#7: Making Urban Planning Work | Regulations and Land Utilisation | Positive Externalities | Let Cities Vary
An essay calling for a liberal planning theory, an insight into building coverage rules, an explanation of positive externalities, and a book recommendation on China’s decentralised approach to growth
Essay
Making Urban Planning Work in India
Author: Bimal Patel
Almost all large and medium-sized towns and cities in India have statutory plans in place to guide their growth and development. However, most of these plans remain on paper. Planning authorities are unable to acquire land for public purposes, ensure compliance with building regulations or raise the resources to provide infrastructure and amenities. As a consequence, most cities are expanding haphazardly into their peripheries, and their central areas are being redeveloped in a disorderly manner. Their street networks, infrastructure and amenities are inadequate. In most cities, legal housing, offices and retail spaces are unaffordable, and therefore the proliferation of slums and illegal construction continues to plague them. Urban planning is not working in India.
Why is urban planning not working in India?
When faced with this question, planners proffer many reasons: lack of strict enforcement; inadequate funds for implementing plans; political interference; lack of resources for planning; lack of data; lack of authority over other government agencies; insufficiently large planning jurisdictions; unscrupulous real estate developers; and the unwillingness of Indians to follow rules. However, are these reasons valid? Is everyone other than planners and everything other than planning to be blamed for its ineffectiveness?
Urban planning is not working in India because its approach – the ‘master planning approach’ – is fundamentally flawed. This has been the case ever since master planning was invented in the mid-20th century, in the heyday of socialist central planning, and all states across India were persuaded to adopt it. If urban planning is to work in India, it will have to be liberalised and reformed.
The master planning approach uses the ‘predict-design-provide-regulate’ method. It entails the following steps:
Plan preparation:
Demarcate a planning jurisdiction and establish a planning horizon.
Undertake careful studies of the geography, climate, ecology, demography, sociology, economy, infrastructure, and historical growth patterns of the area within the planning jurisdiction.
Forecast population growth in the jurisdiction up to the horizon.
Survey, map and document current land use/floor space use, infrastructure and amenities in the planning jurisdiction.
Use approved standards to calculate current shortfalls.
Use approved standards to calculate requirements of land/floor space, infrastructure and amenities up to the planning horizon.
Draw a future layout for the town or city showing population densities, land use, infrastructure networks and land reserved for streets and amenities.
Draw up detailed building regulations to specify the morphology, extent and standards of the future city’s built environment.
Estimate the cost of acquiring land, building infrastructure and providing amenities.
Estimate revenues that can be raised from development charges and fees.
Calculate net implementation costs.
Publish the plan for public objections and suggestions.
Modify the plan as necessary.
Apply for government sanction and funds to implement the plan.
Acquire land, build infrastructure and amenities.
Regulate developments on private plots as per planning regulations.
When the plan period is over, revise the plan as above.
This method of making and implementing plans, though it has proved highly ineffective, continues to be used across most Indian states. This is because it is enshrined in planning legislations, encoded in rules and regulations, taught in planning schools, and considered dogma in the planning profession. It seems systematic and logical, but it is fundamentally flawed. Some of its key problems are as follows:
1. The future cannot be predicted
The master planning method rests on the assumption that future requirements can be predicted based on past population growth and current consumption standards and preferences. There is no basis for this assumption. The growth of a city’s population is affected by far too many exogenous and endogenous factors to be accurately predicted. Likewise, current consumption standards and preferences are shaped by economic growth and changing tastes and, therefore, cannot be reliably used to predict future requirements.
It is impossible to predict the future of any system that is affected by the growth of knowledge, wealth and human intentions. Cities are such systems. They are affected by technological, commercial, social and political changes across the world. Their futures are also shaped by what the people living in them do, how wealthy they are, and how their preferences evolve. To grasp this simple fact, think of how much of the present could have been predicted two or three decades ago. When master plans, created to meet baseless requirements, are statutorily imposed on cities and the future turns out to be different, they turn into strangleholds. They stop people from meeting their real requirement and force them to not comply with them. If urban planning in India is to work, it must abandon the idea that future requirements can be predicted.
