Urbanise and be rich
Source: By Kaushik Das: The Financial Express
It is an empirical truth that, by and large, the most economically prosperous countries are also highly urbanised. While urbanisation may not be the only factor that makes a country rich, it is undeniably one of the key catalysts that help propel an economy to a higher growth trajectory. Take the example of China. China’s emergence as an economic superpower has occurred hand in hand with rapid urbanisation—about 53% of China’s population is urbanised now compared to only 18% in the late 1970s.
What has been India’s experience so far? As per the latest census report, India’s urbanisation rate has increased to just 31% in 2011, from about 28% in 2001. Not only the pace of urbanisation is agonisingly slow in India’s case, the disparity between different states as regards to the urbanisation trend is also striking.
States such as Bihar (11.3%), Odisha (16.7%), Uttar Pradesh (22.3%), Chhattisgarh (23.2%), Jharkhand (24.1%), Rajasthan (24.9%), Madhya Pradesh (27.6%)—despite showing a rise in urbanisation rate in the last decade—remain way below the national average rate of 31.2%. On the other end of the spectrum, Tamil Nadu (48.5%), Kerala (47.7%), Maharashtra (45.2%) and Gujarat (42.6%) have a relatively higher urbanisation rate, among 16 major states we have considered in our analysis. The census findings show that Kerala has recorded the highest increase in urbanisation rate in the last decade (from 26% in 2001 to 47.7% in 2011), while the least improvement has been in the case of Bihar (+0.8%), a trend which is indeed worrisome given that Bihar has the lowest level of urbanisation rate (11.3%) among 16 key states.
But a clear trend emerges when the urbanisation rate of each of 16 key states is compared to other parameters such as overall literacy rate, population growth rate, infant mortality rate, poverty rate and per capita GDP. States which are less (more) urbanised have a lower (higher) literacy rate. States such as Bihar (63.8% literacy rate), Rajasthan (67.1%), Jharkhand (67.6%), and Uttar Pradesh (69.7%), which are the least urbanised also have the lowest literacy rate. On the other hand, states which have a relatively higher urbanisation rate—Kerala (93.9%), Maharashtra (82.9%), Tamil Nadu (80.3%), Gujarat (79.3%)—also enjoy a high literacy rate.
States with a lower (higher) urbanisation and literacy rate have recorded the highest (lowest) increase in the decadal population growth rate between 2001 and 2011. States such as Bihar, Chhattisgarh, Jharkhand, Rajasthan, Madhya Pradesh and Uttar Pradesh, which rank poorly in urbanisation and literacy metrics, have seen 20%-plus population growth rate between 2001 and 2011. Kerala stands out at the other end of the spectrum of having recorded the lowest population growth rate (4.9%) in the last decade.
Infant mortality rate is higher (lower) in less (more) urbanised states. It is highest in states such as Madhya Pradesh, Odisha, Uttar Pradesh, Rajasthan, Chhattisgarh and Bihar, while being the lowest in the case of Kerala, Tamil Nadu and Maharashtra.
Incidence of poverty is higher (lower) in less (more) urbanised states. Orissa (32.6%), Bihar (33.7%), Chhattisgarh (39.9%), Jharkhand (37.0%), Madhya Pradesh (31.7%) and Uttar Pradesh (29.4%) have the largest share of below poverty line population residing in these states as compared to states such as Kerala (7.1%), Tamil Nadu (11.3%), Gujarat (16.6%) and Maharashta (17.3%), where percentage of BPL population is below the national average of 21.9%.
States with lower level of urbanisation rate are poorer than the more urbanised ones. It is hardly surprising that states such as Bihar, Uttar Pradesh, Madhya Pradesh, Jharkhand, Odisha and Chhattisgarh have significantly lower per capita income compared to Maharashtra, Gujarat, Kerala and Punjab, which are relatively more urbanised. The per capita monthly expenditure profile of the prosperous states is naturally higher than the relatively poor ones.
This indicates that, by and large, higher urbanisation leads to lesser poverty, increased prosperity and improvement in development indicators as well. Of course, there could be some outlier cases where a one-to-one correlation may become hard to establish, but the overall message is simple—“higher urbanisation improves economic well-being.”
