Urban Economics

URBAN ECONOMY

IMPORTANCE OF URBAN CENTRES  Cities are the engines of economic growth.  Provide specialized services and enhances the quality of life.  Urbanization leads social-economic changes, economic development and make the process sustainable, efficient and equitable.  Contribution to GDP(from urban sector) increased from 29% in 1950-51 to 60 % in2001.

CONTRIBUTION TO NATIONAL INCOME

National Income (Net National Product) 1800 1590.3

1600

1434.4

1400

1224.8

Rs 000' crore

1200

1094 941.9

1000 800

685.9 685.9

806.6 734.3

787.8

1994-95

1995-96

852.1

890.7

1996-97

1997-98

949

1011.2

600 400 200 0 1993-94

Current Prices

1993-94

1998-99

1999-00

ECONOMIC DEVELOPMENT AND URBANISATION • Positive relationship between urbanization and economic development . •Lead by industrialization, commercialization • Increase in productivity, employment generation and improvement in infrastructure facilities. •Employment rate has increased in private sector post reform period(5% increase). •Negative in public sectors / less than 1%.

Growth Rates of Employment in Organised Sectors 6 5.5 5

Fig in %

4.5 4

3.5 3

2.5 2 1.5 1 0.5

1991

1992

1993

Public Sector

1994

1995

Private Sector

1996

1997

1998

1999

Total Organised

Employment by Industry Public Sector(%)

Private Sector (%)

1990

1995

1999

1990

1999

1995

Agriculture ,Hunting etc.

5.49

5.39

5.15

8.76

8.94

8.71

Mining and Quarrying

9.66 10.16

9.26

0.99

1.03

0.87

Manufacturing

18.7 17.56 15.69

Electricity ,Gas & Water

8.97

9.62

0.04

0.04

0.41

11.34 11.64 11.07

68

0.53

0.71

1.63

2.19

3.08

3.23

Transport ,Storage & Communication

30.23 31.06 30.84

0.52

0.58

0.69

Finance ,Insurance ,Income ,Real Estate,etc.

11.54 12.83 12.95

2.39

2.93

3.58

Construction Whole Sale & Retail Trade

1.5

9.35

44.57 47.06 51.78

1.62

Communication ,Social & Personal Services 90.19 95.04 94.94 TOTAL

187.62 194.66 194.15

14.6 16.03 17.00 75.82 80.59 86.98

Source:Ministry of labour Economic Survey 2000-01,GOI.

Formal and Informal Sector Economy

70 60 50 40 30 20 10 0

61.4 49.5

46.5

65.5 53.8

re Ba na lo

Ch en na i

De lhi

Ah me da ba b

Mu m

Ko lka ta

28.5

ba i

Fig in Percentage

IN FO R M AL S E C T O R E M P LO Y M E N T IN C IT IE S

Source:The State of the World’s Cities 2001,UNCHS (Habitat)

Formal and Informal Sector Economy • Formal sector economy pays high salaries but sustains smaller proportion of urban labour force. • Informal sector has higher share of labour force. • Informal sectors mostly found in developing countries. Informal sector is reliable even in stagnant stage of economy. • Informal sector provides new employment opportunities . • Self help employment initiatives

ECONOMIC DEVELOPMENT AND EMPLOYMENT Share of Informal Sector to Total Workforce City

Men

(%)

Women

(%)

Total

(%)

1993

1998

1993

1998

1993

1998

Bangalore

22.5

25

80

75

32.2

34.2

Chennai

-

-

-

-

60.6

64.8

Guwahati

50

55

60

65

53

58

Indore

60.4

69.1

74

86.9

63.7

72.7

Jaipur

-

-

-

-

-

-

Ludhiana

56.6

58.3

62.5

55. 9

59

58

Mumbai

68.3

70.8

61.2

67.1

67.5

70.3

Mysore

-

-

-

-

31.1

34

Vijaywada

60

64.6

82

75.8

65.2

66

Patna

-

-

-

-

-

-

• The above data indicates informal sector in the city workforce has increased ,except Ludhiana which shows marginal decline. • Female employment ranges from 60% to 82%in 1993 & 56 % to 87% in 1998 • Employment opportuinities for males is also increased in all towns from 25% to 65%. • Need to accelerate public support schemes to promote informal sector activities to enhance productivity. • Provision for access to credit ,raw materials, markets, insurances and safetynets.

Policy Initiatives

Policy Framework & Programme Initiatives Self Help Groups • Main Focus on decentralised,participatory and demand driven approach. • Based upon 3-tier system started with 20 families’ Neighbourhood Groups (NHG), followed by 200 families’ Neighbourhood Committee (NHC) and culminating with 2000 families to Community development Society(CDS). • Mainly represented by poor women. • Encouraging local economic development by supporting establishment of saving and credit groups (Sewa Bank).

Policy Framework & Programme Initiatives Promoting Home Based Economic Activities: • Sustainable and Cost effective for small and micro enterprises in urban and rural areas. Development of Small and Micro Enterprises: • Direct intervention to create employment opportunities. (SJSRY ,SGSY,NRY,UBSP) • Focus on promoting on self employment through micro enterprises development. • Women get priority of access. • Cash subsidy is minor component and credit facility is offered through nationalized bank.

Public Private Partnerships To Stimulate Employment Opportunities • The need for involving people in development process is required for proper development. • Solid Waste management in urban area is good example in this field which includes contracted NGO’s and Community Based Organization (Rajkot,Bangalore). • Training and IEC (Information ,Education and Communication) for human resource development for educating and mobilizing the beneficiary groups. • Skilled based training for repairs and maintenance, groups of plumbing and sanitation, consumer durables ,credit groups.

lor ch e en n gu ai wa ha ti In da r JA e IP UR Lu dh ia n M a um ba M i ys or e Pa tn Vi a ja yw ad a G N P

40000 35000 30000 25000 20000 15000 10000 5000 0 Ba ng o

Fig in No.

PER CAPIT A CIT Y IN CITIES

1993

1998

Source: India :Report on urban Indicators:GOI 2001 Ministry of Urban Development and Poverty Alleviation

Productivity and Partnerships • Aiming at reduction of urban poverty • Convergence of resources from stakeholder in urban development . • Per capita product among all town has shown increased during 1993-1998. • Per capita City Product of all cities is higher than GNP(All India). • Chennai is highest followed by Mumbai and Bangalore. • Gross National Product is almost double from Rs 7902 to Rs15019 within 5 year.

Productivity and Partnerships • Percentage of unemployment has reduced. • Decline in female employment, needs priority. • Under DWACUA (Development of Women and Children in Urban Areas) women’s group have been organized for thrift and credit to generate income and employment opportunities .

Emergence of Transport Corridors • Mains tools in accelerating the process of urbanization and industrialization. • Preferred location based on requirement of markets mainly focus on peripheral areas of cities • These corridors also attract other economic activities. • Development of industrial corridors, industrial estates,SEZ’S.

Urban poverty has declined to 21% (NSSO ’992000) . Poverty in India 60 50 Fig in %

•

Poverty

40 30 20 10 0 1973-74

197-78 India

1983 Rural

1987-89

1993-94

1999-2000

Urban

Source: Planning Commission ,Economic Survey,2000-01,GOI

Employment GenerationConstruction Sector • Ranks 4th among 14 sectors in terms of backward linkages. • 3rd - Total linkage with other sectors of economy. • High income multiplier 1:5. • Huge employment generation potential(5th employment multiplier).

Private Sector Participation • Haryana joint development model . • West Bengal Housing Board- Ambuja’s Model. • Shelter delivery :relatively small .

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