2. Markets cannot be dispensed with
Master plans are designs of cities specified in the form of land use plans and building regulations that define: layouts of streets, infrastructure and activities; distribution of population densities; intensities of land use at various locations; and the placement, bulk and construction standards of buildings. They rest on the assumption that all aspects of cities can be designed in the way that architects design buildings or engineers design bridges. Cities are far more complex than buildings or bridges. Their built environment must meet highly specific and continuously evolving requirements of diverse individuals, families, firms, clubs, shopkeepers, restaurateurs, industrialists and myriad other actors and institutions that make them up.
There is no way for planners to grasp this complexity fully or to decipher the diverse requirements of people. Revealing demand for floor space, utilities and transport services – and meeting it with supply – requires well-functioning land and property markets and an efficient real estate development sector. To be sure, a few elements of cities, such as street and infrastructure networks, must be designed. But, overall, the role of design is very limited. If urban planning is to work, it must abandon the idea that markets can be dispensed with. Cities cannot simply be designed.
3. Fairness matters
Master planning rests on the belief that planners are justified in imposing the cost of creating public benefits on a few individuals. This is why they unhesitatingly demarcate private plots, or portions thereof, for public uses in master plans. Following this, they attempt to appropriate such plots or land by using their land acquisition powers. However, this is patently unfair. Why should a few people lose their land to create benefits for the many?
Consider a person whose plot is acquired for making a public street. Even if he is compensated more than market value for his plot, he is likely to feel aggrieved, especially when he considers how he and his neighbours are differently affected by the acquisition. While he can no longer benefit from future increases in land value, his neighbours can. Moreover, the new street is likely to add considerably to his neighbours’ land values. The person losing his land is bound to feel that he is being unfairly treated. Why should he lose while his neighbours gain? Why not the other way around? Aggrieved by this unfair treatment, he is likely to seek political or judicial redress. Planners often complain of political or judicial interference. Yet, this interference is largely caused by their use of unfair means to create public benefits. If planning is to work, plans must be fair.
4. Standards must be affordable
In their bid to ensure that cities are built to high standards, master plans stipulate several minimum standards that all developments in the planning area must follow. Practically all aspects of buildings are regulated by such standards: the amount of floor space that can be built on a piece of land; the amount of land that has to be left open around a building; the amount of parking space that must be provided; the minimum size that rooms have to be; the structural strength that buildings have to be built to, and so on. All such standards impose a cost on people, and when these costs are added up, they determine a minimum cost for building a legal building in the city.
Stipulating minimum standards and, by implication, a minimum cost that has to be borne for building in the city is fine so long as people can afford it. If the cost is unaffordable, people are likely to not comply with the regulations. Broadly speaking, it is this dynamic that has fuelled the growth of slums and illegal building in India’s towns and cities. For Indian urban planning to work, planners must pay far more attention to the affordability of their regulations.
5. Plans must be self-financing
The master planning method does not encourage planners to make self-financing plans. It is essentially a method for creating justifiable budget requests for funds from higher levels of government. All that planners are required to do is to rationally work out future requirements, use approved standards and work out the total costs for implementing plans. They are not required to figure out ways of paying for the plan from local resources or to constrain the cost of their proposals to match the resources that can be generated. This allows planning authorities to propose unaffordable plans and blame the lack of implementation on the unavailability of funds. If urban planning in India is to work, planning authorities have to be made responsible for financing their plans by levying charges to defray costs and unlocking increments in value created by planning and urban development.
6. Transparency, consultation and communication matter
Master planning methodology calls for making plans in secret. The main reason for this is to ensure that speculators and landowners are not able to misuse planning information – either to purchase plots that are likely to rise in value from unknowing sellers or to sell plots that are likely to fall in value to unsuspecting buyers. Well-intentioned as this strategy for protecting unsuspecting buyers and sellers may be, it has never worked. Moreover, making plans in secret also means that planners are unable to consult stakeholders and involve people in the planning process. This prevents them from using feedback to improve their plans.
