Case Study

Cities as the Engine of Growth: Evidence from India

Arup Mitra1 and Barjor Mehta2
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Abstract: This paper estimates their contributions to total gross state domestic product in an attempt to revisit the issue of cities as the engine
of growth. Because direct evidence on this aspect is missing, this paper uses the proportion of urban workers to total workers and adjusts for
the productivity differentials between rural and urban areas to arrive at the estimate of urban (city) domestic product. Findings suggest that a
significant percentage of the value added, particularly in the nonagricultural sector, originates from the urban areas, with considerable
variations across states. In general, states with a higher share of urban state domestic product have witnessed higher growth in per capita
income and lower incidence of poverty. Estimates of cities’ contribution to the total urban domestic product have also been calculated for
those that have been listed under special urban renewal mission. Rapid urbanization, economic growth, and poverty reduction are all related,
and agglomeration economies play a major role in this context. Finally, this paper focuses on policy issues. DOI: 10.1061/(ASCE)UP.1943-
5444.0000056. © 2011 American Society of Civil Engineers.
CE Database subject headings: Urban development; India; Policies.
Author keywords: Urban; Engine of growth.

Introduction
The role of cities as the engine of growth has received considerable
attention in the urban economics literature, a detailed discussion of
which can be found in studies by Montogomery et al. (2004),
Meyer (1998), and Becker and Morrison (1999). Researchers have
already recognized the fact that labor productivity and wages are
higher in large cities than those in smaller ones (Alonso 1970; Hoch
1972). Even workers are aware of this fact; therefore, migration to
large cities are quite voluminous, which shifts the size distribution
of cities in favor of the largest ones (Segal 1976). An urban wage
increase raises welfare and income in both urban and rural regions;
income and welfare also rise with migration into the urban region
even though there are already unemployed workers in the urban
sector (Carter 1998).
One major source of higher productivity levels in large cities
stems from the fact that large cities generate higher levels of
agglomeration economies (Mills 1967; Henderson 1974). The other
important change that has been witnessed in the recent years relates
to information revolution (Brotchie et al. 1985). When production
was predominantly agricultural in preindustrial society, it occurred
outside the cities. This pattern got reversed as the industrial revo-
lution progressed—manufacturing production emerged as the ma-
jor activity occurring in inner city areas. In the postindustrial era,
this pattern again changed, with production base largely moving to
the metropolitan periphery and beyond (Brotchie et al. 1985). This
pattern of change tends to expand the city limits and adds substan-
tially to the contribution made by cities to the total production (also
1
Professor of Economics, Institute of Economic Growth, Delhi Univ.
Enclave, Delhi-110007, India (corresponding author). E-mail: arup@
iegindia.org
2
Consultant, Africa Urban Sector Unit, World Bank, Washington, DC.
E-mail: mehta@worldbank.org
Note. This manuscript was submitted on April 10, 2009; approved on
August 24, 2010; published online on May 16, 2011. Discussion period
open until November 1, 2011; separate discussions must be submitted
for individual papers. This paper is part of the Journal of Urban Planning
and Development, Vol. 137, No. 2, June 1, 2011. ©ASCE, ISSN 0733-
9488/2011/2-171–183/$25.00.
see Norman et al. 2006; Levinson and Chen 2007; Rastogi 2010).
To plan at the nation level and, more specifically, to arrive at the
estimates of urban infrastructure requirements, we need to know the
contributions of cities to total production and their interaction with
the rest of the economy. In other words, from a typical macroeco-
nomic point of view, there is sufficient reason to understand how
cities affect and are affected by various macroaggregates. But do we
have requisite information to pursue this kind of analysis?
For developing countries, a detailed data set that would essen-
tially facilitate such kind of research is often unavailable. For
example, it is common for those who work in the Indian urban sec-
tor to repeat the now worn out cliché that “cities are the engine of
India’s growth” and in the same breath continue on to lament the
serious lack of data required to actually calculate the contribution of
cities to the national economy (Mills and Becker 1986; Mitra 1994;
Mills and Mitra 1997). Recently published data indicate that all of
India’s cities together contributed 51.7% of the country’s net
domestic product during 1999–2000 (Ministry of Statistics and
Programme Implementation 2006), but in our analysis, as we will
see in the following, the estimate turns out to be much larger.
Although this paper concentrates on India, the lack of credible data
with respect to the urban contribution can also be seen in most
developing and emerging market countries, except for China
and Egypt.
This paper applies the proportion of urban workers to total and
adjusts for the productivity differentials between rural and urban
areas to arrive at the estimate of urban (city) domestic product
(GSDP) of select states in India. The hope is to be able to provide
Indian urban policy makers with reasonably accurate information,
allowing them to better advocate the importance of Indian urban
areas in the (what will always be an animated) ongoing debate
on development priorities. For instance, a research sponsored by
the Conference of United States Mayors claims that “out of 100
largest economies in the world, 42 are U.S. metro areas” and that
U.S. metros were “responsible for 86.3% of U.S. gross domestic
product in 2005, producing goods and services with a total value
of $10.7 trillion” (http://www.usmayors.org/74thWinterMeeting/
metroeconreport_January2006.pdf).

