Atanu Dey On India's Development

Building New Cities: A review

| 7 Comments

Rediff recently published a slide show titled “India’s soaring ambition: 5 new cities by 2015“.(Hat tip: Sudipta Chatterjee.) I am thrilled to see that some Indian leaders are thinking big. Narendrabhai Modi, the chief minister of Gujarat leads in thinking big about India’s urbanization.

I have been pondering urbanization for a while on this blog. In March/April 2007, I wrote a series of posts:

In this series on the need for the urbanization of India’s population, I have explored the idea of deliberately building new well-planned efficient beautiful livable cities. I am convinced that it is possible to do so even in the face of the obvious challenges that such a gigantic undertaking would entail. I believe that the resources that are required will be created during the process of building the cities.

Cities generate wealth. That is, they produce stuff. That wealth itself can be used to produce the cities that generate even more wealth. With only a relatively little amount of resources but with a lot of gumption, one can start a process – a self-catalytic process – which can most certainly engage the considerable talents and resources of the country. Like the vision which impelled a nation to seek political freedom, the time is high that a bold vision was outlined for the nation for economic freedom. It is time to think big because the Indian people have what it takes to make a big vision a reality. We have done it in the past – over two and a half thousand years ago with cities like Harappa and Mohenjo-daro.

First in a list of 10 posts is Ancient Cities Modern Slums from March 2007.

We have the power to imagine a different future even if our leaders don’t. Using our collective wisdom and skills, we have the power to dream big. More importantly, having dreamt the seemingly impossible dream, we have the power to make that dream a reality. We need to ask the question: if not us, who else?

The second post in the series was Designer Cities.

Strategically located outside our city is our pride and joy: the power plant. Using the best available technology and the most appropriate fuel, it generates all the electricity we use. And we use a lot of it. But the capacity planning is so good that we never have power shortages. We have power to run our factories, offices and homes. Of course, all our facilities are designed such that we make the most use of the free solar radiation. We use the latest advances in solar photovoltaics to meet our power needs to the extent it is dictated by economics.

Part 3 was titled The Best Laid Schemes:

Planning is uniquely human. Planning shapes not just human institutions and artifacts but indeed creates the future that is unknown and unknowable. Granted, the best laid schemes of mice and men, often go awry, as the poet lamented. When it comes to central planning, or planning by an all-powerful government bureaucracy, you can say that those schemes are guaranteed to go awry. But every failure of centralized government planning can be countered with numerous examples of successful private sector planning. The plain fact is that it is not planning that is a disastrous failure but rather it is centralized government planning that fails.

In part 4, I visited the issue of Financing of Designer Cities:

A city, I submit, is capital equipment just like a machine or a factory. Only difference is that it is large. And while the cost of a city is large, so is the wealth that it creates. Therefore, theoretically at least, it is possible to “buy” a city on borrowed money and then pay back the loan from the increased income that comes from the working of the city. That is the secret of creating wealth out of thin air.

In part 5, I stressed the Coordination of Factors:

The most important bit is to bring all the factors of production and the technology together simultaneously. It essentially is the solving of what is called a “coordination problem.” If you can sequence the set of operations properly, you can build using the existing factors in such a way that every stage generates the wealth that you need to move up to the next stage. It is an upward spiral. If you do need to borrow for the first stage, you figure out some innovative financing mechanism.

In part 6, I briefly looked at the issue of Land Development:

The basic model is simple. First, acquire a sufficiently large piece of cheap land. Second, make improvements on it such as adding utilities, roads and buildings. Third, get a few big commercial interests to locate themselves on this land. Finally, sell or rent subdivisions of the “improved” land to whoever wants it at such a price that you internalize the positive externalities you created by improving the land and coordinating the co-location of numerous businesses on the property. The profits made by the developer accounts for only a small fraction of the total wealth created by the process.

In part 7, I imagined a designer city called 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.

