Ahmedabad's Informal Economy Grapples with Smart City Push: A Tale of Two Indias on the Sabarmati

Ahmedabad, Gujarat – On the glistening banks of the Sabarmati, where a meticulously developed riverfront now stands as a symbol of urban aspirations, a quieter, more profound narrative unfolds. India’s seventh-largest metropolitan area, a flagship 'Smart City' candidate, is wrestling with the complexities of modern development that often sideline its vast informal economy, creating a palpable tension between planned progress and the daily struggle for existence.

The city’s drive towards smart infrastructure, organised public spaces, and digital integration, while promising efficiency and beautification, is increasingly pushing its millions of informal workers – street vendors, construction labourers, waste pickers, and small-time service providers – to the margins. Their livelihoods, often precarious and unrecognised, are being redefined, sometimes erased, by urban plans that prioritise order over organic growth, and aesthetics over social equity. This ground report reveals a city of stark contrasts, where the gleaming facade of a 'new India' casts long shadows on the 'real India' that thrives in its bustling alleys and temporary settlements.

Key points

* The informal sector in Ahmedabad, much like across India, employs a significant portion of the urban workforce, providing essential goods and services while sustaining millions of households. * Smart City initiatives and urban redevelopment projects frequently lead to the displacement of informal businesses and residential settlements, often without adequate rehabilitation or alternative livelihood options. * A lack of formal recognition, social security, and consistent regulatory frameworks leaves informal workers vulnerable to economic shocks, police harassment, and exploitative practices. * The relentless march of beautification and organised urban spaces often clashes with the spontaneous, vibrant nature of traditional informal markets, eroding their customer base and community ties. * Inclusive urban planning that integrates the informal economy and provides social safety nets is crucial for equitable growth and preventing the deepening of urban inequalities.

Manek Chowk, an ancient market square that transforms into a bustling street food paradise by night, epitomises this conflict. Rajesh Bhai, 52, has been serving his famous pav bhaji from a cart here for over three decades. “My father taught me this trade, and I hoped to pass it on,” he says, wiping sweat from his brow. “But now, every day is uncertain. One day, we are told to move, the next, our space is shrunk. They want the city to look grand, but what about the people who make this city live?” Rajesh Bhai’s frustration is echoed by thousands like him, who find themselves caught in a bureaucratic labyrinth, struggling to secure a 'vending certificate' under the Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014, whose implementation remains patchy.

Down a narrow lane near the Sabarmati, Pankaj Kumar, 38, a daily wage labourer from Uttar Pradesh, stands with a small crowd, hoping to be picked for construction work. He lives in a makeshift shanty colony that recently received an eviction notice. “Where do we go?” he asks, his voice laden with despair. “We came here for work, to build this city. Now, the city we build has no place for us. The rents are too high in formal housing, and our temporary shelters are seen as eyesores.” His plight highlights the acute challenge faced by India’s internal migrants, the backbone of its construction and service industries, who remain largely invisible in formal urban planning.

Dr. Asha Parekh, an Urban Sociologist at Gujarat University, observes, “Smart city planning often overlooks the organic, vibrant informal economies that are the very lifeblood of Indian cities. These are not merely survival strategies; they are intricate economic ecosystems that provide affordable goods and services, foster community networks, and absorb a significant portion of the workforce that the formal sector cannot accommodate. When these are disrupted without viable alternatives, it leads to social dislocation and economic hardship.” Dr. Parekh stresses the need for a paradigm shift from viewing the informal sector as a problem to a vital part of the urban fabric.

Ms. Sonal Shah, Director of the Ahmedabad Municipal Corporation (AMC) Urban Planning Department, offers a different perspective. “Our vision for Ahmedabad is one of orderly, efficient, and clean urban spaces that enhance the quality of life for all citizens,” she states. “This involves decongesting public areas, improving infrastructure, and ensuring public safety. We are striving for orderly development, balancing citizen needs with urban efficiency. Rehabilitation and designated vending zones are always under consideration, but the process is complex, involving numerous stakeholders and ensuring equitable access.” She cites the efforts to establish dedicated hawker zones and the push for digital payments as steps towards integrating informal vendors into the mainstream economy, though ground realities suggest slow adoption and persistent challenges.