JOURNAL OF URBAN PLANNING AND DEVELOPMENT © ASCE / JUNE 2011 / 171

J. Urban Plann. Dev., 2011, 137(2): 171-183

 Urban planning in developing countries in general needs to con-
sider this aspect, so that urban areas are geared up to attract further
investment and at the same time realize the need to create a large
capacity to accommodate the increasing pressure in the city. How
the low-income households in the rural areas can also benefit in the
process of urban-centric growth so that economic growth becomes
inclusive in nature is another dimension of the problem. The link-
ages and institutions that need to be created to ensure that growth is
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pro-poor should be an endemic feature of urban planning. In India,
much emphasis has been laid on attaining sustained. If India is to
experience an annual growth rate of 5% between 2010 and 2050,
from where is it likely to come? On the basis of past experience,
which states are likely to grow relatively rapidly? What state-
specific growth rates are needed to yield a national average of
5% or so? Within the states, how much growth should come from
urban and rural areas? For the cities that would receive special
attention under the Jawaharlal Nehru National Urban Renewal
Mission, what contribution would these make to the growth that
would come from the overall urban areas. These are some of
the questions that a policy planner must think about, and this
motivates us further to pursue research in search of an answer
to some of these questions.
This paper is organized as follows: this section focuses on some
of the existing studies. The next section presents the methodology,
which is followed by a presentation of data and results at the state
and city level. The last section summarizes the main findings.
The literature has perceived considerable links between indus-
trialization and urbanization; as a result, both industry and urbani-
zation have been seen as the engine of growth. In the process
of economic development, not only industrialization is seen to
be the cause of urbanization, but also urbanization has productiv-
ity-augmenting effects on industry (Mills 1967; Henderson 1986;
Krugman 1991; Petrakos 1992; Zeiss and Lefsrud 1995; Fujita and
Thisse 2003; Kuchiki 2005). On the one hand, the major links be-
tween concentration (of population and activities) and industrial
productivity include several factors, such as complementary serv-
ices that reduce cost of operation, the declining effective price of
infrastructure (power, water supply, roads, etc.), and backward and
forward linkages among activities. An important mechanism
through which concentration is said to positively affect perfor-
mance is perceived in technical efficiency (Mitra 1999). In other
words, the benefits of agglomeration economies arising in large ur-
ban settlements tend to get manifested in firms’ technical efficiency,
which is higher than that of firms located in medium-sized and
small towns. This aspect of the agglomeration theory motivates
us to examine if regions with higher concentration of population
or industry also reveal higher technical efficiency in general.
Empirical evidence on the existence of agglomeration econo-
mies has been somewhat mixed. Moomaw (1983), Segal (1976),
and Sviekauskas (1975) observed that productivity is generally
higher in larger cities. Carlino (1979), on the other hand, noted that
population scale had a negative effect on productivity reflecting
diseconomies rather than economies of agglomeration. Henderson
(1986, 1988) observed the significance of localization economies,
which tend to peter out as a city expands, implying that there is a
limit to the benefits of agglomerating similar activities. In the con-
text of Japanese cities, Nakamura (1985) observed that light indus-
tries received more productive advantages from urbanization
economies than from localization economies, whereas the reverse
was true for heavy industries. The policy implications of these
findings are important, particularly in the context of the spatial
distribution of industry.
Fujita and Thisse (2003) argued further that agglomeration
economies lead to higher growth because innovation follows a
172 / JOURNAL OF URBAN PLANNING AND DEVELOPMENT © ASCE / JUNE 2011
J. Urban Plann. Dev., 2011, 137(2): 171-183
much faster pace with the movement of the economy from
dispersion to agglomeration. Although this seems to provide
support to the trade-off between growth and spatial equity, the addi-
tional growth spurred by agglomeration may lead to a Pareto-
dominant outcome; even firms that stay in the periphery and are not
in the core are better off than under dispersion. Romer (Working
Paper, National Bureau of Economic Research, Cambridge, MA),
emphasizing the role of market size, argued on the basis of histori-
cal experience that large markets create greater incentives to dis-
cover new ways to use resources. On the other hand, Jones
(1995) noted that the growth rates in the major Organization for
Economic Cooperation and Development (OECD) countries do
not seem to be proportional to the size of the labor force in those
countries, but are rather constant or declining. However, urbaniza-
tion is often positively correlated with per capita income; hence,
there can be negative conditional convergence effects, thereby bias-
ing findings downward. However, Futagami and Ohkusa (2003)
demonstrated an inverted U-shape relationship between market size
(measured in population size) and growth rate. This means that both
small and large economies grow sluggishly compared with
medium-sized economies.
Economic growth, even when it is accompanied by a high de-
gree of mechanization, directly (or at least indirectly) generates em-
ployment opportunities. The complementary relationship among
activities and backward and forward linkages among sectors oper-
ate to allow the growth effect in one sector to spill over to the rest in
a particular region (Papola 1981). As a result, although migration to
regions with higher growth are possibly faster than regions with
relatively lower growth, unemployment rates are expected to vary
inversely with concentration. All these discussions bring out the
possibilities of strong positive associations among urbanization,
economic growth, and employment generation, essentially recast-
ing the thesis of cities as the engine of growth.
Also, with a large population base in the area in which firms are
located, it is less likely that a glut in the commodity market or a
high labor turn-over cost would occur. As Mills and Hamilton
(1994) point out, labor requirements in a particular industry are
subject to random uncorrelated, seasonal, or cyclical fluctuations.
Hence, an urban area with more industries generates a higher level
of employment than what can be achieved with industries spread
out in separate urban areas. Higher levels of urbanization mean a
large overall labor market and a large service sector interacting with
manufacturing. Furthermore, it has been argued that average pro-
ductivity increases with the size of the labor market, as the average
match between the skill characteristics of workers and the job re-
quirements of firms improves with an increase in the size of the
labor market (Kim 1991). Also, specialization of labor is positively
related to the size of the labor market, as workers in large labor
markets tend to invest in more specialized human capital, which
results in productivity growth (Kim 1989), although higher produc-
tivity levels in larger urban settlements could also be an outcome of
higher technology levels (Segal 1976).
Concentration of economic activities occurs mainly to reap
the advantages of externalities arising from indivisibilities in the
production process, such as interdependence of industries in input-
output linkages, ancillarization, marketing of products, and avail-
ability of infrastructural facilities. The development pole theory
explains how other groups of industries tend to form clusters
around a core of industries, which have a high capacity to transmit
growth impulses through both backward and forward linkages.
Such clusters are said to form industrial complexes, the advantages
of which are as follows (see Hermansen 1972): (1) substantial
economies of investment expenditure—the investment for the
whole complex is less than the sum of investment for each
 enterprise planned and located in isolation; (2) efficient production
because of the advantages of specialization, economies of large-
scale operation, and organization of common managerial and infra-
structural facilities; (3) possibility of jointly exploiting the natural
and raw material resources of the location; and (4) opportunities for
close contact, rapid diffusion of technological innovations, and
rapid overall development of the economy.
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Methodology and Assumptions
In its efforts to develop and roll out the third version of a global
urban indicators database, the United Nations Human Settlements
Programme (UN-HABITAT) has published guidelines for the col-
lection of urban sector data. Under the guidelines, the city product
is calculated by taking the national product in each industry sector
[standard industrial trade classification (SITC)] and then multiply-
ing it by differential wage rates at the city level for each industry
sector. This method is used when the employment by industry sec-
tor is known.
The UN-HABITAT method overcomes a major obstacle faced
by the urban sector—the lack of appropriate city or urban-level
data. Generally, published statistics by developing countries does
include data on employment by sector. In many cases, data on this
are disaggregated by rural and urban space as well. Unfortunately,
it is rare to find such data further disaggregated for individual
cities.
This paper adapts the UN-HABITAT guidelines to data avail-
ability on the urban sector in India. We use a two-stage approach
to estimate the share of cities in the Indian economy. In the first
stage, the contribution of India’s urban areas to total domestic prod-
uct (TDP) is calculated on the basis of the following equation:
urban domestic product ðUDPÞ
¼ TDP × ðurban workers=total workersÞ
× ðurban wage=all-areas wageÞ
The TDP can represent either the national gross domestic prod-
uct (GDP) or a state’s domestic product (SDP). Although the
assumption used here is plausible, it does not allow for differences
in technique of production. Some of the activities, particularly in
the urban sector, may be highly capital intensive compared with the
activities conducted in the rural areas because the urban areas have
greater access to communication channels, which are crucial for
dissemination of technology. However, because of paucity of data,
we could not capture the differences in productivity across regions,
which may originate from the differences in technology used.
In the second stage, the contribution of individual cities is
derived by using the following equation:
city domestic product ¼ UDP × ðcity workers=total workersÞ
× ðcity wage=urban wageÞ
An important assumption made in our estimation is that the con-
tribution of urban areas to total domestic product is directly propor-
tional to the employment share of the urban areas. There is a
difference in productivity between the urban and rural areas; hence,
wages are also expected to vary in response to productivity.
We address this by multiplying the ratio of urban wages to
state-specific wages.
We also assume that employment is demand driven; hence, no
distinction is made between those who are residually absorbed in
a particular activity and those who are productively engaged. In
addition, productivity differentials that may exist among workers
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J. Urban Plann. Dev., 2011, 137(2): 171-183
in a particular activity in a given region because of differences
in skill and other human capital–specific variables could not be
considered. These assumptions, which had to be made in the
absence of accurate data, are somewhat unrealistic because in de-
veloping countries in general, a sizeable proportion of the workers
are residually absorbed in low-productivity activities. However,
residual employment exists both in the rural and urban areas
although its extent and intensity is much stronger in the rural than
in the urban areas [A. Mitra, Working Paper, International Labour
Organisation (ILO), New Delhi]. Hence, the inability to make a
distinction between supply-driven and demand-induced employ-
ment may lead to underestimation of the contribution of the urban
areas’ share in total economic growth. Notwithstanding this distor-
tion, the empirical estimates, as we will see in the following
sections, are still able to work out an overwhelmingly higher
contribution of urban areas—the point that this paper tries to
highlight.
The other assumption that has been used in the subsequent
analysis is the equality of earnings of the self-employed and the
casual workers. Because the former includes professionals, this
may be treated as a gross underestimation of the earnings of the
self-employed workers. However, in the Indian context, a predomi-
nantly large percentage of the self-employed workers are engaged
in the lower rungs of the activities, often depicting greater vulner-
ability than even what the casual workers experience (A. Mitra,
Working Paper, ILO, New Delhi). Wage data from the National
Sample Survey (NSS) are given daily. Because cross-sectional
information is used in the exercise, there was no need to adjust
for price changes overtime. However, one may argue that cross-
sectional price variations may exist at a particular point in time.
But because of the unavailability of price index for the urban areas
as a whole across states, these differences could not be adjusted.
Data Sources and Limitations
The Central Statistical Organization of India (CSO) provides infor-
mation on GDP, SDP, and their sectoral distribution. To calculate
the total number of workers and their rural-urban distribution, the
National Sample Survey Organization’s (NSSO) 61st round survey
(2004–2005) results on work participation rates (usual principal-
and-subsidiary status) have been used along with the 2001 census
population estimates. The assumption is that the work participation
rates between 2001 and 2004–2005 have remained the same.
Although the NSS 55th round survey of 1999–2000 is closer to
the population census of year 2001 and the work participation rates
actually should have been taken from the 55th round, the estimates
on work participation rates from this round actually seem less plau-
sible, particularly when they are compared with the results from the
61st (2004–2005) and the 50th (1993–1994) rounds. The work par-
ticipation rates are not expected to change drastically unless large
time spans are considered or the survey year happens to be an
abnormal year. As 2004–2005 figures are more stable in relation
to the figures for 1993–1994, 1999–2000 estimates have not been
used in the exercise.
On the other hand, the census estimates on workers are not con-
sidered primarily because they have not been released separately
for different activity categories. Even at the aggregate level, the
census figures usually underestimate the number of workers rela-
tive to the NSSO. The NSSO estimates the number of workers on
the basis of a more rigorous conceptual framework and uses a
clearer definition of work and workers.
With regard to the data on wages, the NSS 61st round survey
provides the wages of casual workers and regular-wage workers
 across states in both rural and urban areas. However, no informa-
tion is available on the earnings of self-employed workers. The
wage rate of casual workers is assumed for self-employed workers,
which may not be unrealistic in the Indian context, keeping in view
the vulnerability of both groups. However, the productivity differ-
entials and per capita SDP differentials reflect existing, distorted
prices and may not be sustained in a perfectly competitive world.
Alternately, the ratio of average monthly consumption expendi-
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ture in the urban areas to that of all areas is taken to capture the
variations in wages across rural and urban areas. The information
on monthly per capita consumption expenditure is taken from the
NSS 61st round survey on employment-unemployment. The mid-
point of the consumption expenditure (MPCE) class is taken as the
average consumption expenditure of the population belonging to a
particular class interval. Given the distribution of population across
different size classes, the average MPCE has been calculated
separately for rural and urban areas.
At the city level, however, no information is available on wages
even at the aggregate level, let alone information on individual ac-
tivities. Hence, the ratio of city-specific work participation rate
(WPR) to the corresponding state (urban) WPR (only the main
workers according to the census definition are considered because
the marginal workers are not gainfully employed) from the popu-
lation census data and the proportion of the percentage of regular-
wage workers in the city to that in the urban areas of the state from
the NSS data are taken alternately to reflect the wage ratio. When-
ever city-specific information is not available on regular-wage
employment, the city class-specific information is assumed. Three
classes of cities considered in the NSS 61st round survey are as
follows: Class 1—cities with a population of 1 million and above;
Class 2—towns with a population of 50,000 to less than 1 million;
and Class 3—towns with a population of less than 50,000.
The rationale is that if a city has better work opportunities
relative to the state average, the work participation rate is also likely
to be higher in the city relative to other smaller urban settlements.
Several studies have noted that large cities are more productive and
offer more employment opportunities, and the work participation
rate is higher in large cities than in small cities (Mills and Becker
1986; Mohan 1993; Mills and Mitra 1997). Higher levels of total
factor productivity growth in large cities make this possible. Hence,
the availability of productive jobs in large cities raise the work
participation rate more compared with small and stagnant cities.
Likewise, assuming that regular-wage employment is the most pre-
ferred category compared with self-employment and casual-wage
employment, the ratio of the city-specific rate of regular-wage
employment to that of the state (urban) is assumed to indicate wage
differentials.
Empirical Results
Table 1 shows the amount of GDP originating from urban areas at
the national level in nine preidentified sectors of the economy.
Almost 70% of the GDP is generated in urban areas as per the first
estimate using the ratio of urban wage to all-areas wage. On the
other hand, in the second estimate using the ratio of urban MPCE
Table 1. Percentage of GDP Originating from Urban Areas in India (2000–2001): Sectorwise Estimation
Agriculture, forestry,
fishing Mining Manufacturing Utilities Construction
5.1 45.915 74.075 81.09 51.02
Note: The percentage of GDP from activities such as finance, real estate ownership, and business services is overestimated because the same wage rate is
assumed to prevail across different sectors and activities.
174 / JOURNAL OF URBAN PLANNING AND DEVELOPMENT © ASCE / JUNE 2011
J. Urban Plann. Dev., 2011, 137(2): 171-183
to all-areas average MPCE, the figure is approximately 59%. In
nonagriculture activities, the share of urban India is 92 and 76%
as per Estimates 1 and 2, respectively. Urban India’s share of
the GDP can be attributed to the value created by the manufacturing
and services sectors. Table 1 presents the mean values of Esti-
mates 1 and 2.
Table 2 presents the proportion of urban areas GDP as part of
state GDP (which is also called SDP) across primary, secondary,
and tertiary sectors. The table presents the mean values of two
different estimates of state GDP or SDP. The urban areas share
of SDP is less than 50% in 17 states.
Delhi is the most urban state, with 96% of its GDP coming from
the urban areas. The contribution of urban areas in rapidly indus-
trializing states such as Gujarat, Maharashtra, Chattisgarh, and
Karnataka is almost 85% of the state’s GDP. The contribution
of nonagricultural activities to the SDP averages to 93%. Big
southern states such as Andhra Pradesh and Tamil Nadu also have
a significant urban contribution to their GDP—58 and 75%, respec-
tively. Himachal Pradesh is the least urbanized state, with only 19%
of its GDP coming from urban areas. In general, India’s urban areas
contributed an estimated 65% of the total GDP in 2000–2001.
Table 3 takes the two estimates of “urban share of SDP”
(USDP1 and USDP2) and uses their mean values to calculate
per capita income in the urban areas (defined as the urban share
of SDP divided by the state’s urban population). Given the overall
per capita income across states, the calculation of urban state
domestic product shows that the rural shares are pretty low. This
is understandable because most of the high-productivity nonagri-
cultural activities are located in the urban areas. USDP1 and
USDP2 are also used to calculate the value added with the creation
of every hundred jobs in the urban areas. In the basis of the estimate
of urban labor productivity, i.e., value added per labor in the urban
areas, the value added per 100 jobs has been calculated.
Among the major states, Maharashtra, Gujarat, and Chattisgarh
reveal relatively high value addition in this respect. It is clear in
these cases that industrialization is a dominant factor that contrib-
utes to the creation of high value-added jobs by enhancing produc-
tivity. Delhi, Chandigarh (Territory of the Union), and Pondicherry
(Territory of the Union) are also on the high side in urban value
addition but mainly because of the fact that most of their areas
are urban. Among the other small states, Goa and Meghalaya turn
out to be outliers—their value added per 100 urban jobs exceeds
that of other small states.
Table 4 illustrates the distribution of states according to their per
capita income and the share of urban SDP. The most urbanized
states—Chandigarh, Pondicherry, and Delhi—have per capita in-
comes of over 20,000 rupees. In general, there is a divide between
the more industrialized western and southern states and the more
agrarian eastern and northern states. The former are more prosper-
ous, with over 50% of their SDP coming from urban areas. It may
be inferred from these facts that states with a higher percentage of
urbanization are doing better than rural states.
Table 5 distributes the states across various size classes formed
on the basis of incidence of poverty and the urban share in total
SDP. It is quite evident that some of the states that have at least
60% of SDP coming from urban areas also have relatively lower
Nonagricultural
Trade Transport Finance Services GDP GDP
83.985 79.22 — 84.585 64.89 83.69
 Table 2. Percentage of State GDP originating from Urban Areas (2000–2001)
State Primary Secondary Tertiary SDP Nonagricultural SDP
Delhi 25.52 95.15 97.4 95.90 96.88
Chandigarh 32.27 79.74 97.28 91.85 92.55
Maharashtra 10.59 92.17 — 84.98 —
Karnataka 06.36 89.54 — 82.08 —
Chattisgarh 27.78 82.18 — 82.03 88.49
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Pondicherry 18.82 80.54 92.83 81.38 86.04

