Urbanization & Growth : India, China & Asia

Notes from Reuters Special on Urbanization - India & China Story

1. It happens every year. When monsoon rains lash Mumbai, the city turns into a cesspool, which along with its potholed roads and gridlocked traffic, mocks its ambition of becoming a global financial center. India has Asia's third-largest economy and the increasing global clout that goes with it. It is already home to a quarter of the world's 20 most densely populated cities.

2. Indian cities over the next two decades will also house 40 percent of the country's population and generate some 70 percent of new job opportunities, McKinsey Global Institute (MGI), the research arm of consultancy McKinsey, estimates in a report.

"Across all major quality-of-life indicators, India's cities fall well short of delivering even a basic standard of living for their residents," the report said. To cater to this growth, India needs to invest $1.2 trillion in capital expenditure, mainly infrastructure, over that period, an eight-fold increase of current spending levels, MGI said.

3. India will, over the next two decades, see an urban transformation the scale and speed of which has not happened anywhere except China, with many cities becoming larger than many countries, in terms of population size and GDP.

"It's going to be one of the most defining changes that we have yet to see," said Roopa Purushothaman at Everstone Investment Advisors.

Analysis :

Historically, India's politicians and policy-makers have focused on villages. Urbanization has largely been a result of existing cities expanding economically and demographically, rather than anything planned. This is reflected in Sonia Gandhi's approach, who has conceded that the price hike in petrol is to fund the social schemes (read village oriented). This would tantamount to penalize the urban population to help rural population.