Are Indian cities getting too big to manage?

Managing cities is one of the world’s greatest challenges. Cities are increasingly driving countries’ economies, and more and more people are migrating to them. Incredibly, around 1.5 million people will move into a city in the next week and every week thereafter. Nowhere in the world is there a better example of increased urbanization than in India. This week at the World Economic Forum on India, I will be on a panel looking at “Derisking Indian Cities”.

This is very topical, given the events of last week in New York. How many people in New York are now regretting the decision to not invest in adequate flood protection? Recent reports show that a storm surge barrier will cost around US$ 10 billion – a steal compared to the estimated cost of US$ 50 billion of rectifying the current damage.

Dealing with resilience and understanding risk in a city context is not easy and surprisingly a relatively new issue for many. At KPMG, we think resilience is such an important and misunderstood issue that we are making it the subject of our next Insight magazine.

Managing risk and resilience requires the ability to look across a city’s systems and activities in an integrated way. The recent events in New York are yet another good example of the increased interconnectivity of modern infrastructure and the unforeseen knock-on effects of a failure in part of the system.

Given that most cities lack single-point leadership and are managed in silos, integrated planning is tough to achieve. Good governance and preferably an identified, empowered city leader are part of the solution; however, I believe that every major city also should have an economic plan, and that part of this plan should deal transparently with risk and resilience.

An important part of the plan would be investment prioritization. The current traditional cost-benefit methodology for assessing investment cases is totally inadequate. It does not balance social and economic drivers. It doesn’t deal with managing risk. It doesn’t take into account the joined-up nature of city infrastructure; i.e. if you build a metro, you can unlock an urban redevelopment scheme, connect social housing to jobs, and encourage new businesses into the city.

Author: James Stewart is Chairman of Global Infrastructure practice for KPMG. He is attending the World Economic Forum on India 2012.

Image: A worker leans on the wall of a flyover in Hyderabad REUTERS/Krishnendu Halder