Gujarat 12.89 89.12 87.98 79.61 84.37
Mizoram 28.13 85.46 92.36 78.34 91.21
Tamil Nadu 11.15 76.68 96.77 74.80 88.38
Madhya Pradesh 12.34 79.56 99.16 73.18 85.01
Meghalaya 01.7 53.84 94.33 71.92 74.56
Goa 44.82 79.01 66.56 68.71 73.66
West Bengal 05.97 72.37 88.1 62.15 83.34
Jharkhand 41.67 51.5 73.47 60.56 73.27
Andhra Pradesh 08.42 61.35 89.88 57.95 79.20
Rajasthan 05.93 51.69 75.73 49.50 64.52
Uttaranchal 03.67 50.3 72.92 43.01 63.48
Uttar Pradesh 04.12 51.37 70.54 41.81 62.69
Manipur 13.12 33.91 61.56 41.14 53.51
Orissa 08.98 34.08 70.02 40.88 55.45
Punjab 03.47 56.68 70.77 40.46 65.20
Andaman and Nicobar Islands 03.79 37.07 63.95 39.65 55.07
Assam 10.95 47.22 60.23 38.68 57.52
Arunachal Pradesh 03.15 41.05 65.01 38.55 55.83
Nagaland 04.19 44.43 55.86 37.68 53.23
Haryana 05.21 43.72 52.68 34.68 48.94
Kerala 10.47 31.5 41.47 33.35 38.75
Jammu and Kashmir 05.29 37.59 48.17 32.84 45.45
Bihar 04.10 32.65 58.15 32.06 53.40
Sikkim 00.05 19.78 50.03 32.05 41.21
Tripura 02.67 28.69 46.98 31.72 41.16
Himachal Pradesh 01.40 25.27 24.58 19.65 24.60
India 08.73 69.93 83.64 64.89 83.69
Note: The tertiary sector value added has been grossly overestimated in the urban areas in Maharashtra, Karnataka, and Chattisgarh because it is assumed that
the same wage rate prevails across different sectors and activities.

