Urbanisation is accelerating

Urbanisation is a key meta trend underway in the country. A confluence of factors such as higher education, unremunerative agriculture, better infrastructure is driving this trend.

The urban population is growing faster than the rural population and the gap has only widened. In the last decade urban population is estimated to have grown at 3.4x the growth rate of the rural population. In the coming decade, the urban population is expected to grow at over 5x the growth rate of the rural population. Just over a third of India’s population currently lives in urban areas. In the next 15 years, almost 40% of India’s population is expected to live in urban areas. In absolute terms, while India’s rural population is projected to increase by just 34 million from 2021 to 2036, the urban population is projected to increase by 125 million. For sake of comparison, the current population of France and Italy put together is 127 million.

But the pace of urbanisation differs significantly across states. Over 70% of the population of Kerala and Goa live in Urban areas. These are the most urbanized states in the country (excluding Delhi which is a city-state). In contrast, just 12% of Bihar’s population and 15% of Assam’s population currently live in the urban areas. And even the pace of urbanisation differs significantly across states. Thus, over the next 15 years, the Urban population is projected to grow over 40% in Haryana, amongst the fastest growth in the country and well above the All-India growth of 27%. But in neighbouring Punjab, the urban population is projected to grow just over 20% - almost half the pace. Kerala, amongst the most urbanized states in the country, will see the urban population grow over 40% but neighbouring Tamil Nadu is projected to see only a 15% growth in Urban population.

The faster pace of urbanisation will involve a concomitant shift in several related economic and social variables – consumption pattern, family structure, transportation, housing, education etc. Policymakers, Investors as well as Businesses all will need to be prepared for the opportunities and challenges this meta trend will create.