A better strategy is to make the planning process fully transparent so that everyone has access to all the information and no one can misuse this special access. Equally important is ensuring that plans are fair. When plans do not create winners and losers, the value of privileged information automatically reduces. If Indian planning is to work well, planners should be required to make efforts to transparently communicate plans, consult stakeholders and involve people in the process.
7. Cities are not company towns
Master planning is underpinned by a view of cities as well-contained and stable entities – where people are bound by predictable routines and where social, political, technological, and economic changes are slow. This is not surprising, given that Indian master planning was primarily inspired by company and administrative towns like Jamshedpur and Chandigarh, which were being built in the early and mid-20th century. When one views cities in this manner, it is possible to make utopian plans that propose perfect and rigid city designs.
However, modern cities, propelled by and enmeshed in dynamic market economies, cannot be well-contained, stable entities. They have to be dynamic, continuously morphing, evolving and changing to meet new, unanticipated needs generated by endogenous and exogenous factors. Planning in such a context must allow for flexibility and leave much to the play of market factors. It must be far more ex-post than ex-ante. If Indian urban planning is to work, it should view cities as dynamic entities that are continuously morphing and evolving.
In sum, the failure of urban planning in India is not merely a matter of weak enforcement or inadequate resources – it stems from a deeper, structural flaw in the very conception of cities and the methodology of planning itself. The master planning approach, rooted in outdated assumptions of predictability, central control and rigid design, is fundamentally unsuited to the dynamic, decentralised and demand-driven nature of modern cities. Making planning work is not simply about loosening the stranglehold of master plans – it calls for a paradigm shift and a clear understanding of what a liberal approach to planning should entail. Only by reforming the planning paradigm itself can Indian cities begin to shape urban environments that are inclusive, liveable, and responsive to the needs of their people.
Bimal Patel is Chairperson of the Board at CUPDF, a Centre of Excellence at CEPT University
Insight
How Regulations Control Land Utilisation
Author: Namandeep Verma
Planning and building regulations not only determine how much floorspace can be built and what it be used for but also how much of a plot can be built upon – building coverage. This study examines how a set of regulations under Gujarat’s Common General Development Control Regulations (CGDCR) limits ground coverage. This is demonstrated on a plot of land within the R2 zone in Ahmedabad. The plot measures 2320 square metres (35 metres x 66 metres) and abuts an 18 metre wide road.
The diagram below show three development scenarios:
low-rise (15-metre height)
mid-rise (21-metre height)
high-rise development (30-metre height)
The maximum permissible Floor Space Index (FSI) is fixed as 1.8, and the building use considered is mixed-use (residential and commercial uses). It shows how the land area required under margins, common plot, and other open spaces impacts the permissible ground coverage in each scenario.
All Diagrams are proportional. Plot size: 2320 square metres (35m x 66 m)
Margins
Margins along the road depend on the width of the road. Since the road width is 18 metres, the CGDCR mandates that the front margin is maintained at 6 metres in all cases, regardless of the building height. However, the rear and side margins increase as the building height increases. The margin is 3 metres for a low-rise building, 4.5 metres for a mid-rise building and 6 metres for a high-rise building. This progressively reduces the ground coverage as building height increases, and the developable land area lost to margins is 28%, 35%, and 46% respectively for low rise, mid-rise and high-rise buildings. Since it is nowhere mentioned, it is difficult to see what the underpinning rationale for this.
Common plot
The CGDCR mandates that 10% of the plot area must be reserved as a common plot for plots larger than 2000 square metres. It also requires access by an approach road. Common plots can be provided in any part of the site and are allowed to overlap with front, side or rear margins. For this exercise, we assumed that the common plot would overlap with the side margin of the plot. So, while the common plot is 232 square metres (10% of 2320 square metres), we consider only the additional land area under the common plot outside the margins. This area is 165 square meters, 140 square meters, and 94 square meters, respectively, for low-rise, mid-rise and high-rise buildings. Once again, since it is nowhere mentioned, it is difficult to see what the underpinning rationale for this is.