incidence of poverty (up to 30%). On the other hand, only Hima-
chal shows a lower incidence of poverty and a lower urban share in
total SDP. Hence, it may be concluded that poverty tends to decline
with rising contribution of urban share to total SDP. Thus, the role
of agglomeration economies in generating employment and reduc-
ing poverty by enhancing productivity must not be overlooked.
Citywise Results: Jawaharlal Nehru National Urban
Renewal Mission Cities
The aim of the Jawaharlal Nehru National Urban Renewal Mission
(JNUURM) is to encourage reforms and to fast track planned de-
velopment of identified cities. The focus is on efficiency in urban
infrastructure and service delivery mechanisms, community partici-
pation, and accountability of urban local bodies (ULB) and other
agencies toward citizens.
The mission was established keeping in mind the rapidly chang-
ing social demographic of India. The 2001 census shows that India
has a population of 1,027 million, with approximately 28% or
285 million people living in urban areas. As a result of the liber-
alization policies adopted by the government of India, the share of
the urban population is expected to increase to about 40% of the
total population by 2021. It is estimated that by 2011, urban areas
would contribute about 65% of the GDP. However, this higher pro-
ductivity depends on the availability and quality of infrastructure
services. Urban economic activities depend on infrastructure, such
as power, telecommunication, roads, water supply, and mass trans-
portation, coupled with civic infrastructure, such as sanitation and
solid waste management. Because cities and towns in India consti-
tute the second largest urban system in the world and contribute
over 50% of the country’s GDP, they are central to economic
growth. For the cities to realize their full potential and become
effective engines of growth, it is necessary that focused attention
be given to the improvement of infrastructure.
The government of India recently recommended 63 cities and
towns to be part of the JNUURM. These include cities with pop-
ulations of over a million people, state capitals, and other centers
that are important from an industrial, commercial point of view. It is
interesting to assess whether these cities account for a considerable
size of the urban share of their state domestic product.
Appendix I lists these cities. However, it has not been possible to
estimate the urban shares of specific activities or sectors because of
the lack of detailed work force data (from 2001 population census)

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J. Urban Plann. Dev., 2011, 137(2): 171-183

 Table 3. Estimates of Urban SDP, Urban SDP per Capita, and Value Added per 100 Jobs (2000–2001)
Urban SDP Urban SDP Value added Urban SDP Value added
(in million per capita per 100 jobs Urban SDP per capita per 100 jobs
State U.S. dollars)a (in U.S. dollars)a (in U.S. dollars)a (in million rupees) (in rupees) (in rupees)
Maharashtra 38,145.29 928 241,689.38 1,525,811.60 37,120.00 9,667,575.20
Tamil Nadu 17,033.80 620 148,270.71 681,352.00 24,800.00 5,930,828.40
Gujarat 15,114.47 798 211,784.94 604,578.80 31,920.00 8,471,397.60
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Karnataka 14,381.69 801 207,433.68 575,267.60 32,040.00 8,297,347.20

West Bengal 13,335.74 595 154,849.54 533,429.60 23,800.00 6,193,981.60
Andhra Pradesh 12,532.51 602 153,639.21 501,300.40 24,080.00 6,145,568.40
Uttar Pradesh 11,188.14 324 97,861.68 447,525.60 12,960.00 3,914,467.20
Delhi 9,406.08 729 218,211.71 376,243.20 29,160.00 8,728,468.40
Madhya Pradesh 9,018.55 565 162,772.06 360,742.00 22,600.00 6,510,882.40
Rajasthan 6,454.10 488 139,947.09 258,164.00 19,520.00 5,597,883.60
Punjab 4,181.66 506 138,657.76 167,266.40 20,240.00 5,546,310.40
Jharkhand 3,990.27 666 214,064.15 159,610.80 26,640.00 8,562,566.00
Chattisgarh 3,286.72 785 215,718.80 131,468.80 31,400.00 8,628,752.00
Kerala 3,140.25 380 102,387.49 125,610.00 15,200.00 4,095,499.60
Haryana 2,888.05 472 139,311.46 115,522.00 18,880.00 5,572,458.40
Bihar 2,793.79 322 118,308.41 111,751.60 12,880.00 4,732,336.40
Orissa 2,416.16 438 131,116.78 96,646.40 17,520.00 5,244,671.20
Assam 1,800.17 523 155,780.18 72,006.80 20,920.00 6,231,207.20
Uttaranchal 801.57 368 110,798.24 32,062.80 14,720.00 4,431,929.60
Goa 714.77 1,066 293,636.03 28,590.80 42,640.00 11,745,441.20
Jammu and Kashmir 711.26 283 85,384.21 28,450.40 11,320.00 3,415,368.40
Chandigarh 606.97 751 218,869.75 24,278.80 30,040.00 8,754,790.00
Pondicherry 492.48 759 221,362.69 19,699.20 30,360.00 8,854,507.60
Meghalaya 432.19 952 255,155.56 17,287.60 38,080.00 10,206,222.40
Himachal Pradesh 379.57 637 139,761.20 15,182.80 25,480.00 5,590,448.00
Tripura 265.78 487 163,422.96 10,631.20 19,480.00 6,536,918.40
Nagaland 225.57 262 72,081.25 9,022.80 10,480.00 2,883,250.00
Mizoram 202.45 459 119,859.78 8,098.00 18,360.00 4,794,391.20
Manipur 184.32 320 94,679.90 7,372.80 12,800.00 3,787,196.00
Arunachal Pradesh 107.46 472 147,830.00 4,298.40 18,880.00 5,913,200.00
Andaman and 61.03 525 138,580.74 2,441.20 21,000.00 5,543,229.60
Nicobar Islands
Sikkim 51.45 859 232,877.60 2,058.00 34,360.00 9,315,104.00
India 194,446.60 680 186,191.46 7,777,864.00 27,200.00 7,447,658.40
a
US$1 = 40 Indian rupees as of August 27, 2007. States are listed in decreasing population.

