Three recommendations on urban development for inclusive growth in India

• The World Economic Forum has released a new report, The Future of Urban Development and Services Initiative: Urban Development Recommendations for the Government of India.
• The report highlights the importance of wider private-sector participation to bridge the urban infrastructure and services funding gap, widening due to India’s rapid urban population growth.
• Three strategic recommendations and case studies are proposed to guide the Government of India in addressing the most pressing urban development challenges.

Geneva, 13 April 2015 – The World Economic Forum recommends three actions the Government of India can consider to deliver inclusive urban growth. The report highlights the role the private sector can play to bridge the estimated $110 billion funding gap that could hinder India’s ability to provide basic urban infrastructure and services to its rapidly growing urban population.

The report, The Future of Urban Development and Services Initiative: Urban Development Recommendations for the Government of India has been written in collaboration with Accenture. India’s 410 million city dwellers make the country the world’s second largest urban population. With a relatively low urbanization rate of 32%, the country is witnessing accelerated migration from rural areas to cities. India needs investment of more than $640 billion between 2012 and 2031 to deliver basic urban infrastructure to this growing urban population.

“The world is experiencing an unprecedented transition from predominantly rural to chiefly urban living. In 1950, a third of the world’s population lived in cities; today, the proportion has already reached more than half. By 2050, city dwellers are expected to account for more than two-thirds of the world’s population,” said Alice Charles, Head of Urban Development, World Economic Forum. “In the coming decades, the pace of urbanization in the developing world will continue to far exceed that of the developed world. This will be exemplified by India, where the country’s urban population is forecasted to almost double to 814 million between 2014 and 2050.”

The report includes best practice case studies to help guide the Government of India and proposes three strategic recommendations:

1. Integrate spatial planning at all governmental levels: national, state and city. The primary goal of spatial planning is to integrate housing, strategic infrastructure and urban infrastructure, and improve national and local governance in the context of urban development.
2. Create a stable policy framework for private investment in urban infrastructure. Once the right conditions for investors have been created, the Government of India needs to look at the various tools available such as public-private partnerships to enable investments in strategic infrastructure and urban development.
3. Create institutions to stimulate capacity building and attract talent to grow businesses. Organizations will be required to help the private sector increase the quality of white collar service jobs and to attract investment in manufacturing capacity.  India also needs “lighthouse” projects with the potential for interdisciplinary collaboration in the area of urban development.

Gregory Hodkinson, Chairman, Arup Group, said, “The most pressing urban development challenge facing India is the need to provide basic urban infrastructure and services such as water, sanitation, transportation and electricity. If India avails of the opportunity to harness the latest smart and sustainable innovations in the provision of basic urban infrastructure and services, it has the opportunity to leapfrog several stages of urban development.”

“The new Indian administration created an enormous positive momentum with the 100 Smart Cities programme and its other urban development campaigns, such as the Heritage City Development and Augmentation Yojana (HRIDAY) or the Clean India Mission. The three strategic recommendations and the case studies provided in this report are a sound starting point to assess how the urban development in India can benefit from the global business community and vice versa”, added Ajit Gulabchand, Chairman and Managing Director, Hindustan Construction Company.

The previous Government of India sought to foster urban development through legislation that includes the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, and the development of five industrial corridors. India’s administration, which took office in May 2014, has introduced ambitious new initiatives such as the “Make in India” programme and the “100 Smart Cities” programme.

“The Government of India understands that urban development is the key to achieving its vision of faster, more inclusive and sustainable growth,” said Peter Lacy, Senior Managing Director, Accenture Strategy. “To achieve its goal, we suggest that the Government of India integrates infrastructure and housing planning at all governmental levels, creates a stable policy framework for private investment, and creates institutions to stimulate investment in business growth and highly skilled talent. These steps will help deliver a more competitive and sustainable urban economy.”

Following the release of this report, the World Economic Forum’s infrastructure and urban development industry partners hope to continue engaging in India through its Future of Urban Development and Services Initiative. A Roundtable Discussion will be convened in India next month, in collaboration with industry partners to support the Government of India with its ambitious plans.

The World Economic Forum’s Future of Urban Development and Services Initiative serves as a partner in transformation to cities around the world as they seek to address major urban challenges and transition towards smarter, more sustainable cities in this rapidly urbanizing world. Directed by a Steering Board and guided by an Advisory Board, the Future of Urban Development and Services Initiative works in collaboration with local partners.