India needs to create a city the size of Chicago every year for the next 10 years to meet its GDP and urbanisation goals.
In these times of Mahabharat and Ramayana being aired on TV, let me make our narrative into a story. The story goes as follows: Once upon a time, I don’t remember the date vividly because it was an everyday phenomenon, Google Maps told me it would take me 3 hours 20 minutes by car to commute back home, a distance of only 18 km. It actually suggested I walk, reaching home in 3 hours 15 minutes. I thought Google was pulling a fast one on me, so I took the car. I was right, I reached home in 4 hours.
In this story, you are a visionary who is focused on helping India grow. With a service sector-driven GDP, Indian cities play a prominent role. They accumulate, train, upscale and deploy talent. When these cities burst at their seams, like Mumbai with 21,000 people per sq. km, they also become bottlenecks. You want to upgrade existing cities. But how? We learnt about city planning and design from the western world, who have much lower population density. These principles, if not thoroughly upgraded and then applied with Japanese precision (Shinjuku station in Tokyo has 12 train lines – average delay of 18 seconds), give rise to jammed cities. India’s cities, its growth engine is in shambles. Upgrading a live city is even more complicated. Seems like we missed the bus on in-city infrastructure development.
But remember, you are a visionary, not easily dissuaded.
You think. ‘If you stop migration, cost rises, and growth stops. If you let it continue, it overburdens the city infrastructure making the standard of living fall.’ What if you divert migration to new cities? Existing cities have a better standard of living, country growth continues and even accelerates. They say India needs to create a city the size of Chicago every year for the next 10 years to meet its GDP and urbanisation goals.
You begin this venture. Alas! You land in a “chicken-egg problem”. Talent flows where jobs are, and jobs flow where talent is. “Anchor companies” are reluctant to set up shop in new cities due to lack of talent.
Talent is reluctant to shift in lack of jobs. You, my visionary friend, are almost about to give up. Then suddenly, due to COVID-19 work-from-home becomes normalised. The link between chicken and egg is broken. Talent can be away from jobs. Cities can be built.
This has the potential to significantly increase the quality of life and standard of living of our citizens. Our overburdened cities will see lesser inward migration and even outer migration. Everything from commute time, sound pollution, air pollution will see a reduction adding years to our citizens’ life while also adding quality to those years. The creation of these new cities will keep our cost base competitive. India can become to service sector what China is to manufacturing sector. No longer forced to buy overpriced real estate in cities, they will save more and invest more. It is definitely an opportunity to explore.
This is where we are now. How our story plays out in the future will be a result of critical decisions, innovations and some much-needed luck.
Where will these cities be created?
The creation of spanking new cities from the ground up catches the imagination. Being the Yudhishthira constructing an Indraprastha, if I use our Mahabharat analogy. You are a practical visionary and you know brand new cities are equally difficult to populate. People are tied to their current residence with invisible strings – family, friends, network, family doctor to your local grocer. Making them move is tough. But what if you don’t have to make them move? All you have to do is make them stay?
In just a few weeks, 300,000 people have applied to move back to Konkan from Mumbai in COVID-19 times. Equal and higher numbers are moving to other parts of the country. These places of origination, home for the migrants, are locations they do not need to be convinced to stay back. They want to. The invisible strings already exist.
These major centers of migration will be the new cities we create. If given a choice to work remotely, this is where our cities will naturally be built.
“Life is like a river, you have sometimes got to go where the flow is” Why will talent stay there?
Humans constantly try to improve their standard of living. They gravitate towards places of better opportunities and quality of life. With opportunities getting decentralised, the gravitation towards quality of life becomes more important.
The new cities first need to have basic services – water supply, electricity, sanitation, efficient urban mobility, public transport, IT connectivity and healthcare.
Then, they should have aspirational services – suitable climatic/environmental conditions, safety and security, education, affordable housing, open spaces. Also, they should have connectivity services of train station, airport and waterways.
For a certain quality of these services to exist sustainably, each city will need a minimum revenue, hence by partial extension, population. Experts suggest that a minimum number of 80,000 to 100,000 may be necessary.
How will we fund this?
This is where we will require the most amount of innovation. The 2018 Economic survey of India says we need $4.5 trillion or Rs 45 lakh crore of infrastructure investment by 2040. This is a huge amount. India’s most ambitious city construction programme – Smart Cities – could also only garner Rs 48,000 crore of allocation (1 percent of requirement by 2040), of it only Rs 24,000 crore has been approved and Rs 6,000 crore spend. If I have to paint a mental picture, that is Rs 100 crore per smart city per year – perhaps just enough to construct a sewage drain system.
Plans to raise funds at state level stare at the fact that 20 of our 28 states are already more indebted than the threshold – a few staring at bankruptcy. Public-Private-Partnership to raise funds is bogged down by the astronomical cost of land acquisitions, regulatory delays and high cost of borrowing.