Table 4. States across Various Size Classes Formed on the Basis of per Capita Income and Relative Size of Urban Share in Total SDP
Urban share in SDP
Per capita income
in 2000–2001
(Indian rupees) Less than 20% 20–39.99% 40–59.99% 60–69.99% 70% and above
Up to 10,000 Bihar, Jammu and Assam, Manipur, Rajasthan, Chattisgarh, Jharkhand,
Kashmir Uttar Pradesh, Orissa Madhya Pradesh
10,000 to 15,000 Himachal Pradesh Kerala, Nagaland, Arunachal Pradesh, Andhra Pradesh, Karnataka, Meghalaya,
Sikkim Tripura West Bengal Mizoram, Tamil Nadu
15,000 to 20,000 Haryana Punjab, Andaman and Gujarat, Maharashtra
Nicobar Islands
Above 20,000 Goa Chandigarh, Pondicherry,
Delhi
Note: Per capita income is defined as estimates of gross state domestic product at 1993–1994 prices divided by population.

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J. Urban Plann. Dev., 2011, 137(2): 171-183

 Table 5. States across Various Size Classes Formed on the Basis of Incidence of Poverty and Urban Share in Total SDP (Estimate 1)
Percentage of SDP from urban areas
Incidence of
poverty (%) Less than 20 20–39.99 40–59.99 60–69.99 70 and above
Less than 20 Himachal Pradesh Haryana (rural), Assam (urban), Andhra Pradesh (rural), Gujarat (rural),
(rural), Himachal Haryana (urban), Punjab (rural), West Bengal (urban) Gujarat (urban),
Pradesh (urban) Kerala (rural) Punjab (urban), Tamil Nadu (rural),
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Uttaranchal (rural), Tamil Nadu (urban)

Uttaranchal (urban)
20–29.99 Kerala (urban) Assam (rural), Andhra Pradesh (urban), Jharkhand (urban),
Rajasthan (urban) West Bengal (rural) Karnataka (rural)
30–39.99 Bihar (urban) Uttar Pradesh (rural), Karnataka (urban),
Uttar Pradesh (urban) Madhya Pradesh (rural),
Maharashtra (rural),
Maharashtra (urban)
40 and above Bihar (rural) Orissa (rural), Jharkhand (rural),
Orissa (urban) Chattisgarh (rural),
Chattisgarh (urban),
Madhya Pradesh (urban)
Note: Poverty estimates for 2004–2005 are taken from Himanshu (2007).

Table 6. Value Added Originating from JNNURM Cities as a Percentage of Total Urban SDP (2000–2001)
City VA as percentage of urban SDP City VA as percentage of urban SDP
Name State Using regular-wage employment ratio Using WPR ratio
Chandigarh (M Corp.) Chandigarh 100 100
Delhi UA Delhi 99.86 99.77
Pondicherry UA Pondicherry 76.36 82.51
Kolkata UA West Bengal 51.8 63.08
Shillong UA Meghalaya 51.67 64.41
Gangtok (NTA) Sikkim 50.39 52.17
Srinagar UA Jammu and Kashmir 37.8 36.93
Greater Mumbai Maharashtra 36.17 47.52
Aizawl (NT) Mizoram 34.32 44.21
Agartala MCl Tripura 27.01 37
Dehradun UA Uttaranchal 26.92 24.99
Bangalore UA Karnataka 26.73 37.84
Kohima (TC) Nagaland 24.55 25.67
Imphal UA Manipur 24.14 38.99
Jammu UA Jammu and Kashmir 24.02 25.28
Guwahati UA Assam 23.5 27.38
Ahmadabad UA Gujarat 21.65 22.48
Hyderabad UA Andhra Pradesh 20.68 24.86
Jamshedpur UA Jharkhand 18.85 20.27
Shimla UA Himachal Pradesh 17.74 27.43
Panaji UA Goa 16.99 17
Dhanbad UA Jharkhand 16.81 16.91
Chennai UA Tamil Nadu 16.49 19.78
Kochi UA Kerala 15.99 19.19
Jaipur (M Corp.) Rajasthan 15.93 19.57
Itanagar (CT) Arunachal Pradesh 15.74 16.11
Ranchi UA Jharkhand 14.48 15.43
Raipur UA Chattisgarh 14.14 18.5
Ludhiana (M Corp.) Punjab 13.83 20.61
Surat UA Gujarat 12.16 20.97
Bhubaneswar UA Orissa 10.8 14.86
Patna UA Bihar 10.52 20.15

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J. Urban Plann. Dev., 2011, 137(2): 171-183

 Table 6. (Continued.)
City VA as percentage of urban SDP City VA as percentage of urban SDP
Name State Using regular-wage employment ratio Using WPR ratio
Faridabad (M Corp.) Haryana 10.34 17.32
Hardwar UA Uttaranchal 10.33 8.81
Thiruvananthapuram UA Kerala 10.09 12.07
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Indore UA Madhya Pradesh 9.82 10.9

Amritsar UA Punjab 8.72 11.26
Varanasi UA Uttar Pradesh 7.7 4.01
Bhopal UA Madhya Pradesh 7.18 8.7
Pune UA Maharashtra 7.13 9.51
Jabalpur UA Madhya Pradesh 6.33 7.03
Vadodara UA Gujarat 6.03 7.54
Nagpur UA Maharashtra 5.4 4.14
Lucknow UA Uttar Pradesh 4.86 6.99
Visakhapatnam UA Andhra Pradesh 4.85 5.51
Kanpur UA Uttar Pradesh 4.2 8.69
Coimbatore UA Tamil Nadu 4.2 5.91
Rajkot UA Gujarat 4.19 5.11
Mysore UA Karnataka 4.11 4.01
Vijayawada UA Andhra Pradesh 4 5.32
Agra UA Uttar Pradesh 3.57 3.52
Nashik UA Maharashtra 3.57 2.92
Asansol UA West Bengal 3.33 2.92
Ajmer UA + Pushkar Rajasthan 3.3 3.59
Madurai UA Tamil Nadu 3.07 3.91
Ujjain UA Madhya Pradesh 2.88 2.76
Puri (M) Orissa 2.33 2.88
Allahabad UA Uttar Pradesh 2.1 2.65
Meerut UA Uttar Pradesh 1.95 3.41
Naintal UA Uttaranchal 1.71 1.87
Nanded-Waghala Maharashtra 0.89 0.61
Bodh Gaya (NA) Bihar 0.73 0.42
Mathura UA Uttar Pradesh 0.7 1
Note: The percentages remain the same irrespective of whether we use estimate USDP1 or USDP2.

