Beyond Bangalore

India’s development needs to spread well beyond Bangalore at this point, as is evident from data and arguments presented in a series of previous pieces such as Team of Twenty One, India’s Scale Concerns: Real Estate, India’s Real Estate Concerns, and India’s Real Estate Concerns Point to Second Tier Cities.

Meanwhile, billions of dollars get funneled into India as the giants of technology (and of other industries, such as Citibank) shave their fat in the US, and move thousands of people to India.

Clearly, Bangalore is bursting in its seams, and Mumbai & Delhi are also not options, as they are also already bursting, and too expensive. Hyderabad has done an excellent job as a second tier city to capture Microsoft’s India HQ. It is well on its way to becoming a booming IT destination in its own right. Chennai is doing well in ramping up, and Kolkata, after a long slumber, has woken up, and decided to create whole new IT townships in suburbs like Rajarhat. Kolkata’s big negative is the unpredictable strike patterns. Nonetheless, Chennai and Kolkata should be the next two IT hubs to ramp up in a big way, over the next 5 years.

As Pawan Sahay points out: “The idea now, would be to go for 3rd tier cities like, Lucknow and Bhopal, which have, in fact, loads to offer. For instance, Lucknow has 22 engineering colleges (in and nearby) affiliated to the standard UPTU, and Bhopal nearly 18. We need to understand intricately as to why Mumbai-Bangalore-Delhi became the hubs. It was because they had a lot of working population, are education hubs and have the big advantage of being capitals of their states.

Intel is considering a full fledged R&D center in Lucknow. Have we ever thought why? I will suggest another city, Ahmedabad. The city is good with solid infrastructure, ambitious, money minded, educated amdavadis are looking to make it to another Bangalore. Though it does have a setback and that’s the unpredictable Hindu-Muslim feud.”

True. Lucknow, Kochi, Indore, Bhopal, Ahmedabad, Kanpur, Nagpur, Siliguri, Gauhati, Bhubaneswar, are all great options to build out. Also, for manufacturing & assembly oriented industries, the proximity of Ports is very useful, and thus, Ahmedabad, Haldia, Vizag, Mangalore are all desirable gateways.

India’s development needs to expand its scope. Not only does it need to go beyond IT & ITES and expand broadly into Manufacturing, it also needs to expand geographically out of the 3-5 major commercial hubs.

A simple math of each mega hub serving an average of 10 Million people, would indicate that with 10 of these, India can tackle 10% of the population.

Beyond that, we’re looking at the third tier cities, which, let’s say could service 5 Million people average, and if we can scale 20 of these, we have a solution for another 10%.

Atanu Dey’s RISC model says: “The total rural population of India can be covered by about 6,000 RISCs each servicing the needs of approximately 100,000 people. By providing a full complement of services, RISC creates a ‘micro-city’ which seeds the formation of a city by drawing to it the population from the surrounding areas.” An example of a RISC is Jamshedpur, Tata’s flagship steel town.

Once we have exhausted the third-tier cities, the next level of development would require looking into the RISC towns. But that’s still another 20 years away, unfortunately.