Cities sold on the stock exchange

In India, urban growth is so rapid that in a few years cities are springing up on agricultural areas. To convince farmers to give up their land, developers are involving them in the shareholding of their companies. This new model of urbanization is jeopardizing local democracy.

Imagine a new city suddenly springing up from sugarcane fields in the heart of India. With its architecture vaguely inspired by Singapore or the Mediterranean, this high-end city would be entirely designed, built and managed by a private company. The farmers, the original owners of the land ceded to the city, would be transformed into full partners, even shareholders (shareholders), allowing them to generate a long-term income from the profits of this lucrative real estate transaction.

This is what the “shareholder city” project proposes (shareholders city), a model that remains experimental and very much in the minority but which nevertheless represents one of the new avatars of the urbanization of contemporary India and which should therefore be observed with attention. This is precisely the theme addressed by the Indian urban planner Sai Balakrishnan (Harvard) in his latest work, Shareholder Cities.

Economic corridors, town-villages and liberalization

Sai Balakrishnan is interested in a particular geography: that of economic corridors, these giant urban tongues planned along brand new road axes with the aim of accelerating the industrialization of the country. Driven by the State and supported by private investment, five giant corridor projects are currently under study or under construction across India.

Diagram of the five major industrial corridors under development in India (Hugo Ribadeau Dumas)

The industrial zones thus created generate new needs in terms of housing and services, forcing the massive conversion of agricultural land into urban spaces. This is the originality of Sai Balakrishnan’s field of study: focusing on rural areas to understand the urban phenomenon. Both in the world of research and in terms of public investment, recently urbanized small Indian cities often remain in the shadow of giant megalopolises like Mumbai and Delhi. However, it is in these geographies that the future of India could be drawn, as Marie-Hélène Zérah, an urban studies specialist and leading figure in the so-called urban planning movement, explains: subordinate “, in which this work is included.

Industrial corridors are akin to a kind of “frontier” (p. 19) where urban entrepreneurs and agricultural society collide. On the one hand, the liberal reforms of the 1990s opened the way for companies to acquire arable land, which had previously been highly protected, as well as for the privatization of urban services, effectively allowing companies to take over entire cities. On the other hand, these newly urbanized municipalities nevertheless remain governed by rural institutions, namely the gram panchayat and the gram sabharespectively government and village assembly.

The shareholder city model: a solution to land conflicts?

From the investors’ point of view, the refusal of some owners to give up their land constitutes a major risk. To defuse conflicts, some developers have developed an alternative system: instead of receiving a gross sum for their land, the owners are offered shares in the real estate company created for the occasion. In this way, the farmers give up their agricultural activities, but they have the opportunity to receive dividends on future real estate transactions. This system would, according to its designers, make it possible to share the profits of the operation as best as possible with the indigenous populations.

Sai Balakrishnan looked at three cases of shareholder cities, all located in the west of the state of Maharashtra, along the Mumbai-Pune corridor, the very first economic corridor inaugurated in India in 2000. Based on a two-year field study, the researcher proposes to answer two questions: how is this system set up, and with what results?

Location of the three cases of shareholder cities studied (Hugo Ribadeau Dumas)

The shareholder city of Magarpatta City or the reproduction of power structures

In Magarpatta, the stronghold of the sugarcane industry, the shareholder city has been established smoothly. The wealthy landowners in this district are all from the Maratha caste, which is not the highest in terms of ritual purity but is nevertheless considered “dominant” in the state of Maharashtra (p. 47). In addition to enjoying historical access to land ownership, the Marathas have always enjoyed major influence over the state legislature thanks to their electoral weight. This has notably allowed districts with large Maratha populations, such as Magarpatta, to siphon off irrigation works financed during the Green Revolution of the 1980s (p. 46).

It was these same privileged political networks that enabled the Magarpatta developer, himself a Maratha, to obtain exceptional permission to transform very fertile sugarcane fields into luxury residences. Thanks to caste ties, the developer also managed to convince the 120 Maratha owners of the sugar cooperative to abandon their agricultural activities to go into real estate and live off their rents. These decisions were taken amicably, without even convening the village assembly, the gram sabha.

Lavasa’s Shareholder City or the Stifling of Opposition

The case of Lavasa, located in the forests of the Western Ghats mountain range, is emblematic since it is the very first experiment in privatizing urban planning in India (p. 93). Built by the Lavasa Corporation Limited, this city was created from scratch on the model of the Italian city of Portofino.

