Courtesy of HCC
The $8-billion Lavasa development, a 1,500-acre new hill town planned according to the principles of new urbanism, is one bright spot on the nation's horizon.

India is beginning to face both the myriad problems of its urban centers and the many opportunities for economic and social transformation.

By 2030, a $1.2-trillion investment will be required to meet projected demand for the 700 million to 900 million sq m of commercial and residential space, says a McKinsey Global Institute report. The real estate development is equivalent to building a new Chicago every year.

In addition, 2.5 billion sq m of roads will have to be paved and 7,500 km of subways and mass transit lines are needed to meet the demands of the projected 2030 urban population of 590 million, or twice the current U.S. population, says the report. That is 20 times the capacity added in the past decade.

India’s National Urban Renewal Mission recognizes the role of the private sector and is looking at removing impediments to investment. It puts a sharp focus on integrated development of infrastructure services in its cities.

Though urbanization problems are severe, small improvements are under way. “We are finding a change with cities such as Nagpur in West India where a 24/7 water supply is being attempted by the establishment of a special purpose vehicle," says Om Prakash Mathur, a professor of urban economics and finance at the National Institute of Public Finance and Policy, New Delhi.

Another example is the 25,000-acre new township development area of Lavasa, 200 km from Mumbai. Within Lavasa, Hindustan Construction Co. Ltd., Mumbai, purchased 15,000 acres. HCC's first project, conceived according to the principles of new urbanism by architect-planner Hellmuth, Obata + Kassabaum, St. Louis, sets a new development paradigm for India.

The $8-billion new town, which spreads over seven hills, is India's first post-independence hill town. Construction, which includes a 20-sq-km constructed lake, began in 2004. The first phase near Pune is complete. The entire development is set for completion in 2020.

India's problems overshadow any bright spots, such as Lavasa, on the map. Unlike China, which has invested ahead of demand, India has under-invested in its cities. The national government has given little real power and accountability to its cities and the nation's urban-planning system has failed to address competing demands for space, say the experts.

“We are unprepared for this massive urbanization," says Shirish Sankhe, director, McKinsey & Co., Mumbai. "There is a big policy vacuum."

In India, 200-million people in 40-million households live in slums. India spent $17 per capita per year on infrastructure instead of the required $130, says Sankhe. "The main concern is [lack of] political will," he adds. "City transformation takes decades.”