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
1200 1094
Rs 000' crore

1011.2
941.9 949
1000 890.7
852.1
806.6 787.8
800 734.3
685.9
685.9

600

400

200

0
1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00
Current Prices 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
4
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
Employment by Industry
Public Private
Sector(%) 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 44.57 47.06 51.78
Electricity ,Gas & Water 8.97 9.35 9.62 0.04 0.04 0.41
Construction 11.34 11.64 11.07 68 0.53 0.71
Whole Sale & Retail Trade 1.5 1.62 1.63 2.19 3.08 3.23
Transport ,Storage & 30.23 31.06 30.84 0.52 0.58 0.69
Communication
Finance ,Insurance 11.54 12.83 12.95 2.39 2.93 3.58
,Income ,Real Estate,etc.

Communication ,Social & Personal Services

90.19 95.04 94.94 14.6 16.03 17.00
TOTAL 187.62 194.66 194.15 75.82 80.59 86.98

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

 Formal and Informal Sector Economy

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

70 65.5
61.4
60 53.8
49.5 46.5
50
Fig in Percentage

40
28.5
30
20
10
0

lhi

re
ta
i

na
ba

De
ba
lka

lo
en
m

na
da
Ko
Mu

Ch

Ba
me
Ah

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.
 PER CAPIT A CIT Y IN CITIES

40000
35000
30000
Fig in No.

25000
20000
15000
10000
5000
0
JA e

P
a
UR
gu ai

ti

M a
ch e

e
M i

a
ba
r

tn
ha

n
lor

or

N
ad
da
n

ia

Pa

G
en

IP

um

ys
wa
o

yw
In

dh
ng

Lu

ja
Ba

Vi
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.
 Poverty
• Urban poverty has declined to 21% (NSSO ’99-
2000) .
Poverty in India

60
50
40
Fig in %

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

India Rural Urban

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

 Employment Generation-
Construction 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 .
THANK YOU