Bengaluru: Economist and former deputy chairman of Planning Commission, Montek Singh Ahluwalia, Wednesday emphasised the need for rapid urbanisation, stating India needs more cities than villages and must move away from the notion of being a rural-centric nation to achieve its Viksit Bharat goal.
Speaking at Invest Karnataka 2025, Ahluwalia suggested that dividing larger states — including Karnataka — could accelerate urban development.
“While I will not speak of individual states, with the people of Karnataka having to voice their opinion on this sensitive issue, India needs more cities than villages. The romantic notion of India lives in its villages — once spoken of by Mahatma Gandhi — is gone. What we need is more cities than villages. The more efficient way towards achieving it is dividing the larger states to rapidly have more cities,” said the 81-year-old economist during a fireside chat with fellow economist Salman Anees Soz.
Citing the example of Andhra Pradesh’s bifurcation in year 2014, Ahluwalia said the necessity of a new capital city in Andhra Pradesh, following the formation of Telangana, had sparked urban development.
“With Andhra Pradesh not able to use Hyderabad as its capital, which is located in Telangana, there is an urgency to create a capital city there. The same will be the case in other larger states as well when they are divided into two or three, with each aspiring to build a capital city and see rapid urbanization,” he explained.
Ahluwalia recalled former Uttar Pradesh CM Mayawati’s proposal to split UP into Harit Pradesh, Uttar Pradesh, and Purvanchal, arguing such divisions would lead to the creation of multiple capital cities and drive economic growth. “There will be an added incentive to develop more capital cities for each of these newer states and help achieve economic growth,” he said.
However, Ahluwalia cautioned that sustaining an annual economic growth rate of 8% was crucial to realizing Viksit Bharat by 2047. He warned that economic disparities between northern and southern states could fuel regional political tensions.
“There will be a lot of politics that need to be handled when such a situation is to be managed. There will be a possibility of South India growing at 9% and North India at 7%. This may lead to regional politics growing and needs to be managed,” he said.
Reflecting on the shifting global economic landscape, Ahluwalia noted that unlike 1991, when liberalisation was a “no-brainer”, India now faces a world where the same powers that once promoted globalization are embracing economic fragmentation.
Ahluwalia said the guarantee schemes floated by the Congress government in Karnataka and freebies in other states are more of a political necessity than of economic value. “The problem is no govt is able to win politically, based on good programmes; hence, freebies have become a norm. If people believe certain basic infrastructure and requirements are not being met because of freebies, then they need to be questioned. But if people do not believe that basic infrastructure or other schemes are required, then freebies will continue,” he said.