In the 2022 urban local body elections held after over 10 years in Tamil Nadu, the Dravida Munnetra Kazhagam (DMK) and its allies won by a sweeping majority. Chief Minister M.K. 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 rightfully celebrated, the newly elected representatives must reckon the stakes of this victory and the ongoing and imminent urban governance challenges.
A post-agrarian scenario
A significant factor that has fostered inclusive growth in the State is broad-based urbanisation that is driven not only by metropolitan cities, but also by localised economic processes. Although exact urban population numbers as of 2021 are still awaited, estimates suggest that more than half the State’s population now lives in urban areas. It is in recognition of this urban growth and corresponding land use transformations and development needs that Tamil Nadu recently decided to constitute new urban development authorities in Madurai, Coimbatore, Tiruppur and Hosur, along the lines of the Chennai Metropolitan Development Authority. The proportion of the urban population is expected to increase to 67% by 2036, according to some estimates, given that the agricultural sector is shrinking and urban agglomerations are expanding.
Agriculture, considered the backbone of the Indian economy, is now only a residual sector in Tamil Nadu. According to the Situation Assessment Survey of Agricultural Households 2019, only 26% of rural households in the State directly depend on agriculture as the 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” like Gujarat and Maharashtra, respectively. Therefore, if we conservatively assume that 50% of Tamil Nadu is urbanised, seven out of eight households rely on the non-farm sector in Tamil Nadu. In addition, the survey reveals that a majority of the households that reported agriculture as their main source of income also rely on wage labour to complement their household income. As much as 62% of farm household income comes from wage labour in Tamil Nadu, as against 43% in Gujarat and 45% in Maharashtra. This is perhaps an indicator of how much diversification has occurred even within farm households in the State.
The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) is a critical source of livelihood, particularly for landless labourers and marginal landowners who together constitute over 92% of all rural households in the State. Therefore, when a village gets designated as urban, landless labourers suffer the most. Change of designation of land from rural to urban might benefit landowners from increased land values. However, this is not the case for those who are landless. Though the main reasons for urban growth in Tamil Nadu are the absorption of villages into the nearest urban jurisdictions and the designation of existing villages as census towns, there has been some resistance from village panchayat heads against classifying their villages as urban, simply so that they can continue to avail of the benefits from MGNREGS.
Labourers displaced from rural and agrarian sectors are not being adequately absorbed by urban sectors. The main driver of employment generation in urban areas is the low-end service sector and construction. The share of those employed in construction in the total workforce has more than doubled between 2005 and 2019, according to the Periodic Labour Force Survey 2019-20; while the proportion of those in manufacturing has been stagnating around 20% for more than a decade. In comparison, Gujarat increased its share of the workforce in manufacturing to 20% in 2019 from 16% in 2004-05.
The quality of jobs available is also notable, given that 63% of all non-agricultural enterprises are informal. The pandemic has only further informalised the labour force and made it harder to access jobs. In other words, the dispossession rate from traditional occupations in the State is higher than the rate at which secure employment is generated in the urban sector. While this dispossession has weakened the caste basis 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 the MGNREGS. However, this is set to cover select corporation zones, municipalities and town panchayats, and at a mere expense of ₹100 crore, without any support from the Union government. A demand-driven, guarantee-based approach to ensure urban employment is an immediate need for urban centers, especially given the adverse effects of the pandemic on employment.
With more and more people moving to urban centres in search of employment, we are likely to witness urbanisation of poverty as well. The State has to reckon with the need to provide affordable housing, health care, subsidised food and fuel through the public distribution system, among other necessary social measures. This will entail expanding and strengthening the capacities of urban governance structures which are less participatory compared to rural Panchayati Raj institutions. An urban grievance redress mechanism must be set up.
The Union government’s role
The Union government has been encroaching policy spaces where State-level protections have been ensured for citizens. For instance, Tamil Nadu has 34 welfare boards for informal workers across multiple sectors. These are the primary mechanisms through which workers receive formal benefits including pensions, maternity benefits, compensation in the event of an accident or death, educational scholarships for children of workers, and skills training. These boards, a vital aspect of the State’s inclusive development, are now under threat from the Union government’s new labour laws, which seek to “consolidate” and “universalise” provisions for all labourers.
In addition to the ideological biases and centralising tendencies of the Union government, many national policy interventions also suffer from a rural bias (the Jal Jeevan Mission, for instance), which Tamil Nadu’s majority urban population will not benefit from. The Union government’s aggressive one-size-fits-all strategy does not do justice to State-specific development patterns.
Even as it is losing potential funds from the Union government, the State has not been raising its own resources optimally, through property taxes, for instance. Member of the Economic Advisory Council to the Chief Minister Arvind Subramanian pointed out that despite being the most urbanised State in India, Tamil Nadu’s property tax collection is only ₹2,500 crore, much lower than the earnings of less urbanised States like Maharashtra and Karnataka.
In sum, Tamil Nadu needs to take steps to keep up with the rate at which urbanisation is taking place, recalibrate its welfare architecture and strengthen urban governance, while collectively bargaining with the Union government to reclaim its rightful budget shares and policy priorities.
Kalaiyarasan A. is Research Affiliate at South Asia Institute, Harvard University, and Priti Narayan is faculty at the University of British Columbia