Decoding India's economic geography: Over 7,935 cities are symbol of

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  1. Srinivas_K

    Srinivas_K Senior Member Senior Member

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    Decoding India's economic geography: Over 7,935 cities are symbol of diversity of markets

    As early signs of economic renewal are seen, India's promise as a 'sone ki chidiya' - a nation with young demographics and a sizeable consumer economy - is once more capturing the interest of international and domestic companies. By our estimates, India's GDP growth could rise from 4.7 per cent in 2014 to average between 6.4 per cent and 7.7 per cent per year over the next decade from 2014 to 2025, depending on the pace of reforms and their wholehearted implementation by various states.


    Yet, capturing the opportunity needs an appreciation of India's complexity. 3,000 jatis (castes), 1,635 spoken languages, over 7,935 cities and towns dispersed across more than 640 districts cutting across 29 states and 7 union territories are symbolic of India's large scale, staggering diversity, and the heterogeneity of its MARKETS. How well are different parts of the country geared to benefit from the uptick in the national rate of INVESTMENT in infrastructure and basic services expected in the coming decade? Where should businesses target their resources? Where could the government realise the maximum economic gains from its INVESTMENTS in industry, infrastructure and social development? Understanding the likely shifts across districts (excluding Jammu & Kashmir and NE States), that are microcosms of India's economic geography, help answer these questions (See table).
    [​IMG]
    Through a geographic lens, the country's economic growth potential can be dissected across three dimensions: states, metropolitan cities and their hinterlands, and clusters.

    Four tiers of states: India's states can be grouped into four tiers based on their economic performance - very high performing, high performing, performing and low performing states. By 2025, the top two tiers comprising 12 states 2012 2025 count count Change Contributio 2025 n to GDP in will generate about 60 per cent of India's incremental GDP, and be home to 57 per cent of its consuming class (defined as households with income of more than $31,000 per year in 2012 on a PPP adjusted basis). Of these 12 states, 4 are 'very high performing'- Delhi, Chandigarh, Goa and Puducherry - with GDP per capita likely to be more than twice India's national average, and 8 are 'high performing'- Gujarat, Haryana, Maharashtra, Himachal Pradesh, Kerala, Uttarakhand, Tamil Nadu, Andhra Pradesh and Telangana (considered jointly) with GDP per capita estimated at 1.2x to 2x the national average in 2025. The standard of living in these 12 states would mirror that of high and middle income countries today. For example, the GDP per capita (PPP adjusted) of Tamil Nadu in 2025 will be similar to that of South Africa today, with a population the size of Germany's. For MARKETERSfocused on affluent households, these states form a large and high growth opportunity.

    By contrast, the next two tiers of states comprise eight 'performing states' - Karnataka, West Bengal, Madhya Pradesh, Chhattisgarh, Rajasthan, Odisha, Punjab and Jammu and Kashmir - with GDP per capita likely to be 0.7x to 1.2x times the national average; and the remaining states ('low performing states') of Uttar Pradesh, Jharkhand, Bihar and the North eastern states, whose GDP per capita would be lower than 0.7x of India's average, based on current trends. These states will be interesting to marketers looking to target the 'neo middle classes' or the aspirational segment. The five largest 'performing states' will be home to 51 million aspirational households or about 30 per cent of India's neo middle class. 69 metropolitan cities and their hinterlands: Worldwide, cities are attractive MARKETS due to their concentration of purchasing power, and India is no exception.
    By 2025, we estimate India will have 69 metropolitan cities, each with more than a million population) spread across 79 districts. These cities and their hinterlands will generate 54 per cent of India's incremental GDP from 2012 to 2025, and be home to almost half of its consuming class. Home to a total of 99 million households in 2025, this cohort will provide the same MARKET size as India's eight 'high performing' states making it a "mustplay" arena for businesses looking to establish a meaningful presence in India. Not all are metropolitan cities today: for example, the high-growth mid-tier urban centres of Aligarh and Bikaner will enter this cohort by 2025.

    49 metropolitan clusters:For companies in search of pan-India growth opportunities, adopting a cluster based strategy is worthwhile. By 2025, 49 clusters, spread over 183 districts, will account for 77 per cent of India's incremental economic growth, 72 per cent of its consuming class, and 73 per cent of its income pool.

    Each cluster consists of 4 to 5 contiguous high potential districts, with a metropolitan district as the nucleus. Each cluster has a vibrant, fast growing, local economy, with similar psychographics, and is a serviceable area.
    Some households with income between Rs 180,000 to Rs 485,000/ $11,000 to $31,000 in 2012 prices. Dollar prices are reflective of PPP conversion factor of $1=Rs 16 at 2012 prices) 125 of them are semi-urban and transition districts, with lower competitive intensity, making them ripe MARKETS to focus on. 29 of the 49 clusters are located in 'performing' and 'low-performing' states - underscoring the benefits of urban centres and their positive economic effects on surrounding areas, irrespective of a state's overall economic performance.

    The top 21 clusters alone (comprising 86 districts) will account for 44 per cent of India's consuming class households, and 47 per cent of its income pool in 2025.


