'70% of India Has Yet to Be Built'

Can the government turn slums into the world's greenest cities?

A slum in Gujarat (Emmanuel Dyan/Flickr)

ASPEN, Colo.—We don't typically see an upside to slums—the squalid, makeshift settlements that house one-third of the urban population in developing countries. But not everyone's so glum. The economist Edward Glaeser, for instance, has argued that slums don't make people poor, but rather attract and inspire poor people seeking a better life in the city.

Shirish Sankhe, a director in McKinsey's Mumbai office, offers more cause for optimism. For him, slums are cities waiting to be built. By that, he doesn't necessarily mean new cities conjured from scratch, like China's "ghost cities." Instead, he means developing the sophisticated infrastructure that India's furious urbanization demands. If and when these cities are built, they can be conceived as 21st-century metropolises, equipped to meet modern challenges like climate change in ways that established cities like New York can't be.

Three hundred million Indians are expected to move to urban areas over the next 20 years, Sankhe noted during a panel discussion on Saturday at the Aspen Ideas Festival, which is organized by the Aspen Institute and The Atlantic. That means India will be 40-percent urban by 2030 (more than 60 million Indians already live in slums).

All this, in turn, is going to put a premium on developing urban infrastructure. In a 2010 McKinsey report he co-authored, Sankhe estimated that rapid urbanization in the country will require the construction of 700 to 900 million square meters of commercial and residential space, or "a new Chicago every year."

As the study put it, "70 to 80 percent of the India of 2030 is yet to be built."

Ask Sankhe how he arrived at that staggering figure, and you get the sense that it's not a precise estimate—and more a rough and impressionistic measure of untapped possibility. He applies it not just to India but also to other emerging markets like Bangladesh and Indonesia, and bases it on a variety of factors.

"Seventy percent of these cities are not yet built," he explained. "Seventy percent of almost everything: the water systems, the houses.... Sixty percent of Mumbai, for example, live in slums, so their houses are not yet built. The transportation networks: Mumbai has finished only one corridor, it requires 15 corridors of metro. So 14 corridors are not yet built.... Not the population—the population is there. Everything related to climate change, everything related to energy sufficiency, a lot of things are not yet built. So we have a rare chance of designing it right."

'Designing it right,' in Sankhe's opinion, includes integrating strategies for combating climate change into the design of cities, where energy consumption and greenhouse-gas emissions are concentrated. It's a particularly critical challenge for India, which is one of the world's largest greenhouse-gas emitters and has the second-highest number of city-dwellers living in low-elevation coastal areas that are susceptible to rising sea levels.

As his McKinsey study cautiously outlined:

[C]ities around the world already offer some excellent examples of innovative approaches for sustainability that India could incorporate into urban planning and development. One interesting example is Masdar, a clean-energy cluster city being developed on the outskirts of Abu Dhabi city. Abu Dhabi is designing Masdar to produce zero waste, be self-sufficient in terms of water, and be powered solely be renewable energy. Masdar city will support 40,000 residents and 50,000 commuters, will be car-free, and will incorporate light rail transit, personal rapid transit, and associated logistics....

Nevertheless, our analysis suggests that the scope in India to create new 'zero carbon' cities will be limited because the majority of India's urban growth will come from the expansion of existing cities—a far more complex undertaking, in fact, than building state-of-art new cities.

The additional catch is that developing all the infrastructure Sankhe is calling for—the highways, public housing, potable water—costs a lot of money. And it's money that India's urban population doesn't have. Sankhe estimates that of the 300 million people expected to migrate to Indian cities over the next two decades, 60 percent earn less than $1 per day per capita.

"Housing in this market costs some hundred times that monthly income," he said. "So it's simply unaffordable." He forecasts that the Indian government will have to invest $1.2 trillion in urban infrastructure between now and 2030, and that the city-dwellers who benefit from these expenditures will only be able to pay for a fraction of that price tag. He calls this conundrum the "mass-balance of money."

"The problem is the people who you are building it for cannot pay for it," he told me. "That's the paradox of urbanization in emerging markets." As a result, the Indian government will have to come up with the cash through taxes or other revenue-generating schemes like monetizing land.

The Indian government has, in fact, already embarked on an ambitious campaign to build hyperwired, environmentally friendly "smart cities" as part of its $90-billion Delhi-Mumbai Industrial Corridor project. One of the planned cities is Dholera, in Gujarat, which could be twice the size of Mumbai.

But so far, the experiment doesn't seem to be going particularly well. In April, The Guardian reported that opposition to the "smart city" had grown among activists warning of possible environmental damage, displacement of local farmers, and cost overruns. Plans for a port have been shelved and private investment has dried up. The fate of the mega-project remains unclear.

Asked about the problems with Dholera, Sankhe noted that the cities created by the Delhi-Mumbai Industrial Corridor are only expected to house 15 million people—a small percentage of the 300 million people who are expected to move to cities by 2030. The corridor is just a "5-percent solution," he explained.

Of course, if the vision is proving difficult to execute in Dholera, imagine how hard it will be to implement for the other 95-plus percent of newly minted Indian urbanites.