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Indian Economy 2030 MGI Report

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Indian Economy 2030 MGI Report

  1. 1. <ul><li> INDIAN ECONOMY: 2030 </li></ul>
  2. 3. Estimated GDP per capita in 2005 in selected major cities - Underpinning here data of economic renaissance is a wave of global urban expansion. - In all the major economies urbanization is unfolding in a huge scale in unprecedented scale.
  3. 4. INDIA’s CURRENT URBAN ECONOMIC ISSUES: - Very low investment rate in urban infrastructure by International comparison. - Demand for any key service would increase 5-7 times in next few years. - Poor quality of life indicators: - Poor water supply - Poor public transportation system - Untreated sewages. - Massive slum population. --------------------------------------------------------------------------------------------------------------------------------- - If India continues to invest in the same rate in urban infrastructure, it will fall short of what is necessary to sustain prosperous cities. - Current annual Capital spending = $ 17 per capita 14% of china’s 4% of UK’s
  4. 5. MODEL ASSUMPTIONS : Urbanization will be central to India’s Economic future. -590 million urban population. -Cities will generate 70% of GDP by 2030. (58% in 2008) -70% of net new jobs. -85% tax revenue from cities. -Houses 40% of population. -Will witness an urban expansion at the scale and speed yet not happened anywhere in world except China. 2011- 2030 [ Annual GDP growth: 7.4% ( Average) : Oxford Economics’ projection ] - Assumed or targeted GDP rate of the model: 10%
  5. 6. Model Assumptions (Graphs):
  6. 7. REQUIRED CHANGES IN THE ECONOMY FOR THE PROJECTED MODEL: - 700 to 900 million m^2 of residential and commercial space a year. - 350 to 400 Km of metros/ year. (20 times the current) - 19,000 to 25,000 km of road lanes/ year. - $2.2 trillion over next 20 years. - 0.5% of GDP allocation to 2% annually. - Need of a next generation urban reforms. -
  7. 8. OPERATING MODEL: - Int. experience shows that it is possible to turn cities around in 1 decade. - UK, S.A, China (less than in 10 years) - India of course has to pave its own journey. --------------------------------------------------------------------------------------------------------------------------------- A five dimensional operating model: - Funding - Governance - Planning - Sector policies - Shape
  8. 9. India’s record in all these elements thus far is weak: - Funding: - Developed countries have more transparent mechanism. - S.A, 40 to 50% urban infrastructure is funded by govt. - China raise revenue from monetized land. - Governance: Most successful governance structure is that empowers local leaders but holds them accountable. - UK, directly elected mayors ( Corporate agency, Transport for agency). - S.A ( Single metropolitan govt.). - China, powerful political appointees (SPVs). - Planning: - London, cascaded system (Advance planning : 20 years in advance). - China, long range plans for effective land use. - Sector policies: Developed countries have strong city policies. - Affordable housing . - S.A provides free land for poorest income groups. - Singapore, public housing for 80% population. - Shape: - India, different portfolio and distribution of cities. - Germany, cities grown in parallel. - China, concentrated pattern of urban expansion.
  9. 10. FUNDING: - Make tier 1 and 2 near self sufficient(80- 85%). - Triple annual JNNURM (18-20% per capita per year/ 30,000 crore) - Additional support to Tier 3, 4 ($20 per capita) - Grant distribution equally. ( Municipal/ Metropolitan) - Establish ‘Ring-fenced’ mechanism.
  10. 11. GOVERNANCE: - Empower local city administration. - Delhi has quasi-statehood status. - Kolkata’s modified mayor-commissioner model. - Modernize service delivery structure. - BEST( Mumbai’s bus and electricity agency) - Lateral entry of private sector.
  11. 12. PLANNING: - Optimal allocation of space (FAR: Floor area ratio). - Can save 6 million hectares of potentially arable land. - Devolve planning function to local govt. with technical expertise. - Slum redevelopment through basket of incentives for developers. - Interest rate subsidies/ favorable tax regime. - Public housing plans.
  12. 13. Sector Policies / Planning: - Affordable housing policies. - S.A provides free land to poorest income groups. - Singapore, 80% are public housing. - Developed cities invest efforts in strong city policies. - Redevelopment of slums. - Cross subsidized/ Direct government construction. - Interest subsidy of 5-7% for 20 years/ Corporatized agencies. - Additional FAR up to 1. ( 5% commercial , 25% area reserved for affordable housing. - Second generation JNNURM/ establishment of 74 th amendment more actively.
  13. 14. SHAPE: - Shape the distributed urbanization portfolio through focused approaches to different tiers of cities. - Migration flows should be balanced. - Specialist cities. - Eg: Tourism, manufacturing. - Need 25 more satellite cities. - Tier 3, 4.
  14. 15. References: MGI publications.

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