Despite opposition from activists who denounced the project as an environmental disaster, the developers obtained the consent of eighteen gram panchayatthat is, the local governments of all the surrounding villages. Dominated again by the Maratha landowners, the gram panchayat viewed favorably the promise of real estate revenues as well as the arrival of new infrastructure in this largely downgraded region (the very profitable sugar cane cannot be cultivated in these densely forested mountains).

In contrast, the Mulshi tribe, composed of landless agricultural workers, received no compensation. Considered outside the caste system by the Hindus, and therefore “impure”, the Mulshi were unable to initiate collective action or make their voices heard, mainly because they were dispersed in small communities across the forest. gram sabhathe village assembly which was supposed to be open to all, was never consulted and the promoters were therefore able to reach direct agreements with the Maratha farmers.

The shareholder city of Khed City or the partial exercise of democracy

In Khed, the developers faced more resistance from the Maratha landowners. They did not object to the idea of ​​giving up their land, but they considered the first offer of purchase by the private company Bharat Forge to be inadequate. Their collective resistance was fierce and even attracted national media attention (p. 128). The developer was forced to negotiate and the village assembly, the gram sabhawas summoned for the occasion.

It was therefore in the arena of the village assembly that the principle of transforming landowners into shareholders was validated as well as the distribution of shares between the different stakeholders, namely 15% for the landowners, 34% for the State and 51% for the Bharat Forge company.

The village assembly also provided an opportunity for the Thakkars, a landless tribal community as marginalized as the Mulshis of Lavasa, to voice their demands. The Thakkars were granted increased financial compensation, new housing, a promise of water supply and access to schools for their children.

A devalued economy and an eroded democracy?

According to Sai Balakrishnan, from an economic point of view, the shareholder city does not allow the primary objective of industrial corridors to be fulfilled, namely to stimulate job creation. Indeed, these new cities are almost entirely turned towards sterile real estate speculation targeting the wealthy classes, sometimes to the detriment of industries (p. 158). Thus, the Mumbai-Pune highway, managed by a private operator, remains to this day boycotted by trucks because of its high fares.

Moreover, this speculation also involves high risks for former farmers and new shareholders, who have no guarantee of future dividends (p. 139). In this regard, Lavasa is still considered today as a bitter real estate failure, unable to attract residents.

Above all, argues Sai Balakrishnan, the intrusion of private companies into the planning and management of cities constitutes a danger for democracy. Indeed, the shareholding promised to evicted landowners is only an illusion of inclusiveness, a substitute for social justice, since landless communities are excluded, “silenced” (” (it) silences the claims of non-property constituents “, p. 159). Thus, in Magarpatta and Lavasa, the landless lower castes were totally excluded from the process. The shareholder city then only freezes the power relations of the past, transforming agricultural privileges into urban privileges.

The imperfectly salvific role of village assemblies

The researcher, however, remains somewhat optimistic about the role of village assemblies, the gram sabhaswhich have the potential to play the role of a “countermovement” to the ultra-liberal nature of shareholder cities (p. 146). Certainly, in Magarpatta and Lavasa, the gram sabhas were avoided, either because the elite was excessively powerful, or because minorities were too thinly spread. In Khed, however, the gram sabha did indeed come together, forcing the ruling classes to articulate their proposals and providing a sounding board for dissenting voices, particularly those of the oppressed castes.

Of course, this is not a miracle recipe: the gram sabhas can sometimes be slow, manipulated or unable to produce a mutually agreeable agreement. However, they have a unique advantage, that of allowing the practice of ” takleef dena “, that is, “to give a hard time” to the dominators, leaders and promoters which, according to Sai Balakrishnan, should constitute the foundation of a healthy democracy (p. 168).

The future of shareholder cities

Sai Balakrishnan offers a critical look at shareholder cities that is welcome at a time when the privatization of Indian cities is increasingly commonplace. However, the book offers only a gateway to understanding these spaces, since it focuses on their formation, not their development. In the future, it will be interesting to study the evolution of these new urban communities as well as the choices made in terms of urban planning.

Sai Balakrishnan’s work thus initiates fascinating reflections on the future of Indian cities, increasingly likely to become real commodities or financial products: “when groups engage in the life of the city not as citizens but as shareholders, what are the issues?” (“What is at stake when groups engage with their city not as citizens but as shareholders?”, p. 157). The question remains open, and it is difficult today to anticipate what this financialization of urban planning will lead to.