Wed. Oct 16th, 2019

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Realise the economic potential of cities: Hundred $50 billion economies

3 min read
indian-economy

To realize the vision of a $5 trillion economy in the next five years, we need to decentralize our efforts by unlocking hundreds of $50 billion economies across the country—i.e., encouraging states to set targets and develop road maps to contribute to the national effort. The NITI Aayog has a catalyst’s role here, as another exercise in positive competitive federalism gets going.

There are two caveats to this plan:

First, a special focus should be on laggard states, or regions, so that they can catch up.

Second, all economies need to be way more inclusive and sustainably run than what we have been able to achieve till now.

Uneven Economic Development in States:

India has hitherto grown unevenly, with some regions contributing to the country’s gross domestic product (GDP) much more than others.

For instance, the gross state domestic product (GSDP) of Maharashtra is projected to be around $430 billion in the ongoing financial year. It contributes a little more than a tenth to the country’s GDP, the highest among all states. More than 85% of the western state’s GSDP is contributed by the Mumbai Metropolitan Region alone.

Challenges because of such unevenness :

Such a development model driven by deep pockets of growth is neither environmentally sustainable nor inclusive. It puts disproportionate pressure on a fast-growing region’s infrastructure and resources. Unfortunately, we are realizing that this pattern is repeating itself in other existing and emerging pockets of growth. Oxford Economics predicts that all the top 10 fastest-growing cities in the world for the next 15 years are going to be in India. Surat tops this list and is expected to add close to $100 billion to GDP during this period.

Examples:

Pathetic working conditions: Surat

Our work on the Good and Better Jobs programme took us to Surat for exploring its textile industry. Our preliminary findings reveal that its growth is anything but inclusive. While minimum wage laws are complied with on paper, ingenious ways have been devised to claw back a part of the compensation from labourers. Decent working conditions are absent. Profits are reinvested or retained on the pretext of wafer-thin margins, and workers have negligible opportunities to partake in the region’s growth.

Sustainable-development-related challenges: Bangalore

By 2035, Bengaluru city is slated to be the largest economy among Indian cities with a GDP of $283 billion. It is currently facing its worst water crisis in history, in addition to other sustainable-development-related challenges.

Low Rankings on International Indices: Chennai

It is no surprise that none of the Indian cities features in the top 80 of the Sustainable Cities Index, which ranks cities on the parameters of “people, planet, and profit”. Chennai makes a quiet entry at 88th position. Its challenges with sustainable development are not unknown.

Similarly, the Cities in Motion Index, which compares 174 cities around the world on indicators of competitiveness, sustainability, and quality of life of inhabitants, ranks Bengaluru (highest among Indian cities) at 153rd position.

Best Way Forward:

  • The inward-looking “pocket of growth” model needs to give way to the outward-looking “fountain of development” model. Rather than focusing on a few big magnets to attract and house enormous human and financial resources, we need to engage other areas with resources of different magnitudes, capable of setting off development cycles within and around the region.

For example the huge potential of the coir and areca tableware industries in Kerala, banana and other natural fiber industries in Tamil Nadu, clay product industry in Gujarat, lantana furniture industry in Uttarakhand, and the bamboo industry in Tripura and other North-Eastern states.

  • These environment-friendly industries have naturally evolved in their respective regions owing to the availability of primary raw material, and require minimal skilling, given the traditional knowledge of the local people, particularly women. The availability of decent income-generation opportunities does not only promote inclusive development but also has several positive side-effects, such as local infrastructure growth and reduction in migration.
  • To be sustainable, economic and human empowerment need to be coupled with political empowerment. Citizens need to work with governments and bureaucrats more closely to set performance targets and fix accountability in case of non-performance.
  • We have the potential to unlock hundreds of $50 billion in economies across the country. An appropriate mix of human, economic and political empowerment of citizens is the key.

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