Smart Cities – Does India Need Them?

Earlier estimates put India’s urban population at about 590 million by 2030. We could add another 100 million if we include India’s population in ‘urban-like’ areas, going by the World Bank’s 2010 figures for the same period.


In response to rapid urbanization, the Government of India launched the National Smart Cities Mission in 2015 for urban renewal – to retrofit 100 cities and make them sustainable by 2023. The agenda included addressing citizen services, clean air, housing, safety, power, water, sanitation and mobility. And a focus on green spaces, skilling, creating jobs, keeping crime in check, preventing flooding and alleviating poverty. The mission had an outlay of INR 98,000 crores ($14Bn then) over 5 years, with equal contributions from the Central and State Governments.

Reverse Migration

The pattern is that about 10 million Indians migrate annually from rural to urban centers. But the pandemic has changed that. During the first phase, provoked by uncertainty and exacerbated by a national lockdown, a significant part of our 140 million migrant population headed in the opposite direction. Without wages and all the usual expenses including for food, transport, utilities and rent to contend with, many migrant workers had no choice but to go back to their rural homes. This also upended the prevalent logic that those at the lowest level of the urban economic ladder are better off than those higher up on the rural scale.

During the second wave, which was much worse than the first, we witnessed reverse migration of about 30%. A proof point is that domestic remittances from urban workers to their families, mainly remittances to Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh from the more prosperous NCR, Maharashtra, Karnataka and Gujarat dropped that much.

Many more people caught the pandemic this time, aggravating the situation. The farmer agitation, elections in many States, religious gatherings and just lowering our guard, added fuel to a raging fire. Lockdowns at Delhi, Karnataka, Kerala, Odisha and Maharashtra owing to a rise in cases, have blunted the rebound.

Migrant workers have attempted to get back to their place of work because of economic compulsions, but that has been thwarted for now because of higher fatalities.

Time for a Re-think

Is a pivot underway? Estimates now show we will have about 150 Tier-1, 105 Tier-2 and 330 Tier-3 & 4 cities by 2030. The Smart Cities Mission, combined with the first and second phases of the pandemic may have triggered a directional change.

When the first phase of the pandemic hit, India’s GDP went down 23.9% in the 2020 April-June quarter. Services and industry shrank substantially, while agriculture grew 3.4% in stark contrast. There has been steady growth in rural incomes over time thanks to better support prices, higher crop and horticulture profitability, and increased payouts under the Rural Employment Guarantee Act. Rural demand is up across categories, and marketeers have already identified 90,000 out of 650,000 villages contributing 25% of overall rural sales for added attention. In anticipation, two and four-wheeler manufacturers had launched hundreds of small format outlets, mobile showrooms and a small army of sales reps to harvest the potential upturn in the hinterland.

But the second phase of the pandemic has disrupted all plans for rural growth. A decline in non-agricultural activities, which constitutes two-thirds of rural income, has impacted demand even more. With momentum slowly gathering around the pace of vaccinations, the likelihood of a good monsoon, and a lurking, subliminal fear about urban abandonment when times are bad, we can expect a fair proportion of migrants to stay back in rural and semi-urban (rurban) locations.

A New Action Agenda

To sustain this directional change, the government would have to do much more to bridge the opportunity gap in rurban areas. The push for rural connectivity has to be redoubled because broadband accelerates business and contributes to the death of distance. Government schemes must further encourage entrepreneurship in rurban areas and procurement from rurban firms. Rurban manufacturing clusters need a greater push – like Tirpur for hosiery, Ludhiana for apparel, Moradabad for brassware, Firozabad for glass, Ankleshwar for chemicals and Surat for diamond cutting.

Let’s also look at white-collar employees. Many have returned to their native places during the pandemic. Company policies now encourage working-from-anywhere as realization has dawned that jobs in strategy, technology, marketing, support services, finance and accounting, among others, can actually be performed well remotely. And as skill matters more than location, companies now have access to new talent pools.

Companies are adopting new workspace models and the central theme seems to be to bring offices closer to homes. In cities this means smaller disaggregated offices, and Tier 2 & 3 cities constitute a big new opportunity. Recognizing this, managed office providers like Awfis, Smartworks, ABL Workspaces and MyBranch have announced plans to extend flexible workspace options to smaller cities.

It is refreshing to hear the CEO of Zoho, India’s largest software-as-a-service company, talk eloquently about their rural-centric development centers, enabling people with a better understanding of local nuances to deal more effectively with customers. Illustratively, in India their main development center is at Tenkasi in Tamil Nadu and the ones coming up include one on the outskirts of Patna and another in rural Andhra Pradesh. And they intend taking this model to the US, the UK, Mexico and Japan.

What next?

The government and the private sector are making efforts to decongest our dense metropolitan jungles and improve quality of life.

So, does India need smart cities?

Yes, we do. Because digital transformation makes cities and towns smart, which makes them viable! For instance, digitally induced transparency will ensure that revenues increase from taxes and utility collections. IOT interventions in energy and waste management will cut costs. Social and environmental benefits will accrue too, and citizen services will be significantly better. And when municipal corporations achieve investible grade ratings to garner funds, this mission will achieve self-sufficiency and burgeon.

In 1909, Mahatma Gandhi touched upon the idea of self-sufficient villages for integrated rural development to impact a majority of the Indian population, in his book ‘Hind Swaraj.’

It’s time to take a leaf from that 112-year-old book and create smart villages at scale too. Do you agree?


Interested in a deep dive into your country’s competitiveness, innovation readiness, and global talent? Email info@portulansinstitute.org. Photos by Jeremy Bishop and Photo by Nitin Mendekar on Unsplash