Margins from common plot
Buildings on the site are required to maintain margins from the common plot in the same way as they maintain margins from the plot boundary. The margin distance from the common plot is 3 metres for low and mid-rise buildings. This margin requirement reduces the permissible buildable area of the plot by 6%. For a high-rise building, the marginal distance from the common plot increases to 6 metres - a reduction of 11% in the buildable area of the plot. Since the approach road to the common plot, another key requirement is within the front and side margins of the plot, it does not add to the non-buildable area of the plot. Yet again, since it is nowhere mentioned, it is difficult to see what the underpinning rationale for this.
Building Coverage
This case highlights that the available area for development, or the ground coverage on a plot of land reduces as the height of buildings increases. The ground coverage achievable is 58% in low-rise development, 54% in mid-rise development, and only 38% in high-rise development. Although the FSI remains constant at 1.8 in all cases, the flexibility of how it can be used changes based on the availability of land from the reductions in ground coverage. In this case, at 1.8 FSI, the maximum FSI is low. When FSI regimes are liberalised to allow higher maximum permissible FSI, it is also important to look at liberalising regulations that govern the use of land. Improving land utilisation is an important aspect of enabling efficient development in our cities. Design flexibility, cost, and buildability are all ultimately tied to such regulations.
More generally, when framing regulations, it is important to consider both, the benefits that regulations are likely to create and the cost they are likely to impose. It is also important to record the rationale underpinning regulations and to specify a way of measuring intended benefits. Without this it is impossible to later verify whether regulations are delivering the benefits they were meant to. Much too often, building regulations fail to deliver benefits but continue to impose costs on people.
Namandeep Verma is a Research Associate at CUPDF, a Centre of Excellence at CEPT University
Explained
Positive Externalities and Cities
Authors: Suyash Rai and Bimal Patel
This section of the previous newsletter discussed the concept of ‘negative externalities’ in the context of cities and urban planning. The next issue will focus on ‘public goods’. This one discusses ‘positive externalities’.
Positive externalities are the benefits that individuals, firms, or institutions generate for others through their actions, without receiving full financial compensation in return. These benefits are enjoyed by third parties without payment. Public economics usually frames externalities as unintended consequences - benefits created without the provider’s full consent. A standard policy textbook defines externalities as arising when ‘property rights are attenuated because either the rights to exclusive use are incompletely specified or the costs of enforcing the rights are high relative to the benefits.’ However, this lens does not does not account for voluntary generosity - cases where individuals, firms, or institutions deliberately allow benefits created by them to spillover and benefit others, without charging them. Such spillovers are foundational to the vitality, inclusiveness and productivity of cities.
Positive externalities and urban built environments
Great cities are distinguished by the fact that our experience of them is not limited to their public spaces - publicly owned streets and public parks. We can seamlessly weave in and out of publicly and privately owned spaces: streets, parks, cafés, markets, shops, little gardens, art galleries, hotel lobbies, pubs, malls, arcades, temples, cathedrals, and plazas. In doing so we are able to enliven our experience and enrich our lives. This possibility of being able to freely access and enjoy a wide variety of spaces, public and private, is what makes great cities great. One way of understanding this feature of great cities is through the concept of positive externalities.
Good cities are ones where negative externalities, or the spillover of nuisances, are kept in check. Good cites also have generous public realms and ample public facilities - they are well-endowed with public goods that everyone can enjoy. Great cities are ones that are also brimming with positive externalities for everyone to enjoy - benefits created by private individuals or institutions that everyone can enjoy without paying for them. Examples abound: a hotel lobby that anyone can sit in for a while, a temple courtyard or a private garden that provides respite from the hustle and bustle of a city, a café where one can work for endless hours, or private college grounds that are left open for morning walks. All of these are positive externalities that emerge when private individuals and institution allow access to spaces that they own. Other examples of positive externalities are: a beautiful building façade that adds to a city’s beauty, a well-kept garden that can be enjoyed by people walking by, or a ground water recharge well that replenishes common aquifers. These positive externalities are privately created benefits that spill over outside private properties.