at the level of a nine-fold industrial classification. Given the urban
share of state domestic product as estimated in the preceding
section, the proportion of city work force to total urban work force
adjusted for wage differences between a specific city and the c
orresponding state urban measure is considered to estimate the
city-specific domestic product, as indicated in the “Methodology
and Assumptions” section:
city domestic product ðCDPÞ ¼ USDP × ðCW=UWÞ
× CWAGE=UWAGE
where USDP = urban share of state domestic product; CW and
UW = city workers and total urban workers in the given state,
respectively; and CWAGE and UWAGE = city wage and urban
wage, respectively.
Calculations relating to USDP are given in the preceding sec-
tion. The number of workers (main plus marginal) in individual
cities are taken from the 2001 population census because NSS fig-
ures at this level are not available. To have comparable estimates,
the census figures on total urban workers (main plus marginal) of
the corresponding states or union territories are taken from popu-
lation census as well. The main problem relates to the wage data at
the city level. In the absence of this information, the ratio of the
work participation (main workers) rate in the city to that in the state
urban is considered to reflect on the wage differential, i.e., it
remains unadjusted for real wage differential.
Alternately, the ratio of the percentage of city workers engaged
in regular-wage employment to that of the state urban has been con-
sidered. This information is available in the NSS 61st round survey
for cities with populations exceeding 1 million, whereas the list of
JNNURM cities includes several other small cities and towns as
well. For these cities and small towns, the average figures corre-
sponding to the class of cities or towns to which an individual city
or town belongs were used in the NSS 61st round survey (Ministry
of Statistics and Programme Implementation 2007).
Two sets of estimates of the proportion of city value added to the
USDP, based on the ratio of city-specific WPR to state-specific
WPR and the ratio of city-specific regular-wage employment size
to that of the state, are presented in Table 6 for each city. These
estimates remain unchanged in relation to the magnitude of the
urban state domestic product, i.e., USDP1 and USDP2. The range
of a city’s contribution varies widely from less than 1% to 100% of
USDP. Its share is particularly high when states have only a handful
of cities or towns. On the other hand, when states have many cities

178 / JOURNAL OF URBAN PLANNING AND DEVELOPMENT © ASCE / JUNE 2011

J. Urban Plann. Dev., 2011, 137(2): 171-183

 or towns, the share of a particular city in the total urban state
domestic product appears to be moderate. Of course, this is without
figuring into the calculation the wage differential between cities in a
given state. It does not look at the productivity of the labor force
(and hence the city) because wage differentials do not exist. All this
tells us is that cities with more urban workers contribute more to the
state’s urban SDP.
In general, it is evident from Table 6 that not all the JNNURM
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cities account for a very high proportion of USDP originating from
the corresponding states. This reveals the importance of other con-
siderations that have been used in selecting the cities for urban re-
newal mission, such as historic or cultural importance. Nevertheless
for a large number of cities and towns, each constitutes a sizeable
percentage of the total urban domestic product.
In Appendix I, the median value of four estimates of city value
added is presented according to four combinations of two estimates
of the urban state domestic product (USDP1 and USDP2) and two
substitutes for wage ratios: (1) USDP1 and the ratio of relative size
of regular-wage employment; (2) USDP2 and the ratio of relative
size of regular-wage employment, (3) USDP1 and WPR ratio for
main workers and (4) USDP2 and WPR ratio for main workers.
Based on these estimates, the median figures on city per capita in-
come and value added created by 100 jobs in the city are presented
in Appendixes I and II, respectively. City per capita income is
above 20,000 rupees in many cities, and some of them are small
in population size. On other hand, some of the more than 1 million
cities, such as Patna, Kanpur, Allahabad, and Agra rank very low in
per capita income. All this suggests that the nature of economic
activities performed in the city, and not just the size of the city,
is an important determinant of per capita income. For example,
a city that is highly industrialized or is a major trade center in
the region shows a higher per capita income than a religious city
like Allahabad, which is otherwise one of the more than 1 million
cities in India. However, population migration, slum dwelling, and
urban poverty also tend to reduce the city’s rank in per capita terms.
Kanpur could be one such example in spite of its being an indus-
trialized city. Likewise, value added generated for every 100 jobs
created in the city economy is not necessarily large in all big cities.
A number of big cities actually appear at the bottom in Appendix II,
which lists the cities in decreasing magnitude of value added
generated for every 100 jobs.
Conclusion
Because of the importance that the cities play in generating much of
the economic growth, the urban areas need to receive a great deal of
investment and attention from policy planners. However, given the
data constraints, a fair appraisal of this situation is hardly followed,
and the allocation of public spending to urban areas in general and
large cities in particular has remained intensely political. Because
of the importance of urban planning in the future years, this paper
attempts to estimate the contribution of the urban areas to total pro-
duction. To illustrate, the exercise focused on the Indian economy,
certain results of which may be generalized for other countries
as well.
The foregoing analysis suggests that a significant percentage of
value added, particularly in the nonagricultural sector, originates
from the urban areas. This, however, has considerable variations
across states. In general, there is a pattern suggesting that states with
higher share of urban state domestic product have witnessed higher
growth in per capita income and lower incidence of poverty. All this
tends to support the view that rapid urbanization, economic growth,
and poverty reduction are related. Agglomeration economies and
JOURNAL OF URBAN PLANNING AND DEVELOPMENT © ASCE / JUNE 2011 / 179
J. Urban Plann. Dev., 2011, 137(2): 171-183
the role of information operating in the urban areas seem to have
a major role in this context.
Estimates of cities’ contribution to the total urban domestic
product have also been calculated for those which have been listed
under a special urban renewal mission, which covers more than a
million cities, state capitals, and cities of historical and cultural im-
portance. Estimates show that per capita income is not necessarily
high in all large cities. The nature of activities conducted in a city is
an important determinant of its per capita income. In addition, pop-
ulation migration possibly aggravates the “employment problem”
and living standards in some of the big cities. Nevertheless, for
many cities and towns, it is quite evident that each of them con-
stitutes a sizeable percentage of the total urban domestic product.
Hence, further investment to sustain their growth momentum and to
improve the quality of life in these cities is indeed important.
Although this strategy may exacerbate spatial inequality, any delib-
erate attempt to curb this process may have to be implemented at
the cost of growth. Therefore, a balanced approach will be to evolve
over time a set of new spatial regions that have the potential to help
reap the benefits of agglomeration economies. The medium-sized
and small towns need to be improved in a continuous manner, and a
great deal of public infrastructure has to be created in these urban
settlements. This, of course, has to be initiated without adversely
affecting the growth dynamics and the investment requirements of
the existing urban agglomerations.
Urban planning in developing countries needs to consider this
aspect, so that urban areas are geared up to attract further invest-
ment while creating enough capacity to accommodate the increas-
ing pressure in the cities. How the low-income households in the
rural areas can also benefit in the process of urban-centric growth is
another dimension of the problem. What opportunities in infra-
structure have to be created and how the accessibility of the poor
to these opportunities can be enhanced are some of the issues that
need the attention of policy planners. In India, the JNNURM mis-
sion started in 2005–2006 and essentially focused on: (1) integrated
development of infrastructure services in cities covered under the
mission; (2) establishment of linkages between asset creation and
asset management through a slew of reforms for long-term project
sustainability; (3) ensuring adequate funds to meet the deficiencies
in urban infrastructural services; (4) planned development of iden-
tified cities including peri-urban areas, outgrowths, and urban
corridors leading to dispersed urbanization; (5) scaled-up delivery
of civic amenities and provision of utilities, with emphasis on uni-
versal access to the urban poor; (6) special focus on urban renewal
program for the old city areas to reduce congestion; and (7) provi-
sion of basic services to the urban poor, including security of tenure
at affordable prices, improved housing, water supply and sanita-
tion, and ensuring delivery of other existing universal services
of the government for education, health, and social security. The
program aimed to provide housing to the urban poor near their
place of occupation. Also, the basic services to the urban poor cre-
ated in the cities are to be maintained efficiently and become self-
sustaining over time by creating effective linkages between asset
creation and asset management.
In general, JNNURM has two components: (1) sub-mission
for urban infrastructure and governance; and (2) sub-mission for
basic services to the urban poor. The latter includes an integrated
development of slums, i.e., housing and infrastructure projects
in the slums in the identified cities; development/improvement/
maintenance of basic services to the urban poor; slum im-
provement and rehabilitation projects; projects on water supply/
sewerage/drainage, community toilets/baths, etc.; houses at afford-
able costs for slum dwellers/urban poor/economically weaker
section (EWS)/low-income group (LIG) categories; construction
 and improvements of drain/storm-water drains; environmental im-
provement of slums and solid waste management; street lighting;
civic amenities, such as community halls and child-care centers;
operation and maintenance of assets created under this compo-
nent; and convergence of health, education, and social security
schemes for the urban poor (Ministry of Housing and Urban
Poverty Alleviation, unpublished report, 2009). The urban devel-
opment ministry has recently prepared an agenda for action for
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believes that athough rural poverty and rural development programs
may acquire the top priority in the development strategy of a devel-
oping country, the contribution that the urban areas are making to
the overall growth cannot be overlooked. If the overall growth has
to be stepped up in the future, the urban areas’ contribution cannot
be underplayed. For this, more investment in cities, for their
residents, and the poor, who strive hard notwithstanding their