It is an empirical truth that, by and large, the most economically prosperous countries are also highly urbanised. While urbanisation may not be the only factor that makes a country rich, it is undeniably one of the key catalysts that help propel an economy to a higher growth trajectory. Take the example of China. China’s emergence as an economic superpower has occurred hand in hand with rapid urbanisation—about 53% of China’s population is urbanised now compared to only 18% in the late 1970s.
What has been India’s experience so far? As per the latest census report, India’s urbanisation rate has increased to just 31% in 2011, from about 28% in 2001. Not only the pace of urbanisation is agonisingly slow in India’s case, the disparity between different states as regards to the urbanisation trend is also striking.
States such as Bihar (11.3%), Odisha (16.7%), Uttar Pradesh (22.3%), Chhattisgarh (23.2%), Jharkhand (24.1%), Rajasthan (24.9%), Madhya Pradesh (27.6%)—despite showing a rise in urbanisation rate in the last decade—remain way below the national average rate of 31.2%. On the other end of the spectrum, Tamil Nadu (48.5%), Kerala (47.7%), Maharashtra (45.2%) and Gujarat (42.6%) have a relatively higher urbanisation rate, among 16 major states we have considered in our analysis. The census findings show that Kerala has recorded the highest increase in urbanisation rate in the last decade (from 26% in 2001 to 47.7% in 2011), while the least improvement has been in the case of Bihar (+0.8%), a trend which is indeed worrisome given that Bihar has the lowest level of urbanisation rate (11.3%) among 16 key states.
But a clear trend emerges when the urbanisation rate of each of 16 key states is compared to other parameters such as overall literacy rate, population growth rate, infant mortality rate, poverty rate and per capita GDP. States which are less (more) urbanised have a lower (higher) literacy rate. States such as Bihar (63.8% literacy rate), Rajasthan (67.1%), Jharkhand (67.6%), and Uttar Pradesh (69.7%), which are the least urbanised also have the lowest literacy rate. On the other hand, states which have a relatively higher urbanisation rate—Kerala (93.9%), Maharashtra (82.9%), Tamil Nadu (80.3%), Gujarat (79.3%)—also enjoy a high literacy rate.
States with a lower (higher) urbanisation and literacy rate have recorded the highest (lowest) increase in the decadal population growth rate between 2001 and 2011. States such as Bihar, Chhattisgarh, Jharkhand, Rajasthan, Madhya Pradesh and Uttar Pradesh, which rank poorly in urbanisation and literacy metrics, have seen 20%-plus population growth rate between 2001 and 2011. Kerala stands out at the other end of the spectrum of having recorded the lowest population growth rate (4.9%) in the last decade.
Infant mortality rate is higher (lower) in less (more) urbanised states. It is highest in states such as Madhya Pradesh, Odisha, Uttar Pradesh, Rajasthan, Chhattisgarh and Bihar, while being the lowest in the case of Kerala, Tamil Nadu and Maharashtra.
Incidence of poverty is higher (lower) in less (more) urbanised states. Orissa (32.6%), Bihar (33.7%), Chhattisgarh (39.9%), Jharkhand (37.0%), Madhya Pradesh (31.7%) and Uttar Pradesh (29.4%) have the largest share of below poverty line population residing in these states as compared to states such as Kerala (7.1%), Tamil Nadu (11.3%), Gujarat (16.6%) and Maharashta (17.3%), where percentage of BPL population is below the national average of 21.9%.
States with lower level of urbanisation rate are poorer than the more urbanised ones. It is hardly surprising that states such as Bihar, Uttar Pradesh, Madhya Pradesh, Jharkhand, Odisha and Chhattisgarh have significantly lower per capita income compared to Maharashtra, Gujarat, Kerala and Punjab, which are relatively more urbanised. The per capita monthly expenditure profile of the prosperous states is naturally higher than the relatively poor ones.
This indicates that, by and large, higher urbanisation leads to lesser poverty, increased prosperity and improvement in development indicators as well. Of course, there could be some outlier cases where a one-to-one correlation may become hard to establish, but the overall message is simple—“higher urbanisation improves economic well-being.”
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