India’s Urbanisation Paradox: Growth or Governance Crisis?

India's urbanisation is often viewed as a symbol of economic progress, but beneath this transformation lies a paradox that challenges its sustainability. While cities act as engines of growth, they also expose the systemic failures in governance, infrastructure, and social equity. Whether it is a farmer from rural Bihar seeking a stable income in Delhi or a young graduate from a small town aspiring to join Bengaluru's tech ecosystem, the magnetism of urban centres is undeniable. However, the reality of urban life is far from the promise of prosperity.

Urbanisation in India has been rapid, with over 35% of the population residing in cities as of 2023, a figure projected to reach 50% by 2050. According to the World Bank, Indian cities contribute nearly 63% to the country’s GDP. While this economic boost suggests a positive trend, the governance framework has struggled to keep pace. Slums have expanded, public transport remains inadequate, and access to essential services such as healthcare and sanitation is still a distant dream for many urban dwellers.

One of the primary issues with India's urbanisation is the lack of planning. Unlike China, where urban growth is meticulously managed, Indian cities expand haphazardly. For instance, Mumbai, the financial capital, houses nearly 42% of its population in slums. Dharavi, Asia's largest slum, is a stark example of how poor planning leads to extreme inequality. The Economic Survey 2021-22 highlighted that while urban areas generate wealth, they also create concentrated pockets of poverty. The increasing number of informal settlements reflects the inability of municipal bodies to accommodate the influx of migrants.

Employment opportunities attract millions to cities, yet underemployment and informality persist. The Periodic Labour Force Survey (PLFS) 2022 indicated that nearly 80% of India's urban workforce is engaged in the informal sector, lacking job security and benefits. Gig economy platforms like Ola, Uber, and Swiggy have provided employment but have failed to offer stability. The urban poor, working as construction labourers, street vendors, and domestic workers, remain vulnerable to economic shocks, as seen during the COVID-19 lockdown when millions were forced to return to their villages due to the collapse of urban livelihoods.

Another critical issue is the failing urban infrastructure. The urban transport sector is overburdened, with metro systems in cities like Delhi and Mumbai unable to meet the growing demand. A report by the Centre for Science and Environment (CSE) in 2023 stated that road congestion costs India nearly $22 billion annually due to lost productivity and fuel consumption. Bengaluru, often called the Silicon Valley of India, suffers from massive traffic congestion, with commute times exceeding two hours for distances as short as 10-15 kilometres.

Water and sanitation infrastructure is another area of concern. Despite the Swachh Bharat Mission's efforts, open defecation remains prevalent in several urban slums. The National Sample Survey (NSS) 2021 reported that 22% of urban households do not have access to piped water. Additionally, cities like Chennai and Bengaluru face acute water crises due to over-extraction of groundwater and erratic monsoons, highlighting the environmental cost of unchecked urban expansion.

The paradox deepens when considering the governance crisis. Urban local bodies are often financially weak and depend heavily on state governments for funds. The 74th Constitutional Amendment, meant to empower municipalities, remains poorly implemented. Property tax collection in Indian cities is among the lowest in the world, leading to a lack of revenue for urban development. A report by the Indian Council for Research on International Economic Relations (ICRIER) found that municipalities collect only 0.2% of GDP in taxes, compared to 1% in China.

Furthermore, political decision-making in urban governance is fragmented. Mega projects such as the Smart Cities Mission and AMRUT (Atal Mission for Rejuvenation and Urban Transformation) have failed to deliver on their promises due to bureaucratic inefficiencies and a lack of citizen participation. In contrast, cities like Shanghai and Singapore have shown how strong governance can ensure sustainable urban growth without compromising on quality of life.

The solution to India's urbanisation paradox lies in comprehensive policy reforms. First, urban planning must be proactive rather than reactive. The government should invest in affordable housing, better transport infrastructure, and sustainable water management. Second, labour laws must be restructured to protect informal workers while fostering formal employment. Lastly, decentralisation is key—municipal corporations should be granted more autonomy and financial resources to execute city-specific policies effectively.

India's urban journey is at a crossroads. If managed well, urbanisation can be a boon, driving economic growth and innovation. However, if governance failures persist, cities may become hubs of inequality, congestion, and environmental distress. It is imperative for policymakers to acknowledge this paradox and act decisively to ensure that urbanisation leads to inclusive and sustainable development.