Arvind Panagariya pitches ‘special employment regions’ to build job-led cities

New Delhi: India should consider creating special employment regions, building cities around jobs, economist and 16th Finance Commission chairman Arvind Panagariya said on Friday.

He called for building cities akin to China's Shenzhen and Xiamen, which would be modern counterparts to existing Indian industrial cities such as Bokaro, Bhilai and Durgapur.

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"These don't have to be empty pieces of land, and these could be areas where something already exists. Simply declare them as special employment regions and then build them up," he said at an event organised by the National Council of Applied Economic Research (NCAER) here.

Such a city, he said, could have a single empowered governance office that takes decisions within its territory, including on labour rules. It could also be connected to ports and highways.

"That may be another way to solve some of the rigidities that currently exist in labour and land markets," he said.

Greater urbanisation

Panagariya advocated reforms, focusing on greater land availability and ease of construction to accelerate urbanisation in India.

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Authorities should bring idle land to the market, turning it into a highly productive asset, he said. They should auction unused public and disputed land and reduce the minimum required lot size for institutions such as universities and medical colleges.

He also favoured ending the requirement for prior approval to convert agricultural land for non-farm purposes. Building bylaws need to be liberalised, and a flexible zoning system should be promoted. Slums can be redeveloped into better living spaces, Panagariya said. Authorities need to pave the way for the conversion of census towns into statutory towns. Urban property ownership cards should be issued more widely by reconciling cadastral maps, transaction and rights records, and property tax databases.

He also said states such as Assam, Gujarat, Maharashtra, Andhra Pradesh and Karnataka have already initiated steps to make land acquisition easier, indicating that others can draw lessons from these best practices and tailor their own policies.