Driving India’s Next Wave of Urbanization

By T.G. Sitharam
Professor, Department of Civil Engineering and Former Chair, Center for Infrastructure Sustainable Transportation and Urban Planning (CiSTUP), Indian Institute of Science
Jaya Dhindaw
Senior Urban Planner, CiSTUP, Indian Institute of Science

The phenomenon of “urbanization”, or population shift from rural to urban areas, is occurring at an unprecedented rate in India. According to the 1901 census, the population residing in urban areas in India was 11.4%. This number steadily increased post-independence and by 2011 had reached 31.2%, with continued urbanization on the horizon.1,2 Based on the growth rates observed between 2001 and 2011, by the end of 2015 the population of Mumbai is projected to stand at 25 million, Delhi and Kolkata at 16 million each, while Chennai, Bengaluru, and Hyderabad will each have 10 million residents.3 According to a 2007 United Nations “State of World Population” report, 40.8% of India’s population is expected to reside in urban areas by 2030.3 In absolute terms, this means that the country’s urban population will increase from 340 million to nearly 600 million over the next 15 years.

Mumbai—the physical manifestation of Indian urbanization

Mumbai—the physical manifestation of Indian urbanization

To put these numbers into perspective, while quickly growing, India’s share of urban population is lower than that of some other emerging market countries, including China (48%), Mexico (78%), South Korea (83%), and Brazil (87%).4 With the exception of China, India is much larger than these other emerging economies, thus the actual number of people in urban areas in India is already large and growing.

Urbanization and economic growth are often intertwined—in India, urbanization has kept pace with economic growth. From 2001 to 2011, the country’s GDP grew at a rate of about 8% per year, comparing favorably with the rate of 5.5% observed over the previous two decades.4 Recently, India’s Finance Ministry estimated that the country’s economic growth could increase to as much as 8.5% in the coming fiscal year, which could make it the world’s fastest-growing large economy. About 75% of India’s GDP is concentrated in its cities.

Urbanization has occurred rapidly in India and has offered improved quality of life and more opportunities. However, this has been accompanied by challenges that include insufficient energy, lack of urban infrastructure, and poor delivery of basic services, resulting in undesirable environmental impacts, congestion, and urban sprawl. Reportedly about half of all manufacturers in India lose power for five hours a week—slowing the momentum of some of the country’s most important employers.5


Research and analysis reveals that the principal underlying causes of urbanization in India are socially, economically, and politically driven. Industrialization results in employment opportunities and the ability to have greater specialization within the workforce. Access to the technology, education, and better infrastructure, as well as growth of the private sector, available in an urban environment can lead to an improved standard of living and greater opportunity for increasing one’s income. Indian urbanization has occurred since the partition of the country and has accelerated due to an increase in birth rates. As the government has worked to expand infrastructure and basic services there has been a corresponding expansion in urbanization. In addition, the 11th Five-Year Plan (2007–2012) specifically promoted urbanization. As India attempts to achieve faster and more efficient growth, cities will inevitably continue to play an important role as the principal engines of economic growth.

The opportunities afforded by urbanization are most readily realized when careful urban planning is in place. If urban infrastructure and planning are unable to keep up with the rate of urbanization, the consequences can be considerable. The rapid rise in urban population in India has had several unforeseen or unplanned consequences such as the increase in slums, poor standard of living for some, air quality issues, urban sprawl, traffic, and environmental degradation (see Figure 1). There are also the classic problems arising from an unmanaged and unintended rapid population increase, including unemployment, changes in family and social structures, and increasing crime rates. India’s urbanization has indeed placed tremendous demand on the country’s resources.

FIGURE 1. Challenges presented by urbanization in India

FIGURE 1. Challenges presented by urbanization in India

Thus, proper planning is needed to address the challenges associated with urbanization and realize the full potential of the benefits of urbanization occurring in the country. Urban planning is critically important in many areas, like providing reliable access to energy with lower environmental impact and clean transportation fuels with adequate transportation planning.


Today, energy consumption in India is the fourth largest after China, the U.S., and Russia.6 Increasing industrialization and urbanization will require much more energy for an already-underserved country.

A major benefit to urban centers, and thus perhaps a strong driver for urbanization in India, is access to electricity. In its “World Energy Outlook 2011”, the International Energy Agency reported that the electrification rate in India’s urban areas was about 94%, whereas it was only 67% in rural areas (2009 data).7 Without access to electricity and modern cooking fuels, over 80% of the nearly 900 million people living in rural India rely on traditional biomass for cooking. Thus, India has become the largest consumer of fuel-wood in the world, as a result of which an estimated 41% of India’s forest cover has been degraded over the last decade. This rate of consumption is about five times higher than what can be sustainably removed. Moreover, biomass or dung burned indoors releases dangerous particulate emissions that are considered a major health risk.

