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Photo: Bloomberg
Photo: Bloomberg

Why smaller cities in India witnessing faster growth?

  • Malappuram secured first rank in the world rankings with a 44.1% change between 2015 and 2020
  • The other cities in the top 10 list were three cities from China, one each from Nigeria, Oman, UAE and Vietnam

New Delhi: Leaving behind the fast changing metropolitan cities behind, three smaller cities in South India have secured a place in the list of world’s fastest-growing urban areas in the Economist Intelligence Unit (EIU) survey released on Friday.

According to the survey report, Malappuram, Kozhikode and Kollam are the only Indian cities enlisted in the top 10 of the world’s fastest-growing cities.

Malappuram secured first rank in the world rankings with a 44.1% change between 2015 and 2020, with Kozhikode ranking fourth with 34.5% change and Kollam standing at 10 with 31.1%, in the EIU survey.

This is when there is a preconceived notion that the maximum growth in India has been taking place in the Metropolitan cities such as national capital New Delhi along along with others such as Mumbai, Kolkata, Bengaluru and etc.

Economists reacting to the announcement hold that India is changing in all aspects and business and growth opportunities are also coming up in smaller cities. With overall changes and movement of people across the country, there are enhanced investments made in all cities and not only in metros.

“It is remarkable that three Indian cities are among the world’s fastest growing urban areas and that all three are in Kerala, as seen in the EIU ranking. Smaller cities playing catch-up with their larger counterparts across the country will be a major driver of growth in the coming years," said Bidisha Ganguly - Principal Economist - Confederation of Indian Industry (CII).

“Clearly, this is where the opportunity lies, and greater penetration will occur across products and services. Both government and the corporate sector must focus on delivering services to these areas," Ganguly said.

Other cities from India making to the list are Thrissur in Kerala at 13th rank, Surat in Gujarat at 26, and Tirupur in Tamil Nadu is at 30 the position.

“Good to see that the fastest growing in India are not the monster metropolises, Mumbai, Delhi, Kolkata etc. When smaller towns & cities grow it signals that a wider distribution of wealth & job opportunities is underway. We need more smaller towns to Rise!," Industrialist Anand Mahindra tweeted.

India is also witnessing rapid urbanisation. With government schemes in health, education and other areas, government is also pooling in more investments in small and medium scale enterprises. The government think tank, NITI Aayog has also been focussing on improving services in the tier 2 cities.

"Top heavy urbanisation is fundamental problem of Indian urban landscape. Not only population but other basic facilities, including health are concentrated in metros and class one towns," said Pritam Datta Fellow at The National Institute of Public Finance and Policy (NIPFP), an autonomous research institute under India's Ministry of Finance.

“When it comes to healthcare, not only corporate hospitals, but also informal health providers are highly concentrated in an around metro and class one towns. Development of infrastructure is the only solution," said Datta.

Gradually, the infrastructural development though is also picking up pace in various other cities apart from metropolitan cities. As the Tier 2 cities growing, as per estimates they have attracted more than $1 million investments in recent past.

“As alternative centres of growth, counter magnetic cities attract migrants, counters population explosion and can be the hotbed for new ideas, innovations and economic growth. Currently there are over 60 urban agglomerations in India with a population of 1 million or more against 35 in 2001. About 43 percent of the urban population of India lives in these cities. And with urban India expected to contribute nearly three-fourths of GDP by 2020, these counter magnetic cities will help kick start/ rejuvenate an economic regeneration through business models based on disruptive technologies and thus, help create thousands of jobs and propel economic growth,"said Ashwajit Singh, Managing director, IPE Global, an international development consulting organisation.

“As hotbeds for young wealth creators, these cities with a good connectivity to Major cities will also help boost both transport and economic growth . Thus, the government should consider giving priority to such cities when allocating funding for development of land, housing and infrastructure," he said.

The other cities in the top 10 list were three cities from China, one each from Nigeria, Oman, UAE and Vietnam.

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