Home / Opinion / Linking urban India to drive growth

Cities are the crucibles of wealth creation. They provide the dense networks of talent, capital and trade that help economies grow rapidly.

New estimates by the Brookings Institution on the size of metropolitan areas around the word highlight a stark fact: India still has relatively small urban economies. Just six Indian cities feature in the list of top 300 metropolitan areas — New Delhi, Mumbai, Chennai, Hyderabad, Bengaluru and Kolkata.

China has 48 cities in the list. Also, the Chinese cities are tightly packed together along the booming coastal areas while the six Indian cities are scattered around the country. Each urban area seems to have an economic life of its own, though proposed infrastructure projects such as the industrial corridors could help change the situation.

The importance of rapidly-growing metro areas is brought out by the fact that these urban areas drive national growth, the report says. As of 2013, the six Indian cities contributed approximately 9.5% of the country’s gross domestic product (GDP). In addition, all six cities have grown their GDPs faster than India in the period 2000-14.

However, while the report pegs Indian cities as doing better than the country as a whole, they fall well short of almost all the top 300 cities in the world. While the report shows Delhi as having the highest per capita GDP ($3,580) among the Indian cities, much higher than Mumbai’s $1,990, the national capital is the ninth lowest out of the 300 cities. The rest of the cities figure right at the bottom of the list.

That said, Delhi does make the top 30 cities in terms of per capita GDP and employment growth over 2013-14. But even that improvement is a shadow of the progress the city had been making prior to that period. While the city’s per capita GDP grew by 4.4% since 2013, it grew by a much faster 6.6% in the period 2000-14.

The cities themselves have different factors driving their growth. The business and finance category, for example, contributes 44% of Delhi’s GDP but only 17% of Kolkata’s GDP. Similarly, manufacturing contributes 18% of Mumbai’s GDP but only 4% of Delhi’s.

China, in contrast, has one factor that is driving growth of most of its cities—manufacturing. Manufacturing on average contributes around 35% of the GDP of each of the 48 Chinese cities that make the top 300. This kind of cohesive growth is one of the key reasons behind the proliferation of urban centres in China, and even the country’s rapid economic growth. Manufacturing contributes an average of 12.5% in each of the six Indian big cities, and it varies quite significantly across cities.

Linking the cities could not only lead to smaller, ancillary cities coming up, but also help the main metros grow faster by providing greater access to skills and expertise.

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