contributions to city’s growth, are definitely required.

urban local bodies for their better management. The 21-point
agenda include suggestions for citizen charter, tips for improving
basic services, assistance under central sector schemes, manage-
ment of urban areas, revision of building bylaws, use of informa-
tion and technology (IT), urban transport, financial system, etc. As
a step toward increasing the ULBs’ own financial resources, the
ministry has proposed that cities meeting the specified criteria in
improving civic amenities will be given financial rewards under
the JNNURM. More credit-worthy cities can tap the bond market
directly, whereas others could benefit from a pooled finance.
JNNURM, however, does not include any specific program on
employment for the urban poor. Secondly, the number of cities to
be included under the mission is extremely small. Although in the
recent years, urban employment schemes have been recommended
under other programs, its coverage is still limited; whereas the
national rural employment programs have been debated and
discussed in a major way in the country. In general, this paper
Several countries, particularly in the developing world, usually
follow an imbalanced approach by initiating major investment
projects in large cities only or by raising political slogans in favor
of small towns and rural areas. In the light of our findings, it may be
suggested that these countries need to take more balanced deci-
sions, so that the increase in economic growth originating from
large urban settlements benefits the poor across all regions. In ad-
dition, medium-sized and small towns need to be kept ready for
future productivity growth once the possibility of reaping the
benefits of concentration from the present set of large cities is
completely exhausted. Strategic development of the urban centers
can facilitate the rise in productivity growth in rural areas as well.
By directing investment projects in an urban settlement that is sur-
rounded by rural areas, the benefits of growth can be distributed
more equitably. Some of these issues are indeed of primary impor-
tance in urban planning.

Appendix I

City Domestic Product and Value Added per Capita: JNNURM Cities
Estimate in Indian Estimate in U.S. Per capita income Per capita income
City rupees (million) dollars (million) City (Indian rupees) (U.S. dollars)
Greater Mumbai 627,322.40 1,568.31 Panaji UA 48,750.00 1,218.75
Delhi UA 375,529.80 938.82 Nashik UA 42,414.50 1,060.36
Kolkata UA 304,959.75 762.40 Greater Mumbai 38,171.00 954.28
Bangalore UA 180,915.20 452.29 Shillong UA 36,598.50 914.96
Ahmadabad UA 133,200.40 333.00 Gangtok (NTA) 35,937.50 898.44
Pune UA 124,583.00 311.46 Surat UA 34,785.00 869.63
Chennai UA 123,105.40 307.76 Nagpur UA 33,577.50 839.44
Hyderabad UA 113,176.30 282.94 Pune UA 33,128.00 828.20
Surat UA 97,801.55 244.50 Bangalore UA 31,731.50 793.29
Nagpur UA 71,503.30 178.76 Pondicherry UA 30,866.00 771.65
Nashik UA 48,875.29 122.19 Raipur UA 30,156.50 753.91
Jaipur (M Corp.) 45,579.36 113.95 Chandigarh (M Corp.) 30,029.00 750.73
Vadodara UA 40,610.54 101.53 Ahmadabad UA 29,436.50 735.91
Indore UA 37,117.52 92.79 Kohima (TC) 29,351.50 733.79
Coimbatore UA 34,202.70 85.51 Delhi UA 29,162.00 729.05
Jamshedpur UA 31,043.08 77.61 Mysore UA 29,157.50 728.94
Ludhiana (M Corp.) 28,373.86 70.93 Jamshedpur UA 28,100.50 702.51
Bhopal UA 28,286.66 70.72 Rajkot UA 27,795.00 694.88
Kanpur UA 27,918.03 69.80 Ranchi UA 27,502.00 687.55
Rajkot UA 27,878.65 69.70 Vadodara UA 27,236.00 680.90
Dhanbad UA 26,898.39 67.25 Nanded-Waghala 25,880.50 647.01
Lucknow UA 26,089.57 65.22 Dhanbad UA 25,249.00 631.23
Visakhapatnam UA 25,818.67 64.55 Indore UA 24,469.00 611.73
Varanasi UA 25,430.62 63.58 Ujjain UA 23,551.50 588.79
Chandigarh (M Corp.) 24,278.84 60.70 Shimla UA 23,512.00 587.80
Jabalpur UA 23,934.28 59.84 Coimbatore UA 23,408.50 585.21
Ranchi UA 23,747.94 59.37 Kolkata UA 23,093.00 577.33

180 / JOURNAL OF URBAN PLANNING AND DEVELOPMENT © ASCE / JUNE 2011

J. Urban Plann. Dev., 2011, 137(2): 171-183

 Estimate in Indian Estimate in U.S. Per capita income Per capita income
City rupees (million) dollars (million) City (Indian rupees) (U.S. dollars)
Madurai UA 23,656.68 59.14 Vijayawada UA 22,184.00 554.60
Mysore UA 23,303.45 58.26 Guwahati UA 22,129.50 553.24
Vijayawada UA 23,060.72 57.65 Jabalpur UA 21,798.00 544.95
Kochi UA 22,057.92 55.14 Varanasi UA 21,122.50 528.06
Raipur UA 21,112.88 52.78 Ludhiana (M Corp.) 20,289.50 507.24
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Guwahati UA 18,119.86 45.30 Bodh Gaya (NA) 19,985.50 499.64

Asansol UA 16,610.57 41.53 Hyderabad UA 19,710.00 492.75
Amritsar UA 16,551.38 41.38 Madurai UA 19,663.00 491.58
Patna UA 16,250.10 40.63 Jaipur (M Corp.) 19,624.50 490.61
Agra UA 15,862.34 39.66 Bhopal UA 19,395.50 484.89
Faridabad (M Corp.) 15,860.80 39.65 Visakhapatnam UA 19,182.50 479.56
Pondicherry UA 15,616.75 39.04 Chennai UA 18,765.50 469.14
Thiruvananthapuram UA 13,896.10 34.74 Bhubaneswar UA 18,365.00 459.13
Bhubaneswar UA 12,088.36 30.22 Agartala MCl 17,902.50 447.56
Meerut UA 11,673.38 29.18 Ajmer UA + Puskar 17,575.50 439.39
Nanded-Waghala 11,147.47 27.87 Itanagar (CT) 17,484.00 437.10
Srinagar UA 10,622.74 26.56 Amritsar UA 16,486.50 412.16
Allahabad UA 10,505.62 26.26 Kochi UA 16,267.50 406.69
Ujjain UA 10,154.42 25.39 Puri (M) 15,692.00 392.30
Shillong UA 9,796.03 24.49 Dehradun UA 15,655.00 391.38
Ajmer UA + Puskar 8,881.14 22.20 Thiruvananthapuram UA 15,620.00 390.50
Dehradun UA 8,301.35 20.75 Asansol UA 15,562.00 389.05
Jammu UA 7,001.44 17.50 Faridabad (M Corp.) 15,020.50 375.51
Panaji UA 4,859.27 12.15 Naintal UA 14,331.00 358.28
Mathura UA 3,750.32 9.38 Aizawl (NT) 13,839.50 345.99
Shimla UA 3,408.67 8.52 Hardwar UA 13,830.50 345.76
Agartala MCl 3,401.48 8.50 Agra UA 11,915.00 297.88
Aizawl (NT) 3,159.26 7.90 Lucknow UA 11,618.50 290.46
Hardwar UA 3,053.28 7.63 Mathura UA 11,599.50 289.99
Puri (M) 2,476.84 6.19 Jammu UA 11,437.50 285.94
Kohima (TC) 2,260.94 5.65 Srinagar UA 10,749.50 268.74
Imphal UA 2,207.94 5.52 Kanpur UA 10,280.50 257.01
Gangtok (NTA) 1,054.92 2.64 Allahabad UA 10,080.00 252.00
Bodh Gaya (NA) 616.68 1.54 Meerut UA 10,048.50 251.21
Itanagar (CT) 612.32 1.53 Patna UA 9,570.00 239.25
Naintal UA 571.96 1.43 Imphal UA 8,823.50 220.59