It is relatively easy and inexpensive to prevent others from accessing private spaces, that is to say they are easily excludable. Thus, providing access is a choice. Spaces tend to be rivalrous - that is, one person’s use may prevent another’s. But this quality varies with time and purpose. A space can be used by different people at different times without conflict. An office building during the week could host a market or art gallery on weekends. Pure private goods like food or phones are highly rivalrous. But the rivalrousness of space is context-dependent. A private college may open its garden for walks. A sports academy may allow outsiders to access its playground while managing congestion.
Some spaces also offer non-rivalrous goods, such as greenery, a better micro-climate, art, or scenic views. These are especially valuable because many can enjoy them at little additional cost. Consider a family that owns an art collection in a building: they could keep it private, or open it to others. Others’ viewing does not diminish the owner’s enjoyment - indeed, it may even enhance it by revealing new perspectives. Of course, such spaces can become congested, requiring entry limits or fees that do not cover the full costs, but only work to mitigate congestion. Even so, many more people can enjoy these goods than the owners alone.
This potential may remain untapped if access is restricted. Opening up such spaces enhances efficiency because it makes some people better off without making anyone worse off. In these terms, we may see new possibilities for urban space, irrespective of ownership. These opportunities matter even more in large cities in developing countries, where private space per capita is often low. Publicly accessible spaces can greatly enhance residents’ quality of life.
In privately owned spaces, the decision to allow access lies with the owner. The key question is: how can private persons and institutions be encouraged to open up access to their properties?
One reason for not doing so is fear - of damage, encroachment, or misuse. If a city cannot assure property security without high private costs, few owners will offer access. If damage or misuse does occur, there should be swift and fair recourse. Such fears are hard to overcome, especially if based on past experience. A strong sense of safety - enforced by competent authorities and supported by a civic culture of respect and restraint - is key to fostering openness.
Another obstacle is regulatory rigidity. Planning rules may prohibit mixed uses - such as commercial activity in residential areas. Planning should allow flexibility, restricting only the most harmful uses, which are few. Building setback regulations also prevent close juxtaposition of different types of spaces that may lead to positive externalities – as Alan Jacobs has observed in his work, great streets have active, permeable edges, with shop windows, cafes, front stoops, and building entrances that animate the sidewalk.
Opening a private space for public use or allowing privately created benefits to spillover outside ones property may seem like a cost with no benefit. But benefits do exist - gratitude from users, or the enhancement of one’s reputation, for example. For some, that is sufficient. For others, symbolic recognition or small civic rewards may help. Human nature allows us to convert burdens into benefits through social meaning and community affirmation.
Positive externalities and urban economies
Great cities are also characterised by positive externalities that we may call knowledge spillovers – the spill over of knowledge created by private individuals, firms and institutions into the urban economy. Such knowledge spillovers are key to productivity. Economist Paul Romer emphasised that ‘ideas are non-rival’ – they can be shared without depletion.
At one level knowledge spillovers are simply an outcome of proximity. In tightly packed clusters, it is much easier for individuals, firms and institutions to learn from one another and for innovations to spread. In Surat or Tirupur, entrepreneurs copy each other’s designs, tools and techniques. None of this is centrally planned, yet it enhances collective productivity.
Deep and competitive labour markets in cities also encourage skill development. Workers invest in training because they expect rewards in a dynamic market. Firms benefit not only from their own training but from the generally higher skill level. In Bangalore or Silicon Valley, new kinds of start-ups thrive because of the availability of experienced developers and engineers who switch jobs, as well as informal learning across firms.
