Building New Towns: A Pressing Priority


High-street rentals in India’s top eight cities went up by 50 per cent, even as rentals in malls in general rose by 10 per cent, according to real estate consultant Cushman and Wakefield. Office space rentals have not yet soared, more or less holding steady, as offices reverse their work-from-home policy in a staggered fashion. But this is the data for the year, as a whole.

Residential rentals have increased by 10-12 per cent in Bengaluru, of late, according to news reports, as people return to the city to restart the habit of working at the office. This suggests that the demand for office space, too, would start to grow and see similar increases sooner rather than later.

These indicators suggest resumption of economic activity and are welcome. But they are also a warning, which, if not heeded, would make the cost of doing business in India progressively unsustainable and render India’s service exports non-competitive. The way out is more, and more intelligent, urbanisation. India needs new towns and these towns must be better planned, better built and better connected with other cities. The responsibility for this lies primarily with state governments, which can expect to, and should, get help from the Centre.

Demographic trends make the case for building new towns starkly clear. Industry and modern services grow much faster than agriculture, and create the bulk of new jobs. These jobs take shape in towns, not on the farm. This is what drives urbanisation anywhere in the world, leaving aside Tughlaqian brain waves to move capitals.

Probably 35 per cent of India’s population of 142 crore is urban, making the number of those who live in towns a whopping 50 crore. Normal urbanisation has been disrupted by the pandemic, otherwise the urban population would have been higher. By 2051, population projections put India’s population at 167 crore. If the level of urbanisation reaches 50 per cent in India — it is already higher than that for the world at large and two-thirds for China — the total urban population would reach 83.5 crore. That means India must prepare to accommodate an additional 33.5 crore people in its towns.

Clearly, the existing towns that already creak under the weight of their current inhabitants cannot accommodate any large proportion of this additional influx. India needs new towns. Depending on the population density, the additional urban area that would need to be developed would range from 13,400 sq km (with a population density of 25,000 per sq km) to 22,300 sq km (with a population density of 15,000 per sq km).

India has zero plans for building new towns; the only plans available are for urban redevelopment that yield juicy contracts. Redevelopment can accommodate only a tiny fraction of the prospective rise in the urban population. We simply need new towns.

It is easy to identify some desirable characteristics of a new town. It should have a university and an airport. It must be built not far from an existing national highway. It must be planned as a series of interconnecting modules, each containing office and residential spaces as well as open spaces for social infrastructure: schools, hospitals, entertainment facilities, shopping malls, sports stadia, places of worship and public gatherings, such as political rallies, itinerant circuses or trade fairs, as the case may be.

People should be able to walk to work, shop or school, minimising the need for commutes. Greenery and open spaces must be planned, elaborate underground facilities instituted for a sewerage network, electric and optical-fibre cables, road drainage and tunnels through which workers can move around for repair and maintenance of other underground facilities. Municipal waste processing and disposal cannot be afterthoughts. Building codes appropriate for energy efficiency and the region’s earthquake vulnerability must be laid down and built into every building that comes up.

To prevent replication of Mumbai-like slums or Chandigarh-like long, costly commutes from afar for service providers, India’s new towns must have large stocks of low-cost rental housing distributed within the city. DLF CEO Rajeev Talwar’s proposal for the government to convert its Awas Yojana, which gives the poor ownership of homes, into publicly-built rental housing stock makes eminent sense. The poor and young, whether students or workers, are mobile. They need to find affordable accommodation wherever their fortunes take them, not to own some tacky building somewhere that they cannot afford to settle down in.

A well-functioning university would produce new knowledge, new ideas and entrepreneurs who would convert these ideas into new businesses, setting up in the vicinity of the university to draw on its output of talent and innovation. Silicon Valley, Boston and Britain’s so-called golden triangle of Oxford, Cambridge and London are hotspots of new enterprise and job creation because of their university linkages.

It is easier to build an airport than to lay a rail track from afar when a new city is built. Easy connectivity is vital for businesses to thrive. If the requirements of expansion are kept in mind while acquiring land at the outset, airports can become effective aids to development. Releasing land for a new town is the trickiest part of building a new town. The Amaravati model of getting farmers to pool their land for the new city in return for getting a fraction of it back as developed remains valid, even if Amaravati itself got tangled in politics.

The state government has to identify urbanisable zones, invest in urban planning and coordinate the developers of assorted chunks of real estate and institutions such as industrial estates, offices, hospitals and schools that constitute a town. The Centre must amend the Constitution to make the third tier of the government, the local government, fiscally empowered, with its own fiscal base and not remain at the mercy of the state government so that municipal bonds can become a viable tool of financing. A functional market for corporate debt is vital.

Building new towns is a great booster for overall growth. States should compete to come up with the first new town built from scratch. The winner will get jobs, new investment and political support. And there would be no losers — every new town would get its share of young, restless Indians, their energies and the prosperity they produce.

This article was first published on The Tribune as No losers in race to build new towns on February 17, 2023.

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