Note: The city domestic product is calculated as the median of four estimates: (1) USDP1 and the ratio of the relative size of regular-wage employment;
(2) USDP2 and the ratio of the relative size of regular-wage employment; (3) USDP1 and WPR ratio for main workers; and (4) USDP2 and WPR ratio for main
workers. Cities are listed in decreasing city domestic product and per capita income.

Estimate in Indian Estimate in

Appendix II City rupees (million) U.S. dollars
Greater Mumbai 10.44 261,043.25
Value Added Generated for Every 100 Jobs Created in JNNURM Ranchi UA 10.43 260,726.84
Cities Dhanbad UA 10.17 254,258.23
Estimate in Indian Estimate in Nanded-Waghala 10.02 250,426.16
City rupees (million) U.S. dollars
Pune UA 9.66 241,485.66
Panaji UA 12.61 315,315.61 Raipur UA 9.30 232,403.99
Nashik UA 12.32 308,101.75 Ahmadabad UA 9.21 230,372.40
Shillong UA 11.11 277,788.15 Pondicherry UA 9.09 227,128.95
Nagpur UA 10.98 274,429.19 Surat UA 9.01 225,153.28
Jamshedpur UA 10.47 261,738.04 Kohima (TC) 9.00 225,040.90

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 Estimate in Indian Estimate in economies.” Handbook of regional and urban economics: Applied
City rupees (million) U.S. dollars urban economics, P. Cheshire and E. S. Mills, eds., Vol. 3, North-
Holland, Amsterdam, Netherlands.
Delhi UA 8.87 221,706.79 Brotchie, J. P., Newton, P., Hall P., and Nijkamp, P., eds. (1985). The future
Mysore UA 8.76 219,039.64 of urban form: the impact of new technology, Routledge, London.
Gangtok (NTA) 8.71 217,687.91 Carlino, G. A. (1979). “Increasing returns to scale in metropolitan
Rajkot UA 8.59 214,668.43 manufacturing.” J. Reg. Sci., 19(3), 363–373.
Carter, T. J. (1998). “Urban productivity, urban unemployment, and labour
Vadodara UA 8.47 211,697.56
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Bangalore UA 8.24 205,952.65 Fujita, M., and Thisse, J.-F. (2003). “Does geographical agglomeration
Chandigarh (M Corp.) 8.09 202,176.08 foster economic growth? And who gains and loses from it?” Jpn. Econ.
Ujjain UA 7.62 190,435.76 Rev., 54(2), 121–145.
Indore UA 7.61 190,233.09 Futagami, K., and Ohkusa, Y. (2003). “The quality ladder and product
Varanasi UA 7.39 184,692.54 variety: Larger economies may not grow faster.” Jpn. Econ. Rev.,
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Jabalpur UA 7.09 177,196.40 Henderson, J. V. (1974). “Sizes and types of cities.” Am. Econ. Rev., 64(4),
Vijayawada UA 6.83 170,732.09 640–656.
Kolkata UA 6.65 166,132.35 Henderson, J. V. (1986). “Efficiency of resource usage and city size.”
Bodh Gaya (NA) 6.55 163,819.36 J. Urban Econ., 19(1), 47–70.
Bhopal UA 6.54 163,555.11 Henderson, J. V. (1988). Urban development: Theory, fact and illusion,
Oxford University Press, New York.
Hyderabad UA 6.49 162,236.70
Hermansen, T. (1972). “Development poles and related theories: A
Jaipur (M Corp.) 6.42 160,496.34 synoptic review.” Growth centers in regional economic development,
Visakhapatnam UA 6.31 157,779.14 N. M. Hansen, ed., The Free Press, New York.
Guwahati UA 6.27 156,732.58 Himanshu. (2007). “Recent trends in poverty and inequality: Some
Ajmer UA + Pushkar 6.18 154,450.31 preliminary results.” Economic and Political Weekly, Feb. 10,
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Shimla UA 6.12 152,998.05
Hoch, I. (1972). “Income and city size.” Urban Stud., 9(3), 299–328.
Coimbatore UA 5.99 149,693.78 Jones, C. (1995). “R&D based models of economic growth.” J. Polit.
Madurai UA 5.66 141,597.74 Econ., 103(4), 759–784.
Asansol UA 5.59 139,690.24 Kim, S. (1989). “Labour specialization and the extent of the market.”
Ludhiana (M Corp.) 5.53 138,295.73 J. Polit. Econ., 97(3), 692–705.
Bhubaneswar UA 5.51 137,790.46 Kim, S. (1991). “Heterogeneity of labour markets and city size in an open
spatial economy.” Reg. Sci. Urban Econ., 21(1), 109–206.
Chennai UA 5.49 137,356.44
Krugman, P. (1991). “Increasing returns and economic geography.” J. Polit.
Agartala MCl 5.43 135,705.19 Econ., 99(3), 483–499.
Dehradun UA 5.32 133,023.39 Kuchiki, A. (2005). “Theory of a flowchart approach to industrial cluster
Puri (M) 5.23 130,803.24 policy.” Discussion Paper Series No. 36, Institute of Developing
Amritsar UA 5.12 127,926.03 Economies–JETRO, Chiba, Japan.
Levinson, D., and Chen, W. (2007). “Area-based models of new
Hardwar UA 5.10 127,502.51
highway route growth.” J. Urban Plann. Dev., 133(4), 250–254.
Naintal UA 4.96 124,091.65 Meyer, D. R. (1998). “World cities as financial centres.” Globalization and
Faridabad (M Corp.) 4.82 120,592.40 the world of large cities, F.-C. Lo and Y. M. Yeung, eds., United Nations
Itanagar (CT) 4.81 120,252.31 University Press, Tokyo.
Kochi UA 4.75 118,844.25 Mills, E. S. (1967). “An aggregate model of resource allocation in a
metropolitan area.” Am. Econ. Rev., 57, 197–210.
Thiruvananthapuram UA 4.75 118,653.25
Mills, E. S., and Becker, C. (1986). Studies in Indian urban development,
Agra UA 4.64 116,089.58 Oxford University Press, New York.
Lucknow UA 4.22 105,597.73 Mills, E. S., and Hamilton, B. W. (1994). Urban economics, 5th Ed., Scott
Mathura UA 4.19 104,806.63 Foresmen, Glenview, IL.
Allahabad UA 3.94 98,581.39 Mills, E. S., and Mitra, A. (1997). Urban development and urban ills,
Patna UA 3.80 94,905.05 Commonwealth Publishers, New Delhi.
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