Urbanizing Rural India? A Solution to the Country's Urban/Rural Conundrum

New Delhi, India, 3 December 2007 – Today’s plenary session, during the World Economic Forum’s 23rd India Economic Summit, held in partnership with the Confederation of Indian Industry (CII), focused on one of India’s biggest challenges – the massive migration from rural communities to increasingly overburdened cities. Over 100,000 people a month migrate to Delhi alone. "As long as all opportunities are concentrated in metropolises, you will not be able to stem this tide. It will be like King Canute," said Mani Shankar Aiyar, Minister of Panchayati Raj and Youth Affairs and Sports of India.

Enumerating the scale of the problem, he said that while India’s economy has "kissed" 10% growth, on the Human Development index, it has sunk from 126th position to 128th. Some 836 million Indians live on less than 20 rupees per day. A huge number live on less than nine per day. "India is becoming prosperous, but not Indians," he warned. "And that prosperity is affecting only a small number of Indians."

At the same time, the minister said, "India is not just the world’s largest democracy, but the most represented democracy." There are 250,000 institutes of elected government in the country – in the form of local government institutions – comprising 2.2 million representatives of which half are women. Yet these people are not being involved in national economic and social policies. Aiyar remarked that, "Elected self governments should be a source of delivery to people. We need to use them to secure entitlements for the poor. But they are still not within the policy perspective. Rural and urban are not separate. Both are connected. Until we see that, India will become prosperous and Indians will remain poor."

Aiyar added that a key solution is to "buckle the rural hinterland to its immediate urban environment and create opportunities off the farm." He advocated creating urban centres close to the centres of production and investment in non-agricultural rural activities such as biodiesel, handicrafts and food processing. He also urged businesses to locate their centres of operation in non-urban areas.

Examining ways in which this could be done, Anand G. Mahindra, Vice-Chairman and Managing Director, Mahindra & Mahindra, India, and a Co-Chair of the India Economic Summit, pointed out that, "Human beings like to live in cities. They have done so for thousands of years." He suggested that special economic zones could meet that need by forming what he called an "accidental" way of spreading urbanization – and opportunities – to rural India.

The India Economic Summit was designed to generate insight and guide action to improve the alignment of India’s development, industry and global agendas in the context of this year's theme, Building Centres of Excellence. Over 700 business, political and civil society leaders from 37 countries are gathered here for the Summit.

Source: WEF

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