Atanu Dey On India's Development

Pune DeCi

“Pune DeCi” is a designer city started in 2010 and completed by 2016. Just 30 kilometers outside the old city of Pune, about 100 square kilometers of land was acquired. The government of Maharashtra, the state where Pune is located, was a partner in the “Pune DeCi Development Authority” and had a stake of 20 percent in the project for which it supplied all the land which was basically non-prime land. Long term bonds raised the approximately $1 billion initial investment required for the first improvements.

The anchor tenants were Bharat Forge and Tata Motors. Assured that they will be able to draw their workers from the one-million strong new “Pune DeCi” population, they agreed to build their new modern high-capacity factories at the outskirts of the proposed city. These anchor firms were expanding their output since they anticipated that the economy would grow rapidly as new cities were being built. To build these across India, the demand for trucks and the derived demand for forgings would be high, they estimated. That pattern of increased demand for manufactured goods kept pace with the capacity building of manufacturing facilities around the new designer cities.

With the growth of the cities, demand for labor went up. The labor for construction of Pune DeCi came primarily from the agricultural sector which had become highly productive and therefore released labor in non-agricultural sectors such as services and manufacturing. The building of the city thus provided employment and the wage goods required for the labor came from the high productivity farms around. Thus even though the economy of the region was growing at a very fast rate, there was no inflation.

People started living in the new well-designed apartments in high rises located in well-planned neighborhoods littered with parks and other amenities. Pune DeCi grew rapidly as all sorts of service providers moved in, from schools to shopping arcades to banks to bakeries. Manufacturing kept pace with increased demand and thus provided sufficient incomes to the workers who were able to purchase the products of the manufacturing units. The demand for services went up. Thus demand for education provided employment to teachers, who used their incomes to buy housing and food, which provided employment to the construction industries and farmers, and so on.

It is a long story. The title of the story was “Urbanization Demand Led Economic Growth.” Another way to look at it is to consider it the equivalent of a “Marshall Plan” which the US put together at the end of the Second World War for the reconstruction of Western Europe. By aiding in the reconstruction, the US helped build capacity in Europe. But as a side-effect, it provided employment to Americans within America to supply the goods that Europe needed. And when Europe regained its feet, it was a ready market for American goods and services, and became its biggest trading partner.

India needs a Marshall Plan where the urban part helps construct cities for the rural part. In the next bit, I will explore what needs to be done for creating one.

[This is part seven of a ten-part series. Part 6 was "Land Development." Part 8 is "The Future Past." You will find the entire series and previous posts on the subject in the category "Cities and Urbanization." ]

  • http://the-sin-nitesh.livejournal.com Nitesh Dixit

    Hi Atanu,

    I have following your series on DeCi and I wanted to make an observation and collect your thoughts on the same. You offer that the reason why a Designer City developed by a private corporation would be better than any planned by the government is owing to the fact that private enterprise is better than public for a whole host of reasons. Specifically, by creating a designer city you estimate that there will be wide boulevards, open spaces, minimal congestion and so forth. As a counter-point I would like to offer-up the Hiranandani (HN) Gardens township in Powai. It is, to my knowledge, a whole private development where the land has been acquired by the HN Group and has been developed for residential and commercial (service) purposes. I have been a resident of powai for the past 7 years and I have seen the township come up from a small scale affair of so many 7 story constructions to the development today when there are several 25-30 story apartments, with the latest being built with 4-5 bedrooms only. Along with that, the HN business park has been established in the same area employing thousands of people in outsourcing and other services industries. The office of Deloitte Consulting, Lehman Brothers are in these buildings.

    Along with these offices and residences a number of auxiliary services are also provided. There are D’Mart and Haiko as supermarkets in the area, nightclubs, shopping arcades, entertainment zones – all provided within the complex. And yet the roads are narrow enough that they are already busting at the seems, even when new construction is being done at almost any available space. There are open spaces around the buildings but in comparison to the construction and the population these are minimal. I would concede that the HN, Powai is a very good place to live in within Mumbai and yet, after only 7 years of development the shortages are evident. This when the entire development was done by a private developer who had the vision to provide quality lifestyle and yet a vision that was not far-reaching enough that not sufficient broad roads were built up.

    My understanding of your idea of a DeCi is an HN complex on a much larger scale. How do you propose that the problems currently being faced by the residents of powai because of the relatively erroneous planning by the HN group be avoided? Regulations, we agree may not be the best solution. And if you propose that such townships would become unpopular once better once are built suffers from the problem that the “solution” is one of 20-30 years in making and does not help in decongesting current spaces.

    Nitesh
    PS: My comment maybe a bit dis-joint, I am not used to writing on the small window of the comment screen. Please to pardon.

  • http://constructal.blogspot.com Sameer

    Atanu, first of all thanks for a detailed series on Urbanization. It is very thought provoking and instructive. I had a few questions regarding this.

    Acquiring land for the DeCi’s will I believe be the first step in this process. In your example above the entire DeCi is built on non-prime land provide by Maharashta govt. Is this scenario realistic? If it is, would you let us know some data (e.g. acres of undeveloped non-prime land available etc.)? I have no idea whether this is realistic but if it isn’t how does one go about acquiring prime property (most of which might be agricultural land).

    With the recent horrors in Nandigram, I am highly skeptical of any land acquisition efforts by govts. (state or union) in India on behalf of industries. So in the case of DeCi’s would the land be acquired by the govt. on behalf of the anchor firms or will the anchor firms and other parties (one of which may be govt.) deal directly with the property owners. The latter would be a market based approach free of govt. intervention. I am afraid that firms might figure that getting the govt. to do the land acquisition is much cheaper and easier. How do we ensure that govt. does not acquire land at “dirt cheap” (pardon the pun) prices using archaic laws and not pay the market price to the property holders.

    I feel this question is important because even if acquiring land for the city itself is not a problem, there will be associated land acquisition required for providing access road, rail, air links and other things such as powerlines etc.

  • http://and.email error

    posts like this one is one reason i dont blog. there is no meaningful analysis or debate going on here, just wishful thinking from fantasyland.

  • suhas

    we have successful as well as not so succcessful examples of gated communities as townships(gurgaon and tatanagar).now the question is if we make these small pockets of ‘perfect things’with all facilties would it start a chain reaction of such developments in close proximities? how would these be sustianble?
    New towns in eurpoean countries started with similar basic concepts have been sucessful in decongesting the main cities but as a long terms goal not a feasible one . also these efforts should be done with inner citu revitalisation programmes.

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