Challenges for Tamil Nadu’s Urban Future

In the 2022 urban local body elections held in Tamil Nadu after more than 10 years, the Dravida Munnetra Kazhagam (DMK) and its allies won a landslide victory. Chief Minister MK Stalin attributed this resounding victory to the Dravidian model of governance, a relatively inclusive model that combines high economic growth with social development. While these results are celebrated correctly, newly elected representatives must consider the stakes of this victory and the ongoing and imminent urban governance challenges.

Post Agriculture Scenario

An important factor promoting inclusive growth in the state is widespread urbanization which is driven not only by metropolitan cities, but also by local economic processes. Although exact urban population numbers as of 2021 are still awaited, estimates suggest that more than half of the state’s population now lives in urban areas. It is in recognition of this urban development and corresponding land use change and development needs that Tamil Nadu has recently decided to set up new urban development authorities at Madurai, Coimbatore, Tiruppur and Hosur on the lines of the Chennai Metropolitan Development Authority. By some estimates, the proportion of the urban population is expected to increase to 67% by 2036, given that the agricultural sector is shrinking and the urban agglomeration is expanding.

Agriculture, considered the backbone of the Indian economy, is now the only residual sector in Tamil Nadu. As per the Status Assessment Survey of Agricultural Households 2019, only 26% of rural households in the state are directly dependent on agriculture as their main source of livelihood. In contrast, in Kerala, 33% of rural households identify agriculture as their main source of livelihood, while 61% and 54% do so in “developed states” such as Gujarat and Maharashtra. So, if we traditionally assume that Tamil Nadu is 50% urbanised, seven out of eight households in Tamil Nadu depend on the non-agricultural sector. Further, the survey reveals that most of the households who have cited agriculture as their main source of income also depend on wages to supplement their household income. In Tamil Nadu, 62 per cent of agricultural household income comes from wage labour, while it is 43 per cent in Gujarat and 45 per cent in Maharashtra. This is perhaps an indicator of how much diversification has taken place even within the farming households in the state.

The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA) is an important source of livelihood, especially for landless laborers and marginal landowners, who constitute more than 92% of all rural households in the state. Therefore, when a village is designated as urban, landless laborers suffer the most. Landowners can benefit from increased land values ​​by changing the land designation from rural to urban. However, this is not the case for those who are landless. Although the main reasons for urban development in Tamil Nadu are the inclusion of villages in the nearest urban jurisdiction and the designation of existing villages as census towns, there has been some resistance from village panchayat chiefs against classifying their villages as urban. , just so that they can take advantage of MGNREGA.

The displaced laborers from rural and agricultural areas are not being adequately absorbed by the urban areas. The main driver of job creation in urban areas is the low-level service sector and construction. According to the Periodic Labor Force Survey 2019-20, the share of people employed in construction in the total workforce has more than doubled between 2005 and 2019; While the proportion of people engaged in manufacturing has remained stagnant at around 20% for more than a decade. In comparison, Gujarat increased the share of its workforce in manufacturing to 20% in 2019 from 16% in 2004-05.

The quality of jobs available is also noteworthy, given that 63% of all non-farm enterprises are informal. The pandemic has only made the labor force more informal and made it harder to access jobs. In other words, the rate of eviction from traditional occupations in the state is higher than the rate of secure employment generation in the urban area. While this eviction has weakened the caste base of occupations, it has not ensured secure opportunities in modern sectors.

To its credit, the Tamil Nadu government has announced a pilot urban employment scheme inspired by MGNREGS. However, it is set to cover select corporation areas, municipalities and nagar panchayats, and only at an expense of ₹100 crore, without any support from the central government. A demand-driven, guarantee-based approach to ensuring urban employment is an urgent need of urban centres, especially given the adverse effects of the pandemic on employment.

With more and more people moving to urban centers in search of employment, we can also see the urbanization of poverty. The state will have to consider the need to provide affordable housing, health care, subsidized food and fuel through the public distribution system, along with other necessary social measures. This will require expanding and strengthening the capabilities of urban governance structures that are less participatory than rural Panchayati Raj institutions. An urban grievance redressal mechanism should be set up.

role of central government

The central government is encroaching upon policy spaces where state-level security has been ensured for citizens. For example, Tamil Nadu has 34 welfare boards for informal workers in several sectors. These are the primary mechanisms through which workers receive formal benefits including pension, maternity benefits, compensation in case of accident or death, educational scholarships for children of workers and skill training. These boards, a key aspect of the state’s inclusive growth, are now under threat from the central government’s new labor laws, which seek “unified” and “universal” provisions for all workers.

In addition to central government ideological biases and centralization tendencies, many national policy interventions also suffer from rural bias (for example, the Jal Jeevan Mission), which will not benefit Tamil Nadu’s majority urban population. The central government’s aggressive one-size-fits-all strategy does not do justice to state-specific growth patterns.

Even though it is potentially losing money from the central government, for example, the state is not raising its own resources optimally through property taxes. Arvind Subramaniam, a member of the Chief Minister’s Economic Advisory Council, pointed out that despite being the most urbanized state in India, Tamil Nadu’s property tax collection is only Rs 2,500 crore, much lower than the earnings of less urbanized states such as Maharashtra and Karnataka.

In short, Tamil Nadu needs to take steps to maintain the rate at which urbanization is taking place, to reorganize its welfare framework and strengthen urban governance, while collectively with the central government in its rightful budget. Bargains to retrieve shares and policy priorities.

Kalaiyarasan A. He is a Research Affiliate at the South Asia Institute, Harvard University and Preeti Narayan is a Faculty at the University of British Columbia.