    Growth here will be buoyed by connectivity. Today, 77 per cent of India's air traffic and 59 per cent of its port capacity is concentrated in these 86 districts, and in the next ten years they are expected to further benefit from massive INVESTMENTS in urban infrastructure projects such as airports, metros, waterways, and expressways. Locating INVESTMENT in such districts would provide strong momentum to the government's 'Make in India' programme.

    As businesses craft their India aspirations for the next five to ten years, selecting the right footprint, or 'where to play', will drive a disproportionate SHARE of value. Adopting a granular economic lens will be essential to winning in India's multiple, diverse, MARKETS.

    Anu Madgavkar a Senior Fellow at the McKinsey Global Institute (MGI), Sunali Rohra is an Expert co-leading McKinsey's work on urbanisation in India and both are based in Mumbai. Shishir Gupta is a Knowledge Expert with MGI Economics Research based in New Delhi.

    Decoding India's economic geography: Over 7,935 cities are symbol of diversity of markets - Page 2 - Economic Times
     
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  3. Android

    Android Regular Member

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    Re: Decoding India's economic geography: Over 7,935 cities are symbol

    These cities would need a perfect planning before they are setup or expanded,like Navi Mumbai or chandigarh to make them less chaotic,those 100smart cities that were meant to be built would intially be enought to keep the economy growing and would provide employment to million directly and indirectly.
    *As for percapita Income ,its of no use to compare it with any other country, India being a billion member family will always have a lower percapita jus like China even if it is able to surpass US gdp in nominal terms. What matter is the avg HDI index in India,which should move to High category from ''medium'' curently.
    *There have a few Reforms recently and with more in the pipe line ,like GST, that would fuel the economy to reach 8% gdp growth,even though as per IMF estimates India would grow at 6.4% in 2015. But the reforms would for sure bring in more Investment,which would push the growth forward.
     
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  4. Srinivas_K

    Srinivas_K Senior Member Senior Member

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    Re: Decoding India's economic geography: Over 7,935 cities are symbol

    Another important aspect is GOI should make sure the development is spread all over the country so that cities will not be congested. India has vast Land and resources we should make use of these in a smart way.
     
  5. Android

    Android Regular Member

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    Re: Decoding India's economic geography: Over 7,935 cities are symbol

    Exactly, and that is what 100 smart city plan was all about to have one city in each state. I belive that more focus has to be given to northern India as just two state of it (UP & Bihar) has 269 million of population which is a postive in a way that it has a big labour force and a huge middle class and cos of that fact that those 2 with state like chattisgar,Jharkhand etc are one of the most backward aswell & northeast India has a lot of resource with 80Gw of power and 60million ppl looking for employment.
    *I said north & northeast areas because souther & western India are bound to develop irespective of those citie coming in or not,but those northern areas need some push to climb the ladder.
    *And most importantly it would stop migration which itself would reduce congestion as people would have an alternative to work in their own state rather than migrating to delhi or travelling down south.
     
  6. Srinivas_K

    Srinivas_K Senior Member Senior Member

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    Re: Decoding India's economic geography: Over 7,935 cities are symbol

    DMIC Delhi Mumbai Industrial corridor is close to UP and Bihar and people of that region will benefit.

    Japan and India are working on connectivity between ASEAN and India, through India's North East. This will help the region to develop.
     
  7. Android

    Android Regular Member

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    Re: Decoding India's economic geography: Over 7,935 cities are symbol

    DMIC would just be brushing western UP ,97% of the project lies in GUJ ,RAJ, maharashtra,haryana ,1.5%in NCR-Delhi & left over 1.5% in UP and No it doesn't goes all the way upto Bihar.it is the Eastern DFC under Amritsar-kolkata Industrial corridor that would pass UP & Bihar.
    And yes ASEAN pact would help in conecting with landlocked NE,it is very much needed.And some smart cities have been planned in states neighbouring burma aswell,looking forward to them.
     
  8. Srinivas_K

    Srinivas_K Senior Member Senior Member

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    Re: Decoding India's economic geography: Over 7,935 cities are symbol

    There is a plan to develop new smart cities that will accommodate the people who work in Industrial corridor.

    Most of the human resources will be drawn from UP , Bihar. Because of low wages.
     
  9. Android

    Android Regular Member

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    Re: Decoding India's economic geography: Over 7,935 cities are symbol

    hmm,you mean free accomadation for labour or something like that,never heard of this before,could you provide me a link on this,if true then Dholera and some other smart cities would accomadate them.
    yep,this is most likely to happen,but local population would also be involved,though most the labour force would be from UP ,Bihar & other north states.
     
  10. Srinivas_K

    Srinivas_K Senior Member Senior Member

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    Re: Decoding India's economic geography: Over 7,935 cities are symbol

    It is not free accommodation, they will build environmentally friendly cities, people will move in when DMIC starts functioning.

    Smart cities vary based on budget, not all of them are same.
     
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  11. Android

    Android Regular Member

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    Re: Decoding India's economic geography: Over 7,935 cities are symbol

    Ah,i thought you were talking about free accomadation which doesn't make a sense from business POV. Well that is how all cities would develop,after basic infra is built people would move in ,thats was also the case with Navi mumbai,though Dholera and GIFT would be of a completely new level.
     
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  12. Yusuf

    Yusuf GUARDIAN Administrator

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    Re: Decoding India's economic geography: Over 7,935 cities are symbol

    Karnataka an epic fail!
     

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