The Village as an Institution: Rethinking Rural Development in Punjab

Today is World Rural Development Day. It is an appropriate occasion to ask a simple question: what exactly is a village?

The answer appears obvious. We instinctively think of a village as a rural settlement surrounded by agricultural land. Yet the villages of central Punjab challenge this definition every day. Walk through any one of them and you will find tightly packed houses, narrow streets, busy markets, workshops, schools, clinics, mosques, transport operators and hundreds of small businesses. Agriculture surrounds the settlement, but it no longer defines life within it. Increasingly, these villages function much like small towns, even though they continue to be governed and understood as rural.

This contradiction matters because the way we classify places determines the way we govern them.

The distinction between urban and rural in Pakistan is not merely statistical; it is institutional. Much of it can be traced to the colonial administrative framework, where municipalities were created around district headquarters, cantonments and commercial centers that housed the machinery of government. These municipalities received organized civic services, while villages remained outside the municipal system regardless of how large or densely populated they became. Independent Pakistan inherited this framework and, for decades, continued to govern settlements according to administrative labels rather than their actual character.

The consequences have been profound. A densely populated village and a nearby town may share similar settlement patterns, but one receives organized municipal services while the other does not. The difference lies not in how people live, but in how the law classifies them.

Punjab has only recently begun to move beyond this colonial legacy. Successive local government laws have progressively narrowed the distinction between urban and rural local governments. Although elected local governments have yet to return under these legislative frameworks, an important policy shift has already begun. Through the Suthra Punjab Program, the Government of Punjab has extended organized waste management services to villages. This deserves recognition because it represents more than an administrative initiative. It is an acknowledgement that civic dignity should not depend on whether a settlement is officially described as urban or rural. Municipal services should follow people, not labels.

This evolution also reflects a broader reality that has been emerging for some time. In my earlier article, The Rise of GT Road Megalopolis, I argued that Punjab’s urbanization had long outgrown municipal boundaries. The province was increasingly functioning as a network of interconnected settlements rather than isolated cities separated by rural hinterlands. More recently, the World Bank reached a similar conclusion through a different methodology. Its work on Pakistan’s settlement patterns suggests that our official urban population significantly understates reality because many dense settlements continue to be classified as rural despite functioning as towns in almost every meaningful sense.

But recognizing that our villages are more urban than we once believed is only the beginning of the conversation. The more important question is whether we have misunderstood the village itself.

For too long, we have viewed the village primarily as an agricultural settlement. In reality, it is much more than that. A village is a social institution, where relationships of trust and cooperation are built. It is a political institution, where leadership emerges and collective decisions are made. It is a municipal institution that requires roads, sanitation, drainage and public spaces. Above all, it is an economic institution. It is the smallest place where people organize labour, accumulate capital, create enterprises and produce wealth.

This distinction becomes particularly important as Punjab’s agrarian economy undergoes profound change.

With every generation, agricultural land is divided among heirs. Farms that once sustained an entire household are repeatedly fragmented until they become too small to support a modern family. Ownership survives, but productivity declines. Across many villages one increasingly finds empty houses, ageing family homes occupied only occasionally, and younger generations seeking opportunities elsewhere. The challenge is not simply migration. It is that our agricultural economy is losing the economies of scale necessary to remain competitive.

The answer cannot be to abandon agriculture, nor can it be to continue dividing land into ever smaller holdings. We need to begin thinking differently about production.

One possible direction is to encourage professionally managed agricultural cooperatives at the village level. Individual ownership of land need not change. Instead, landowners could voluntarily pool production while retaining ownership in proportion to their holdings. Such an arrangement would make mechanization affordable, improve water efficiency, facilitate crop diversification, reduce input costs and strengthen access to markets. Productivity would finally benefit from scale without requiring families to surrender their property rights.

Agriculture, however, is only one part of the village economy. Across Punjab, entire villages have developed specialized skills over generations. Some are known for furniture, others for sports goods, embroidery, ceramics, dairy products or food processing. In my own constituency of Zafarwal, the village of Amwal has built an entire local economy around the production of Spanish-style ceramic tiles. Almost every household is connected to this industry in one form or another. Yet these small producers increasingly compete against imported products manufactured in highly mechanized factories operating at enormous scale. The challenge is not a lack of skill or entrepreneurship. It is the absence of institutions that allow small producers to compete collectively.

Instead of viewing these enterprises as isolated businesses, we should begin identifying village production clusters and organizing support systems around them. Affordable finance, common facilities, design support, testing laboratories, digital marketing, export facilitation and shared logistics can transform village industries into globally competitive clusters. The same principle that makes agricultural cooperatives viable can also strengthen rural manufacturing.

There is an important lesson here from China. While much attention is given to China’s national economic strategy, its success was also built from the bottom up. Counties, townships and villages became productive economic units, each encouraged to expand output, attract investment and create employment. National growth emerged from the cumulative success of thousands of local economies.

Pakistan’s development model remains largely the reverse. We prepare national plans and provincial plans, but rarely ask a fundamental question: what is the economic strategy of this village? What does it produce? What are its competitive advantages? What industries can it support? What investment does it require? What contribution can it make to the district economy?

Imagine if every village had an economic profile alongside its population profile. Imagine if local governments were expected not only to maintain streets and drains, but also to increase productivity, support enterprise, attract investment and expand employment. Local government would cease to be merely an administrative tier; it would become an institution for economic development.

That, in my view, is the next frontier of rural development.

For decades, we have understood development primarily as the construction of physical infrastructure. Roads, buildings and utilities remain essential, but they are not enough. The real measure of development is whether local economies become more productive, more resilient and more prosperous.

The village should therefore no longer be seen simply as a place where agriculture takes place. It should be recognized as the basic institution through which Pakistan organizes production, creates wealth and builds communities. If we can strengthen that institution through better municipal services, modern local government, agricultural cooperation and support for village industries we will do more than improve rural livelihoods. We will build a stronger national economy from the ground up.

Perhaps that is the real lesson of World Rural Development Day. The future of Pakistan will not be determined only by the growth of its great cities. It will also depend on whether we finally recognize the extraordinary economic potential that already exists within our villages and give those institutions the tools they need to flourish.