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Friday, November 25, 2011

Urbanization key to speedy growth: RBI governor

Urbanization key to speedy growth: RBI governor

CHANDIGARH: RBI governor Dr Duvvuri Subbarao here on Friday re-enforced TOI's 'Sad cities' campaign saying development of urban areas and economic growth support each other.

"We need Rs 40 trillion between 2012-2031 for development of urban areas to push economic growth," RBI governor said delivering the Haksar memorial lecture at Centre for Research in Rural and Industrial Development ( CRRID). Around $100 per capita funds are required for urbanization.

TOI is already running a series ahead of elections to find out how urban voter feels apathetic due to lack of proper development of cities in Punjab, the fifth fastest urbanized state in the country. It is also the fastest urbanized state in northwest India growing at around 37%, much higher than the country's average of 31%.

Subbarao revealed it has been found that growth may be higher at places where urbanization is faster and also urbanization can be faster where the growth is good.

Comparing the growth rates of China and India, he said India's urbanization rose from 26% in 1991 to 31% on 2011 while that of China increased from 32% in 1997 to 50% in 2010. The slow pace of urbanization in India is intriguing as this is the period when liberalization was set in motion.

Country's top financial planner said for urbanization to be supported, there is need for more effective tax collection, efficient project planning and implementation, innovative urban governance and much greater sensitivity to embracing migrants into the urban ecology.

Haphazard growth and pressure of migration may lead to increase in crime and bottlenecks for economic growth.

He said empirical studies show that middle income countries reach 50% urbanization and advanced economies reach 70% to 80% urbanization.

The RBI governor observed accelerating growth presents two tasks from the urbanization perspective - first the rate of urbanization has to pick up so as to move the people up the productivity ladder and second, pressures of the urbanization have to be managed proactively.

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