Background

Ahmedabad, historically a major textile hub and a cornerstone of Gujarat's economic prowess, has been at the forefront of India's urbanisation drive. Designated as one of the initial 20 'Smart Cities' under the Union Government's flagship Smart City Mission, Ahmedabad has received substantial investment for projects ranging from intelligent traffic management and digital services to extensive urban renewal and infrastructure development, including the iconic Sabarmati Riverfront Development. Concurrently, the informal sector has been a dominant feature of India's economy, accounting for approximately 80% of the non-agricultural workforce and contributing nearly 50% to the national GDP. In urban centres like Ahmedabad, it is estimated that over 70% of the workforce operates informally, providing a crucial safety net and employment avenue in an economy marked by job scarcity in the formal sector.

Official Data

The National Sample Survey Office (NSSO) reports indicate that roughly 90% of India's total workforce operates in the informal sector. Urban India alone accounts for a significant share, with over 60% of its workforce engaged in informal activities. Ahmedabad's informal sector alone is estimated to sustain millions, from street vendors and small kirana shop owners to auto-rickshaw drivers and domestic workers. Under the Smart City Mission, Ahmedabad has seen investments upwards of ₹2,500 crores in various projects. While programmes like the Pradhan Mantri Awas Yojana (Urban) aim to provide affordable housing, many informal settlements often fall outside eligibility criteria or face challenges in proving land titles, leading to continued vulnerability and displacement rather than rehabilitation. The Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014, intended to formalise and protect street vendors, has seen mixed implementation, with only a fraction of vendors nationwide receiving vending certificates or designated spaces.

What it means

The ongoing struggle of Ahmedabad’s informal economy underscores a broader national challenge: achieving inclusive growth amidst rapid urbanisation. The push for 'Smart Cities,' while laudable in its intent to improve urban living, often risks creating segregated cities where the benefits of development are not equitably distributed. It highlights the dilemma between creating modern, aesthetically pleasing cities and preserving the livelihoods and cultural fabric of communities that thrive in the informal sector. Ignoring or marginalising this vast segment of the economy not only exacerbates social inequalities but also risks economic instability by disrupting an essential network of goods and services that cater to the majority of the population. The future of Indian cities hinges on whether they can truly integrate all their citizens into the development narrative, rather than just a select few.

Reactions

Reactions to Ahmedabad's urban transformation are varied. Many residents, particularly from the middle and upper classes, welcome the improved infrastructure, cleaner public spaces, and enhanced civic amenities, often expressing satisfaction with the city’s modern appeal. However, civil society organisations and activists have consistently raised concerns about the displacement and marginalisation of the informal sector. Ms. Lakshmi Iyer, Coordinator for Jan Saathi NGO, which works with urban poor, asserts, “The informal sector is not a problem to be solved, but a solution for livelihoods that needs formal support and protection. Evicting vendors or demolishing settlements without a robust rehabilitation plan is a violation of human rights and pushes people further into poverty.” Local political leaders often balance these views, emphasizing the need for both progress and social welfare, but ground-level implementation often falls short of promises.

What happens next

The immediate future for Ahmedabad's informal sector remains uncertain. There is a growing call from advocacy groups for stricter enforcement of the Street Vendors Act, 2014, and for the urgent formulation of more inclusive urban policies that formally recognise and integrate informal workers. Proposals include establishing dedicated, well-equipped vending zones, providing access to social security schemes, facilitating easier access to credit, and offering skill development programmes. The challenge lies in fostering a dialogue between urban planners, municipal authorities, and informal sector representatives to co-create sustainable solutions. As Ahmedabad continues its journey towards becoming a global city, its true measure of success will be its ability to uplift all its citizens, ensuring that the march of progress does not leave behind the very people who contribute to its vibrancy and economic pulse. The tension between development and dignity is set to continue, demanding innovative and compassionate urban governance.