Indian city is a behemoth and has been lumbering forward on a set
of staid laws laid down at, or even before, Independence. The evolution
of the Indian city remained at a slow and unhindered pace for decades,
when suddenly a little ushering in of urban reforms, a loosening
of restrictive controls, saw the hidden potential of the cities
let loose with an alacrity and speed that soon seemed unstoppable.
We now see city administrations at a loss to tap these unleashed
forces to their maximum capacities, and today we are witness to
more and more urban governance manifest itself in its absence rather
than its presence. Weak and vacillating governments abdicate responsibilities
and powers, and institutions such as the judiciary have to step
in and execute tasks and issue orders for even simple and mundane
duties like clearing the roads of cattle.
need for reforms in urban governance has been acutely felt for long
and there has been much talk of empowering local urban bodies. Though
the great cities of India manage to generate vast quantities of
wealth yet they have about them an air of decay and disorder.
plans and economic reforms go together, and the essence of the best
urban policy is to deliver municipal services efficiently without
the distraction, as one commentator has noted, "of trying to
attract specific clusters, creating global city-states, or attempting
to attract knowledge workers without establishing an environment
where businesses want to invest and expand."
economist Alfred Marshall first recognized that cities exist because
of economies of scale and the indivisibility of firms. This thesis
has been further elaborated by recent research: the availability
of workers in a metropolitan area - particularly specialized workers
in accounting, law, advertising and other technical fields - reduces
costs for businesses. Urban agglomerations come into existence because
of these economic advantages, not because governments offer special
incentives for the migration of industries or workers to particular
areas. Marshall noted that cities reduce the 'cost of moving ideas'.
Another implication is that "cities, not corporations, are
at the centre of competition. If we are to succeed in a more global
world, it is not how efficient or competitive our firms are, but
whether Toronto can compete with Barcelona, Milan, or Tokyo."
Law, Liberty and Livelihood, Parth Shah and Naveen Mandava
document the obstacles in the way of any Indian who wishes to start
a business in one of India's big cities-"Entrepreneurs can
expect to go through 11 steps to launch a business over 89 days
on an average, at a cost equal to 49 per cent of gross national
income per capita". This is contrasted with two days for Australia,
eight for Singapore and 24 for neighbouring Pakistan.
few months ago, Finance Minister P. Chidambaram stated, "the
creation of wealth is the highest pursuit of mankind". Speaking
at a function to honour the country's most respected companies,
he added, "About 15 to 20 years ago, wealth-creation was considered
a sin, even a crime
Thankfully, all that has changed. Unless
wealth is created, it cannot be distributed. Without wealth being
distributed, poverty cannot be wiped out."
arguments are valid, but not when we have the phenomenon of the
rich enjoying a lifestyle, but refusing to pay the price of the
privileges they enjoy. Today, the rich are the primary beneficiaries
of a wide range of subsidies, including those on water, electricity
and many food items, for which they can well afford to pay a full
price. The prescient Finance Minister would do well to repair these
anomalies and create a truly wealthy city, where the rich are given
fullest support in the creation of wealth, while the poor are able
to avail of opportunities to escape the clutches of poverty.
city of New York seemingly teems with millionaires today, and the
very definition of the super-rich has undergone a sea change. Having
$1 million in assets in 2001 placed you in the top 7 per cent of
families in the US, but in New York it meant you own an "average
co-op" in Manhattan outright. Stuart Becker, an adviser for
high-net-worth individuals, observes that, "In the old days,
a millionaire was someone who had a million dollars. Today its someone
who makes a million dollars a year". Bill Fuhs, president of
the New York Private Bank and trust, estimates that in 2001, there
were about 27,000 families in the U.S with a net worth of over 30
million and about 10 percent of them lived in and around New York.
And as the superrich created 'their own ecosystem', they forged
a sophisticated $488.8 billion economy in the city, driven by highly
specialized services and the fullest exploitation of opportunities.
estimating the influence of the superrich on job creation calculate
that the number of New Yorkers with more than $500,000 in adjusted
gross income was about 30,000, and that, on an average, each spends
$200,000 a year on services locally; this would imply that the top
one per cent of earners supported about 153,000 service jobs. One
hedge fund manager who spends $1million on services - a driver and
house staff, investment management and real-estate brokers, restaurants
and psychotherapists - probably sustains 25 livlihoods. Even the
public sector owes a lot to the superrich. About one per cent of
New York City tax-filers in 2000 paid enough to the city ($2.338
billion) to support the wages of roughly 50,000 government employees.
Conventional service professions also prosper. A number of jobs
that pay middle class wages in virtually any other region earn six
figure incomes in New York. New York Stock Exchange Director, Dick
Grasso, made headlines when it was revealed that his secretary at
the New York stock exchange earned $240,000 a year , while his two
drivers took home $130,000 each. But others who had incomes comparable
to Grasso's were not surprised - they were paying their professional
and domestic help similar wages.
this with those Indian cites that are flush with millionaires and
the dismal conditions that their service staff live in. All around,
we see manifestations of archaic and falsely protective laws that
end up doing more harm than good. Our cites carry the burden of
rent laws that have severely crippled the development of reasonable
and healthy real estate, of an abysmal failure to prevent irregularities
of any kind be it in 'commercialization of 'residential' areas,
an inability to counter the takeover of vast tracts of vacant government
land by people desperate for a roof over their heads, or a failure
to enforce taxes and charges for services that a citizen must rightfully
pay for the privileges of living in a modern, civilized city. While
some of this latitude appears to benefit the poor - they are allowed
to save the roofs over their heads - they actually constitute an
indirect subsidy to the rich, allowing the latter to hire domestic
staff, low-skilled services, and industrial and construction labour
at wages that exclude the possibility of a decent shelter and minimum
such practices create a city that, over time, becomes progressively
less attractive to the rich - and consequently to industry, to the
service sector, and to economic growth - leading, eventually to
the decay of the city.
is the economic spur that gives rise to the cultural and civilizational
roots of a city, but unless economics creates such a cultural and
civilizational basis, decay is inevitable. A city must not hinder
the processes of wealth creation, and the spin-offs of that wealth
must be wisely reinvested in the city, allowing it to grow and develop
into a magnet that can attract the very best from across the world.
Published in The Pioneer, January