Large cities also support diverse consumption options that small towns cannot sustain - specialised services, cultural offerings, and artisanal goods. Design studios, music schools, and therapists enrich the urban ecosystem and feed into other sectors. Innovation often builds on such spillovers. A baker invents a new treat, and others adopt or adapt it.
A focus on positive externalities opens up a broader view of the city's potential, revealing hidden opportunities in existing spaces and interactions. Encouraging positive externalities requires regulatory flexibility, protection for informal and unintended uses, and resistance to monocultures of function or population. Most of all, it requires physical and social accessibility.
Suyash Rai is Chair of Research and Bimal Patel is Chairperson of the Board at CUPDF, a Centre of Excellence at CEPT University
Reading
Decentralise to Develop
Author: Suyash Rai
Indian cities find themselves caught in a contradiction. On the one hand, as engines of growth, they aspire to emulate the best qualities of global cities – Singapore’s infrastructure, Shanghai’s skyline, Tokyo’s efficiency, New York’s dynamism and Barcelona’s public spaces. On the other hand, they are bound by governance structures that restrain them from making their own decisions. Very few important decisions are made at the city level. From urban planning to public expenditure, most consequential decisions are taken at the state or national level. This is particularly striking given India’s extraordinary diversity and its democratic, republican form of governance.
This lack of decentralisation becomes even more intriguing when we compare with China. In China, a significant share of public expenditure decisions – and many strategic choices concerning urban growth and development – are made at the local level. In most states in India, urban planning is primarily controlled by state governments, with a minor role for the cities. The local government expenditure in India is estimated to be only about 3% of the total government expenditure, while in China this is about 50%. In China, about two-thirds of public employment was estimated to be at the sub-provincial levels, with county governments holding the largest share. In India, this was only about 12%.
Political economist Yuen Yuen Ang’s How China Escaped the Poverty Trap is a pathbreaking book that shows the essential role that subnational experimentation, adaptive governance, and place-based strategies played in creating one of the longest-running episodes of economic growth in world history. Drawing on Robert Axelrod’s work on complex adaptive systems, Ang frames development as driven by the coevolution of markets and institutions, characterised by three core mechanisms: variation, selection and niche creation. She shows that this only works if political and economic actors are given the room to experiment, adapt and scale what works. At its core, the book tells a story of messy improvisation by local actors under conditions of weak formal rules, vague and broad direction from national leaders, and only limited constraints on local decision-making.
What follows is a reading of Ang’s book through the lens of urban transformation, with a focus on what India can learn from the mechanisms of institutional coevolution that unfolded in China’s urban experiments.
Cities can be crucibles of variation – but only if they are allowed to
Ang’s theory begins with variation – the spontaneous or directed creation of diverse, decentralised responses to local problems. Variation is the raw material of institutional evolution.
In the early reform period, Chinese cities and localities were encouraged – often through vague central directives – to ‘cross the river by feeling the stones’. Faced with institutional ambiguity, local governments in cities improvised responses. They created township and village enterprises, often operating in legal grey zones, which allowed for industrialisation without full privatisation. They reconfigured state-owned assets into commercial entities to generate revenue.
Cities at different stages of development adopted different strategies for attracting investments – from initially being equally open to any investment to later becoming more mindful of complementarities and cluster formation. These initiatives were not centrally designed or coordinated. They emerged because local officials were given space to experiment, and because cities had the autonomy and pressure to solve real economic problems.
Selection requires institutional learning
Once variation is generated, selection is the process by which successful practices are identified, retained and replicated. Successful local practices, such as Shenzhen’s Special Economic Zone policies, were adopted by other cities. Urban land auctions, pioneered in a few cities, became national practice after demonstrating revenue potential. Crucially, this selection happened in a feedback-rich environment. The party incentivised local officials to learn from each other and to adopt successful institutional configurations – policies as well as governance arrangements and revenue models.
