Dividing economic development into two parts, urban and rural, is essentially not supported in basic economic theory. It is artificial and therefore suspect. However, I am continuing with this classification since it provides a useful framework to examine the existing policies of government.

A term paper (in Microsoft Word) on Urban Development in India

Essentially what I have stated in this term paper is that urban development is the true indicator of the onset of the industrial revolution in a country. Taking the excuse that we have a huge percentage of our population living in rural areas does not in any way support our often stated policy of reducing the growth rate of urban areas. In fact, India was one of the most urbanized nations till about 1825 AD, and had cities which were larger than what was London at that time. But then the rest of the world (particularly the Western world) took off on a rapid growth path of urbanization, and we were left way behind. After independence also, for some unknown reason, we did not promote urbanization, with the net result that today we continue to retain most of our population in the unproductive agricultural sector, in small pockets scattered over the entire nation, with the consequent high costs of education.

We did not understand that economies of scale are vital for development, and urbanization provides these economies, in almost every endeavor such as education and industry. We needed great investment in urban planning and instead, we put emphasis on village industry (small industry is a different issue altogether: it is a necessary part of economic development). Even today, when we have a great need for urban planners in every city, we have huge shortfalls in supply. Almost no university teaches urban development and planning. The net result is the atrocious mess that characterizes our urban areas today. And this is going to get worse unless we place a clear cut emphasis on urban planning and development. There is no alternative to urbanization for our long term development.