Even though most residents of cities have electricity access, much more capacity is needed to serve the growing urban populations, provide access to all, and support continued industrialization. Thus, it is worth considering how different energy sources will contribute to India’s future power mix and how best to ensure that the environmental impact from energy production and utilization is minimized.

India’s electricity mix in 2011 and as projected in 2030 is shown in Figure 2. While efforts to increase capacity will likely focus on increasing energy from all sources, the push for renewables has been particularly strong of late. The government has set a target of 175 GW of renewable energy capacity by 2022 to help India increase electricity capacity while decreasing carbon intensity. India has a tremendous locational advantage to develop solar energy and is doing so through investment in large solar projects, solar parks, micro grids, and rooftop solar. Similarly, wind power capacity is increasing and now contributes nearly 2% of the national power needs.7 High capital costs and land-intensive installations are some of the barriers to this option. Although economically viable in India, hydro power has not been fully exploited to its potential of about 150 GW,9 primarily because of ecological concerns (e.g., flora and fauna displacement) apart from the unreliability of this energy source in case of droughts and other potential external influences.

FIGURE 2. Past and projected future energy mix for power generation in India10

FIGURE 2. Past and projected future energy mix for power generation in India10

In terms of resources, India has the world’s fourth-largest coal reserves. Figure 2 reveals coal’s continuing fundamental role in power production. It also contributes over 50% of the country’s primary energy and is used for cement and steel production in substantial quantities.11

Given that about 35% of India’s population still lives without access to electricity, the approach to addressing energy demand must be multi-pronged.12 Coal, which is the mainstay source, needs to be explored as a clean, domestic technology. India’s coal-fired power plants must become more reliable, coal mining practices must be improved to be safer and reduce their environmental impact, and coal utilization must have much lower emissions, water usage, etc. We believe investments in clean coal should be encouraged in addition to clean and renewable energy sources such as solar, wind, hydro, and nuclear.


Although economic development is anchored by both urbanization and industrialization, urbanization itself is a major determinant of energy use, including energy use related to transportation. In urban areas, activities which traditionally relied on manual labor shift to relying on energy-intensive modern transportation technologies. Personal transportation remains the largest area of change in energy use and produces 40% of total national CO2 emissions.

Vehicle ownership, vehicle use, modal split (i.e., percentage of travelers using a form of transportation), and fuel economy are the major determinants of road-transportation energy use.13 As workforce specialization and employment opportunities increase during urbanization, the movement of goods, food, and people increases accordingly. Thus, urbanization increases not only the quantity of passengers and goods, but also the distances over which they are carried.

As wealth increases, people migrate to personal modes of transport thus tilting the scales in favor of fuel-powered options in cities. Careful planning of city transport needs is particularly important as urbanization gathers momentum and cities must address rising internal transport needs. These needs must be met in a manner that economizes energy and also avoids congestion and pollution (see Figure 3). Thus, transport-sector energy consumption can be reduced by promoting safe, low-cost mass transportation systems over both rail and road. This approach requires close cooperation among different government departments and the use of carefully designed systems of taxes and cross subsidies to encourage optimal transport development.

FIGURE 3. Insufficient infrastructure and high-volume traffic present urban transportation challenges.

FIGURE 3. Insufficient infrastructure and high-volume traffic present urban transportation challenges.

Automobiles can also be run with reduced emissions and lower environmental impact. The ever increasing number of vehicles and rising fuel requirements have, in recent decades, compelled research on alternative sources of transportation fuels. This has led to the emergence of many potential alternatives, such as biodiesel, methanol, ethanol, butanol, dimethyl ether, diethylether, bio-ethanol, coal-derived synthetic natural gas (SNG), Fischer–Tropsch diesels, hydrogen, straight vegetable oils (SVO), and hydro-treated vegetable oil (HVO).14 In addition to alternative fuels, electricity-based transportation is also an option. The retail prices of petrol and diesel are relatively high in India, making electric cars more economical. However, these are economical alternatives to diesel only when there is an escalation in international crude oil prices. Under such a scenario, SNG could have tremendous scope to meet the transport-sector requirements utilizing the coal available in India.

Over time, many techniques and methods have been developed and continue to be improved in terms of yield, costs, and sustainability. It is becoming increasingly important to study the feasibility of substitution of crude oil/petroleum with alternative options, which are available or can be produced locally on a substantial scale for commercial utilization. Although several alternatively derived fuels have potential, the relative high cost in comparison to petroleum presents a major obstacle in their widespread use. Thus, these options need to be further explored and production technologies must be improved to meet both quality and feasibility requirements.