In China, selection was often bureaucratically driven, based on a system of performance incentives and informal benchmarking. Even in India, the all-India services and the fiscal power of the union government make it possible to create incentives for replicating what the union government considers successful practices. However, since selection and adoption require context-specific understanding, this is likely to lead to poor selection, not to mention an infringement upon the political liberty of subnational governments. In a democratic, federal context, selection should happen more organically through horizontal institutional learning, lightly facilitated by higher levels of government through knowledge-sharing mechanisms. If cities have the freedom to choose, there will be an incentive for such institutional learning. This also relates to the next insight – the need for niche creation.
Cities can create niches for growth and institutional development
The third mechanism in Ang’s coevolutionary framework is niche creation: the deliberate or emergent generation of new spaces of economic activity suited to the existing local conditions and capabilities. These niches often begin in low-end, informal or unconventional sectors and become drivers of local growth. Over time, they can evolve into more formal, productive and dynamic sectors.
In China, cities created niches in several ways. Special Economic Zones (SEZs) in Shenzhen and elsewhere were institutional niches that combined infrastructure investment, tax incentives and labour flexibility. Urban governments established local financing vehicles, enabling them to invest in infrastructure without waiting for central transfers. Cities coordinated with local firms to attract foreign capital, often playing a direct role in matchmaking between firms and investors. These niches allowed local economies to specialise, learn and scale.
Coevolution is a dynamic and interactive process – not a blueprint
One of Ang’s most important arguments is that development is non-linear. The coevolution of markets and institutions is messy, iterative and context specific. Cities need to start where they are.
China’s transformation was not the product of a grand plan. It was a process of adaptive improvisation, driven by local governments responding to real problems – poverty, unemployment, fiscal shortfalls, housing shortages – with imperfect tools. Over time, as variation accumulated and selection mechanisms matured, more stable institutions emerged. As Ang puts it – ‘Institutions evolve by doing, not by design.’
Let cities vary
It may seem that Indian cities have a lot of variety – India indeed has very different cities due to their distinct histories. However, Indian cities lack the autonomy to generate significant variation. If empowered, Indian cities could experiment with alternative models of: administration; investment promotion; public-private collaboration; land use, transport and infrastructure planning; and housing policy.
Ang’s theory of coevolution – through variation, selection and niche creation – offers a way to think about development as a dynamic and adaptive process. Cities are the ideal spaces for such evolution to begin because they are closest to the problems and rich in feedback.
Ang’s book can be read as a call to enable cities to evolve. Let them vary. And in that variation lies the beginning of transformation. Higher levels of government – state and union – need to decentralise powers to the cities, regulate externalities, provide public goods that go beyond individual cities, and then facilitate institutional learning. In India, this requires a fundamental reorientation from top-down control and standardised schemes to bottom-up experimentation and adaptive learning.
Today’s China is not the same as the one Ang describes. Under President Jinping, the party has centralised power much more than his predecessors. The geopolitical situation has also become more challenging for China. This is a rare opportunity for India, which has so far done a poor job of benefiting from it, as evidenced by the poor record on foreign investment in recent years. There are many reasons for this. If cities are given more freedoms, perhaps they may do better. China has shown that the road to national development goes through cities.
If you want national transformation, you must begin with local dynamism. And for that, the conditions do not need to be perfect. What you need is a willingness to foster productive activity even under imperfect governance. In fact, as Ang shows, China began its transformation not by eliminating corruption or building Weberian bureaucracies overnight, but by repurposing dysfunction towards growth-enhancing goals.
In India, the reforms of the 1990s created some space for the states to decide their own development strategies. States built their own strategies and are competing for investments, entrepreneurs and workers. States are taking different approaches and occupying different niches. There also seems to be some cross-state learning on matters such as investment promotion. While some states are succeeding more than others, overall economic growth has accelerated. Taking this further, cities also need to be freed and motivated to compete for investment and growth.
Suyash Rai is Chair of Research at CUPDF, a Centre of Excellence at CEPT University