WHY focus on Small Town Development
The agriculture sector in India contributes 18% to the national GDP while employing 42% of the population. Due to inadequate employment opportunities in villages and nearby towns, many low-skilled workers are migrating to big cities in search of better livelihoods. This has led to overcrowding and strained urban infrastructure, resulting in problems including inadequate water supply, a shortage of affordable housing, insufficient stormwater drainage causing frequent urban flooding, and severe traffic congestion.
As of 2020, 49% of India’s urban population resided in slums, underscoring the unsustainable nature of this trend. While the migration of high-skilled workers to big cities is both inevitable and desirable, for low-skilled workers the scenario is starkly different. Isolated from their families and a network of strong rural social ties, these individuals are forced to migrate for inadequate incomes and a meager livelihood, often residing in sums owing to the unaffordability of decent housing on their limited wages.
With 80% of Indian villages having populations under 2,000, building and maintaining infrastructure, such as roads and drainage systems of adequate quality for these small villages, is practically and economically unviable. Even a developed nation like the United States faces similar challenges in constructing and maintaining essential infrastructure in rural areas. While urban areas are essential as they provide economies of scale, there is a need to reimagine India’s approach to urbanization and shift the focus beyond just big cities.
HOW can we reform?
Promoting in-situ urbanization by developing small towns as urban magnets for low and semi-skilled workers can effectively manage migration. Small towns can be strategically developed in villages or towns that serve as natural economic hubs, are centrally located, well-connected, and are already frequented by people from neighboring villages for healthcare, travel, or recreation. Prudent public investment in essential infrastructure, such as quality drinking water, stormwater drainage, transport networks, and sanitation supported by proper town planning would encourage private investments in housing, education, healthcare, and leisure services, thereby attracting organic migration from surrounding villages.
With the right infrastructure and incentives, small towns can become hubs for labor-intensive manufacturing, therefore creating jobs for the low and semi-skilled workforce. To enable the growth of such industries, a supportive environment for investment is essential, involving the development of robust infrastructure, assured land availability, and the easing of compliance burdens through labor reforms. Simultaneously, workforce skills in neighboring villages should be enhanced to meet industry needs. Importantly, such towns will offer a quality of life comparable to big cities, especially since technology and services like mobile phones, internet, digital connectivity, and TV are now nearly universally accessible.
The socio-economic benefits of developing small towns are substantial. Not only do they foster a strong network between agriculture and industry, but also facilitate large scale job creation for a significant number of low-skilled individuals through its focus on labor-intensive industries. By enhancing access to healthcare and education, economies of scale for private investment will also be generated. Furthermore, social ties are preserved, as individuals have the flexibility to live and work in either their village or a nearby small town, ensuring a far better quality of life. Our focus on Small Town Development is envisioned to be a strong facet of promoting inclusive growth.