What’s Happening in Small Towns?

By Anjum Altaf

In an earlier post (What is the Future of the City in South Asia?) we had mentioned that the dynamic in small towns was quite different from that in the major metropolitan centers. In this post we speculate about some of the possible differences.

An unusual approach is to work backward from the observation that while all attention is focused on the tribal areas in Pakistan, the breeding grounds of religious extremism are actually the small towns in the Punjab. Why might this be the case?

One hypothesis is that small towns in Pakistan that have declined economically have become socially more conservative with a possible link to the increase in religious extremism.

There is little doubt that the economic function of small towns has changed significantly over time. Earlier, most of them were busy market (mandi) towns serving as points of interaction between rural hinterlands and the larger commercial centers.

Dramatic improvements in transport and communications have eroded the importance of this function. Agents in rural areas can now be in direct touch with their counterparts in the big cities, and transportation is fast, cheap, and efficient enough to eliminate the need for intermediate transaction points. The net result is that the economic reach of the big city has extended much further and has absorbed many of the old economic functions of small towns.

Cell phone and Internet-based technologies are further enlarging the reach of the big city. A pointer to the future is the emergence in India of a service called ‘e-choupal’ which creates a direct marketing chain between the village and the big city by eliminating the middleman. Its advantage is claimed to be the reduction of wasteful intermediation and multiple handling, thereby lowering transaction costs. 


Similar changes in the economic functions of small towns took place in Europe over the last century. However, as a result of economic growth, these small towns developed new economic functions to replace those they had lost. In particular, as the costs of land and labor rose in the big cities, many mature industries moved out of the big cities and relocated in the less expensive small towns.

This has happened to some extent in Pakistan around Faisalabad, Gujranwala and Sialkot. But Pakistan over the past quarter-century has been characterized by industrial stagnation, and such relocation has not been widespread enough. In addition, fraudulent practices in the land market have deterred entrepreneurs from risking their investments in unfamiliar places where they might lack local contacts in the right places. On balance, small towns in Pakistan seem to have lost more economic functions than they have gained.

Advances in communication and transport that have increased the reach of the big city have also had a negative impact on the social fabric of small towns. Small town elites formerly comprised property owners who used their political power to obtain public funds for improvements in local living conditions, e.g., roads, schools, clinics, etc. But technological advances have now made it possible for these elites to continue doing business in small towns while moving to live in bigger cities where better services and opportunities are available for themselves and their children. Their interest in the social improvement of small towns has thereby diminished considerably.

In Pakistan, it seems that the vacuum created by the social withdrawal of the economically productive, property-owning, elite has been filled by the emergence of a professional religious class. Over the last quarter century or so, these new ‘elites’ have been able to channel funding for religious purposes (zakaat) into the promotion of religious education and institutions like the madrassahs. As a result, the central ideas that motivate social behavior and political action in small towns are now largely religious, not economic.

The unemployment stemming from the economic decline of small towns has been exacerbated by the increased supply of unemployable youth graduating from the madrassahs. This supply is the consequence of a below-the-radar human-capital development program that has, by now, produced graduates numbering in the millions. This bulge of unemployable youth has, in turn, increased pressures for injecting more religious content into the institutions of society to provide some kind of employment opportunity for graduates with religious qualifications. Social improvement is now sought increasingly through governance based on religion rather than through old-fashioned economic development.

While we have described a possible dynamic in economically stagnant small towns in Pakistan (which are nevertheless increasing in population size), Sunil Khilnani presents in The Idea of India a picture of prosperous small towns in India that are also marked by a culture of violence.

An aggressive small-town India was surging across parts of the country, impelled by rural economic surpluses…. built-up sprawls stretching along the national highways deep into the countryside, blurring distinctions between the village and the city…. these are the homelands of India’s ‘new middle classes’.

Sunil Khilnani describes how these emerging new cities “have become the heartlands of a vigorous caste politics” and also the “recruiting grounds for the BJP’s Hindu nationalists.

The BJP’s brand of televisual religion is attuned to the desires of these cities’ inhabitants, and the mobilization of their votes has become an essential element in the party’s strategy. L.K. Advani’s rathyatra of 1990, for example, a chariot procession that covered more than 10,000 kilometers, took in dozens of such cities… sparking off violence and riots wherever it went.

So, whether small towns are declining in Pakistan or prospering in India, their social dynamic is giving rise to a dangerous intolerance and a culture of violence. A part of the answer to the puzzle might be found in Professor Dipankar Gupta’s thesis of the ‘vanishing village’ in India. As villages fail to provide adequate employment and livelihoods, their residents move to small towns and the process of social dislocation combined with the imperatives of South Asian electoral politics gives rise to various poorly understood pathologies.

It is clear that a lot more study needs to go into understanding what is happening in small towns in South Asia today, what it means for the future, and whether a vision can be articulated for a positive contribution of small towns to the economic and social development of a prosperous and peaceful South Asia.

A part of this analysis appeared in the Daily Times, Lahore, on May 30, 2004. The author was a Visiting Fellow at the Sustainable Development Policy Institute in Islamabad at that time. Readers should link to Himal magazine’s October-November 2008 issue for a discussion of cities in South Asia today.

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Tags: Cities, Development, Fundamentalism, Religion, Small Towns, Urban