Is Narayana Murthy Right In Saying That We Are Far Away From Smart Cities?

Prime Minister Narendra Modi wants to build smart cities across India. The cities chosen for this mission is a mix of both major and small cities. While there are only a few major cities, small cities where economic development has not yet taken off are in a majority. Economists have long been arguing that governments should help poor people instead of developing poor places. This is because so many people share the infrastructure and amenities in large cities. So, by investing relatively smaller amounts of money, the government can meet the needs of so many people. It is easier to nudge people into moving where amenities are than to build infrastructure wherever people live.

Private firms have always known this, and this is why firms build large offices in city centres.

Infosys co-founder Narayana Murthy recently said that the development centres of his company in Tier-II cities like Mysuru, Thiruvananthapuram and Bhubaneswar are not occupied more than 50 per cent. These are not rural areas, but still, engineers do not want to live in these small cities. Engineers prefer to live in large cities like Bengaluru, Hyderabad and Mumbai.

This is not surprising because large cities have better amenities and infrastructure, both civic and social. Also, the labour market is much larger in large cities. Thus, it is easy to move from one job to another. Moreover, engineers are also likely to earn more in larger cities, especially in the long run. More important and more complex tasks of a firm are likely to be done in large cities.

Narayana Murthy's point was that we cannot contain massive urbanisation. Large cities are growing, and they are likely to grow for a very long period of time. The government urged IT firms to build offices in small cities across India, hoping that this will create jobs in every part of India. But, urbanisation is a reality. Migration to cities is happening at a faster pace than ever, and building offices or infrastructure in smaller cities is not likely to stop this. This is a process that happened in developed countries decades ago. This is why urbanisation has almost reached a saturation point in the developed world.

The best that can be done is to improve the infrastructure in cities like Mumbai, Bengaluru, Delhi and Kolkata. But this is not happening to the extent it should. Narayana Murthy said that we are far, far away from smart cities, and he is right. According to the 2011 census, of the 5,161 towns and cities in India, only 4,861 have even a partial sewage system. Even in major cities like Bengaluru and Hyderabad, 50 per cent of the houses do not have a sewage connection. About half the Indian cities do not provide piped water, and even in the cities where there is piped water, the service is intermittent. About 300 million people do not have access to electricity. Economist Montek Singh Ahluwalia pointed out in 2011 that out of 85 Indian cities with a population more than half a million, only 20 cities have a city bus service. This is lower than that of other countries that are comparably poor.  Not more than a handful of Indian cities have a mass transit system. The facts are hard to deny. But the fact that Delhi has a mass transit system which is good by global standards shows that it is possible to build good infrastructure in Indian cities.