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 Declined from 6.4 %to 6 % from 1999-2000 to 2000-01,attributed by declined in growth rate in service sector.
National Income (Net National Product)
1800 1590.3 1600 1400 1224.8 1094 941.9 685.9 685.9 806.6 734.3 787.8 852.1 890.7 949 1011.2 1434.4

Rs 000' crore

1200 1000 800 600 400 200 0 1993-94 1994-95 1995-96

1996-97

1997-98

1998-99

1999-00

Current Prices
Source :Central Statistical Organization (Economic Survey 2000-2001),GOI

1993-94

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 4.5

Fig in %

3.5 3

2.5 2 1.5 1 0.5

1991

1992

1993

1994

1995

1996

1997

1998

1999

Public Sector

Private Sector

Total Organised

Planning commission (Economic Survey 2000 01,GOI)

Employment by Industry
Public Sector(%) 1990 Agriculture ,Hunting etc. Mining and Quarrying Manufacturing Electricity ,Gas & Water Construction Whole Sale & Retail Trade 5.49 1995 5.39 1999 5.15 9.26 Private Sector (%) 1990 8.76 0.99 1999 8.94 1.03 1995 8.71 0.87

9.66 10.16

18.7 17.56 15.69 8.97 11.34 1.5 9.35 11.64 1.62 9.62 11.07 1.63

44.57 47.06 51.78 0.04 68 2.19 0.52 2.39 0.04 0.53 3.08 0.58 2.93 0.41 0.71 3.23 0.69 3.58

Transport ,Storage & Communication

Finance ,Insurance ,Income ,Real Estate,etc.

30.23 31.06 30.84 11.54 12.83 12.95 90.19 95.04 94.94 194.6 194.1 187.62 6 5

Communication ,Social & Personal Services

TOTAL

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

INFORMAL SECTOR EMPLOYMENT IN CITIES
70 60 50 40 30 20 10 0
um

61.4 49.5 28.5 53.8 46.5

65.5

Fig in Percentage

Ch en na i

ed ab ab

ba i

ta

De l

Source:The State of the Worlds Cities 2001,UNCHS (Habitat)

Ah m

Ba na lo

Ko lka

re

hi

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 Bangalore Chennai Guwahati Indore Jaipur Ludhiana Mumbai 22.5 50 60.4 56.6 68.3

1998 25 55 69.1 58.3 70.8

1993 80 60 74 62.5 61.2

1998 75 65 86.9 55. 9 67.1

1993 32.2 60.6 53 63.7 59 67.5

1998 34.2 64.8 58 72.7 58 70.3

Mysore
Vijaywada Patna

60 -

64.6 -

82 -

75.8 -

31.1
65.2 -

34
66 -

 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 NGOs 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.

PER CAPITA CITY IN CITIES

40000 35000 30000 25000 20000 15000 10000 5000 0
ch en na i gu wa ha ti In da r JA e IP UR Lu dh ia na M um ba i M ys or e Pa tn Vi a ja yw ad a G N P Ba ng o lo re

Fig in No.

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) womens 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,SEZS.

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

Fig in %

40 30 20 10 0 1973-74 197-78 India 1983 Rural 1987-89 1993-94 Urban 1999-2000

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- Ambujas Model. Shelter delivery :relatively small .

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