Imagine looking back from the future. I did in part 8 in the series. Future Past:

The year is 2020. For nearly 12 years, India has seen an average annual GDP growth rate of over 12 percent more than quadrupling the per capita GDP from US$500 in 2008 to $2000, placing India in the league of middle-income economies. Stark poverty is a thing of the past. In much less than a generation, the population transitioned from being 70 percent rural to being less than 20 percent rural. Agricultural labor is only 15 percent of total labor participation, down from 60 percent in 2008. Farm incomes are six times what they used to be. The $3 trillion economy shows no signs of slowing down.

In the next bit, A Forest Fire, I continued dreaming.

Transform India by building new cities designed and built using the best planning. Just by credibly committing to build these, it engaged every resource available. Recall that India was a very “young” country demographically. The people came from there. The capital came from everywhere. Businesses around the world realized that here was a market that the world had never seen. There was a mad rush to invest in India. On average, US$1 billion a day was the foreign direct investment for the last 10 years. India mopped up a significant part of the investment that used to flow into the US and China. So it was not just internal resources but global resources that flowed into India.

The series concluded with the words of a great visionary and urban planner, Daniel Burnham (1846 – 1912). Make No Little Plans:

Make no little plans. They have no magic to stir men’s blood and probably themselves will not be realized. Make big plans; aim high in hope and work, remembering that a noble, logical diagram once recorded will never die, but long after we are gone will be a living thing, asserting itself with ever-growing insistency. Remember that our sons and grandsons are going to do things that would stagger us. Let your watchword be order and your beacon beauty. Think big.

  • Pingback: Tweets that mention Atanu Dey on India's Development » Blog Archive » Building New Cities: A review -- Topsy.com

  • http://krishnabhakt.blogspot.com Karmasura

    I agree with the fact that current Indian cities are loaded and influx of immigrants from rural areas to urban areas are causing immense load on city infrastructure.

    But, don’t you think creating new urban areas, while reducing the load on current cities – which might alleviate the problem to an extent, the problems might still persist? Because how do you determine how many new cities are required for a given set of villages and by the time you make them, the population would have increased hence requiring newer cities?

    A few suggestions:

    1) Population control now is a must. Burgeoning numbers is what has created the mess in the first place. We must reach the crux of the problem.

    2) Why not make multi-storied residential complexes in the villages itself, upgrade infrastructure there and introduce new industries in the existing set of villages itself?

    3) If employment opportunities itself are a concern, we can network nearby villages with improved connectivity and rather than have new cities, organize for cluster of villages.

    4) Keeping population distributed can avoid colossal losses of lives in case of natural calamities or nuke attacks. Additionally, land saved by making housing in villages upwardly mobile can be used for agriculture to solve food shortage.

    JMTs only..

  • AG

    But, but , but…
    you are not allowed to say anything positive about narendra(bhai) modi?

    Only rahul… rahul (in the tune of “only vimal… vimal”)

    \end sarcasm

  • Sridhar

    So who is going to live in these sophisticated world class cities? Unless these futuristic cities house world class manufacturing or services industries with high paying jobs, its residents cannot afford to live and finance the investments. May be the rich from the largest ten metros in India can comfortably vacation in these western style cities if the cities were to have good tourism potential.

    The other scenario I can see is that – assuming the BPO industry is currently only half saturated and that the remaining half would go to these world class cities in the near future and in the process raising another 2-4 millions of high income professionsals.

  • Manix

    Do you have a paper on this?

  • http://vishwakarman.wordpress.com Karthik Rao-Cavale

    Atanu,

    I was going through everything you have written about cities and urbanization today, and I noticed one thing: you quote Jane Jacobs on occasion, and seem to agree with her on the fact that cities are hotbeds of innovation and benefit from agglomeration effects due to their diversity and density. But beyond that, you don’t really seem to be appreciating the existing cities, you’d rather build new ones from scratch – I’m sure you know that Jacobs was very critical of that approach. She’d much rather begin with a study of cities before making the “big plans” that you so passionately advocate.

  • http://tinyurl.com/6bymh4f Koustubh

    My first chapter lists the systemic causes behind India’s urban chaos.
    http://tinyurl.com/6bymh4f