Bihar—India’s latest urban frontier

Bihar is a storied part of India. The heart of the ancient Maurya and Gupta kingdoms. The home of the Bodhi tree where Siddhartha Gautama achieved enlightenment. And more recently, the chronically underdeveloped state that struggles to employ its own people, forcing them to search for jobs across the country and even abroad.

But the state may soon represent something else: India’s urbanising frontier. As I show in a new journal article, published in Environment and Planning A: Economy and Space, Bihar is ground zero for an understudied form of urbanisation, one which contradicts conventional understandings of how countries transition into urban societies.

When we imagine the urbanisation of India, we tend to think about its bustling metros and their rapidly changing peripheries. The National Capital Region has grown from fewer than 10 million people in 1990 to almost 34 million today, voraciously swallowing up its peripheries in Haryana and Uttar Pradesh. Secondary cities like Jaipur and Pune have also grown at a fast clip, alongside southern technology and manufacturing hubs like Hyderabad and Coimbatore.

The growth of these larger Indian cities has been unfolding through a process akin to urbanisation across the world, since at least the 19^th century. A given place holds a unique advantage in producing a tradable good or service (for example, apparel, processed marble, or BPO services), for which demand is strong in regional, national, or global markets. Firms specialising in the production of that good or service emerge and expand, creating demand for labour and attracting migrants from elsewhere. As the population grows, the density and proximity of people and firms catalyse a virtuous cycle of “agglomeration”—through which productivity and prosperity are reinforced by labour market matching, sharing of infrastructure and other inputs, and learning that occurs through knowledge spillovers. These underlying dynamics have enabled Bengaluru to become a world-leading technology hub and Tiruppur to become a major center of garments manufacturing.

However, something different is happening in Bihar. The state has struggled to produce the sort of industrial hubs that generally characterise the urbanisation process. And yet many of its small towns and big villages are seeing urbanisation—their populations are large, dense, and growing, and their local economies are increasingly based on non-farm activities.

These emerging urban settlements are experiencing something I call “urbanisation from within,” defined as an in situ urbanisation process that occurs as villages grow and densify through natural population growth, and as labour markets and land uses transition away from agriculture.

But how and why does this happen? How can a state famous for its out-migration experience the growth and densification of its population? And why are people moving out of agriculture and into non-farm work despite sluggish industrialisation?

Answering these questions requires rethinking urbanisation, its relationship to migration, and its links to job creation and economic development.

At one level, the demographic story is simple: Bihar’s natural population growth outweighs the population it loses through out-migration. Take Muzaffarpur District, for example. Between 1991 and 2011, net migration led to a loss of 14 percent of the district’s population, based on my estimates from the National Sample Survey. But during approximately the same period (1990-2015), the district saw its dense agglomerations—population centres of at least 5,000 people living at average densities of 1,500 people/km²—grow by over 2 million people, according to my analysis using the Global Human Settlements database. This is possible because fertility rates in Bihar have remained higher than in other parts of the country; hence, natural rates of population growth far exceed population loss due to permanent out-migration.

But there’s more to the story. As scholars like Amrita Dutta have documented, temporary and circular out-migration from poor states like Bihar is more common than permanent out-migration. In the cutthroat labour markets of India’s major metropolitan areas, it is mostly migrants with high levels of formal education or large amounts of capital who secure a permanent foothold. Other migrants are stuck in patterns of circular mobility that require them to maintain their families and their permanent residence in their place of origin. This helps to explain why migration is not “emptying” Bihar’s countryside.

But why are agrarian places in Bihar developing non-farm economies, even as industrialisation in the state is slow? More research is required to truly understand these dynamics, but one driver is clear. As scholars Robbin Jan van Duijne, Jan Nijman and Chetan Choithani show, out-migration—especially given its nature, with most family members staying behind—increases the purchasing power of Bihari households who receive remittances, leading to demand for non-farm goods and services. In turn, new enterprises are springing up in large villages and small market towns, in places like Mansurchak, in Begusarai District, where I’ve been conducting research over the past two years. The viability of these small businesses is no doubt reinforced by the population density.

We cannot presume, however, that this is a rosy story of economic development. There is a problem with the kinds of non-farm economies that are forming in market towns like Mansurchak: they lack the dynamism of a specialised urban economy built on tradable goods and services. Part of what makes Bengaluru wealthy is that it sells technology services all over the world; as an unspecialised, retail economy, Mansurchak only sells goods locally, constraining its potential for productivity growth or high-wage jobs. In other words, this is an urban economy without some of the key elements that make urban economies opportunity-rich. Most of the new non-farm employment is informal and precarious.

To turn urbanising villages into centers of job-rich economic development, Bihar’s government will need to mobilise the entrepreneurial energy and informal skills of its return migrants to catalyse deeper economic transformation.

With the rapid expansion of infrastructure in recent decades and demographic dividend, many of the right ingredients are already in place. Yet a more concerted effort—built on utilising the skills of return migrants and propelling the growth of micro- and small enterprises that produce tradable goods—will be required to transform India’s urban frontiers into new centres of opportunity.