Being a country, which has not completed 75 years of Independence after 200+ years of colonisation, we don’t have past savings we can spend. All we can spend is what we make now or in the future.
Singapore was resource-starved when independent. Using tax policies to attract trading, companies, talent and using hyper-efficient governance it grew to where it is. Japan had 40 percent of its industrial base destroyed after WWII. It used its discipline and efficiency to manufacture using economies of scale. India is a demand giant in an oversupplied world. Its suppliers can be its financers. The cities should participate in the boom of real estate they create, using the profits to pay back debt. India may even resort to highly innovative crowdfunding techniques. Think we can list a city on the stock market? Raise money from Indian households? Time to think out of the box.
How will we execute this?
Every major project is made a success when different parts of it fall together in a synchronised manner. This project will require success across three parameters – policies, governance and execution.
Policy: India has been moderately successful in its policy of Special Economic Zones (SEZ). It is time we experiment with its adaptation to cities. It may be through a higher depreciation benefit on purchased house (making people stay put and hence supporting economy), lower tax on construction activities in specified area of specific type (stimulating growth) or lower business tax on certain essential business (hospitals, schools) will be a major factor to support this upcoming city.
Governance: Indian policies are notorious for changing every time the central government or state government changes. Priorities change, plans change, and we seem to get stuck in a perpetual “planning” stage of projects. These cities are long term projects. They perhaps need to be insulated for their success.
Delhi metro is an example. After the badly delayed Kolkata metro, DMRC was given great autonomy to hire people, tender and control funds. Pre-emptive rulings were taken from the Supreme Court to avoid delays. That is the type of governance we will need.
Execution: Just a small example of how difficult execution can be – we have around 5000 town planners in India. We educate about 600 more every year. For our mission to succeed we need 300,000 to a million.
Process maps and timelines will define the success of this project. The process has to be as simple as possible, not any simpler. It needs to be built ground up with timelines and escalations and central monitoring. We need to parallelly solve for the essential building blocks – land acquisition, middleman-free tendering process and a strong audit to weed out corruption.
For this big a project, most probably we will get numerous things wrong – we need the CEO-style governance to course correct and not stop. Do we have a precedent? Look at Navi Mumbai. CIDCO utilised the talent pool within the private sector. Mr. Xerxes Desai, part of the Tata group and responsible for the growth of Titan was appointed as the lead. CIDCO put together a team of town planners, economists, educationists, sociologists and operational research specialist apart fromthe engineers. It chose Charles Correa as architect, Shirish Patel as Urban Planner. The UAE’s planning a city 33 times the land area of New York – led by former chief executive of Siemens AG. If we need to pull out something this big, we need a team which can star in the next Oceans 11 movie.
If there was a part in this entire write-up which perhaps needs the most detailing, it is this one
What should we avoid?
China has in the recent past been accused of creating ghost cities – cities that have all the required infrastructure in place but are heavily under occupied. Further research on this revealed that while this was true at the time, it was part of a more elaborate plan-driven city, and they were built now for future inhabitation. Looking at Pudong, Zhejiang New Town, Zhengdong New Area, Tianducheng – they are now successfully vibrant. China it seems was ahead of time, a problem I hope India faces one day. We are already late. As Yoda says, “Try Not! Do or Do Not! There is no try”
India has had its own experiences with planned city. Chandigarh, planned by a French urban planning architect in 1949, has been a resounding success. Navi Mumbai, Jamshedpur, Jamnagar, Madurai are other examples. These cities had a core raison d'être. A state without capital for Chandigarh, an overburdened city for Navi Mumbai, one of the few cities in Jharkhand at the time for Jamshedpur and so on so forth. Without a core reason, India has also partial failures too. Mahindra World City – lack of a strong reason to move from nearby Chennai, Lavasa – no job opportunities, stand out.
With the ‘work from home’ based raison d'être – existing tier 2/3 cities are ripe to be grown.
So what next?
The first thing to get the ball rolling is for companies to come together in a common forum and identify which jobs can work-from-home in their business. The next step is to identify the people who are doing this, is there a trend in terms of locals and migrants? If they are migrants, where are they migrating from?
Those places should then be collectively shortlisted for the development of a city. Amongst the shortlisted, the current state of infrastructure and political situation should determine a further few cities to start with immediately. These cities then need to be designed by our Oceans 11 team. They should keep in mind the need to socialise, building it in a way, work from home does not harm mental health. Given the revenue the city will be able to generate, the city should look for innovative financing – be it itself holding land parcels in the city to monetise and pay loans, making suppliers fund or even listing the city “sheher” on “share” market. Get the execution mechanism in place and let India have its shot to grow!Shreegopal Kabra is the managing director of RR Kabel Ltd.