Rather than as an insurmountable challenge, India should view urbanization as an opportunity to save energy, reduce emissions, and improve the quality of life of its people. To meet these goals, the following policies should be adopted:

  • Frame preferential policies and provide more financial subsidies to develop unconventional and renewable energy sources. For example, to ensure environmental protection, the government should promote the innovation, research, and development of decentralized wind power and hydropower by exploiting local resources.
  • Existing major energy resources, such as coal, should be
    developed with high-efficiency, low-emissions technologies. More than lip-service funding also must be provided.
  • To accelerate the extensive application of highly resource-efficient and environmentally sound technologies in urban areas, the government should promote technological innovation and capital flow through policy incentives and financial support, such as designing intelligent transportation systems, promoting energy-efficient vehicles for mass transport, improving road conditions, and developing proper road management systems. In addition, the government should encourage implementing financial subsidies and preferential tax policies, such as a consumer-savings-based model for mass-transit.
  • Rail transport should be overhauled and technologies should be developed to optimally utilize existing resources in developing advanced, efficient rail systems.
  • Recognizing that industrialization will continue to play a big role in urbanization, the government should fund and support energy-conserving production technologies. Also, the government should introduce energy-efficiency indicators and
    regulations to enforce and commercial energy consumption.
  • Sustainable urbanization should become a focus through devolution of power to local government so as to enable better environmental legislation that is enforceable. For example, any policy aiming to curb the impact of urbanization on energy demand must address the associated externalities of urban sprawl and automobile dependency.
  • Energy research results in major public benefits—such as economic competitiveness, national security, and environmental protection—that are not necessarily strong motivations for the private sector. Thus, the government of India should support energy research to advance development of near-zero emissions from its energy sector including solar, wind, carbon capture and storage, and low-energy nuclear reactions.

Higher quality of life can be realized in tandem with appropriate policies. As aptly put by Isher Judge Ahluwalia (Chair, Indian Council for Research on International Economic Relations):4

Deficiencies in urban planning and management have to be overcome if India’s urban environment is to meet the rising expectations of an expanding urban population and provide an urban environment consistent with rapid, inclusive, and sustainable growth.


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  2. Datta, P. (2006). Urbanization in India. Regional and sub-regional population dynamic population process in urban areas, European Population Conference, www.infostat.sk/vdc/epc2006/papers/epc2006s60134.pdf
  3. United Nations Population Fund. (2007). State of world population 2007: Unleashing the potential of urban growth, www.unfpa.org/sites/default/files/pub-pdf/695_filename_sowp2007_eng.pdf
  4. Alhuwalia, I. (2014, 14 July). Tackling the challenges of urbanization in India, www.devex.com/news/tackling-the-challenges-of-urbanization-in-india-83871
  5. The Economist. (2015, 21 February). A chance to fly, www.economist.com/news/leaders/21644145-india-has-rare-opportunity-become-worlds-most-dynamic-big-economy-chance-fly
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  8. Government of India Ministry of New and Renewable Energy. (2015). Physical progress (achievements), www.mnre.gov.in/mission-and-vision-2/achievements/
  9. Kumar, U., Singh, P., & Tiwari, A. (2014). A critical study and analysis of various aspects of micro hydro power generation with screw/Archimedean turbine in India. VSRD International Journal of Mechanical, Civil, Automobile and Production Engineering. 4(10), www.academia.edu/10587881/A_CRITICAL_STUDY_MICRO_HYDRO_POWER_ARCHIME
  10. Indian National Academy of Engineering. (2015). INAE 2007: Vision, mission, and values, inae.in/wp-content/themes/inae-theme/pdf/INAEVisionmissionandvalues.pdf report 2015
  11. World Coal Association. (2014). Coal & steel statistics, www.worldcoal.org/resources/coal-statistics/coal-steel-statistics/
  12. IEA. (2014). Energy access database, www.worldenergyoutlook.org/resources/energydevelopment/energyaccessdatabase/
  13. PBL Netherlands Environmental Assesment Agency. (2013). Trends in global CO2 emissions: 2013 report. edgar.jrc.ec.europa.eu/news_docs/pbl-2013-trends-in-global-co2-emissions-2013-report-1148.pdf
  14. Salvi, B., Subramanian, K., & Panwar, N. (2013). Alternative fuels for transportation vehicles: A technical review. Renewable and Sustainable Energy Reviews, 25, 404–419.

The authors can be reached at sitharam@civil.iisc.ernet.in and jaya@cistup.iisc.ernet.in


The content in Cornerstone does not necessarily reflect the views of the World Coal Association or its members.
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