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Think beyond Bangalore, Mumbai!
Arvind Singhal
 
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October 27, 2005

The business environment in India looks different these days, when looked at through different prisms.

On the one hand, if the stock market is any barometer of the health of the economy, India seems to be booming, with various indices having touched their all-time high levels a few weeks ago.

Property prices have touched stratospheric levels in major urban centres and show no sign of stabilising even at these levels. Professional compensation costs are now within comparable levels with those in the most developed countries, including the United States and the United Kingdom.

Launches of global luxury/premium brands are now happening almost on a weekly basis, and most new shopping malls in cities like Delhi, Mumbai, and Bangalore are thronging with real shoppers. The finance minister remains very positive about the state of the economy and now issues a "good health" certificate almost every week.

However, through another prism, almost any visitor to major metros, especially Mumbai and Bangalore, cannot but see and experience the dramatic disintegration of basic infrastructure in what till recently were amongst the best cities in India and were -- in the Indian context -- aspirational for other urban centres.

The pot-holed roads are already choked, the airports regularly out of action fully or partially, electricity and water supplies now regularly erratic even in Mumbai, inflation finally rearing its ugly head, and the Indian politicians continuing to surprise already highly cynical and disgusted citizens with their almost complete disregard for the well-being of the nation and their now very blatant actions that make their own self-interests paramount even to the detriment of tens and hundreds of common Indians.

The recent spat between a none-too-distinguished Karnataka politician (sadly, though not surprisingly any more in hindsight), also ex-prime minister, and a highly distinguished and justifiably well-respected entrepreneur professional is yet another indication of the challenge India now faces from its own politician class.

While we can continue to either believe that India is shining and will be another success story like China in the next few decades, or else lament and berate our politicians and the political system, India continues to add more than 22 million every year to its population, and as of now, over 12 million every year to the ranks who enter the job market.

Within the next five years, this number will increase to a net addition of over 15 million new workers each year.

If we do not act with uncharacteristic urgency to address this challenge, we can vote away the current crop of ineffective politicians but this will not solve the impending crisis.

What we need is a new crop of visionaries and nation builders, and we need them by the hundreds and thousands. India was blessed with some in the nineteenth and early twentieth centuries with the likes of Jamsedji Tata, G D Birla, Lala Shriram, Kasturbhai Lalbhai, and many others who established the backbone of an industrial India.

They did not wait first for 'infrastructure' to be developed but instead, were pioneers in establishing manufacturing enterprises in some of the remotest parts of India, converting swamps and disease-infested forests to what are now thriving townships.

In many cases, the choice was influenced by the terms of industrial licences they could procure but thereafter, it was mostly driven by the optimal availability of critical inputs/raw materials.

As the Indian economy shifts towards being more services-based, and with some of the best employment and wealth-creation opportunities for modern India lying in the very wide spectrum of human-value added services ranging from the low-end call centres to the very high-end engineering design, our current breed of 'nation' builders have to think beyond Bangalore and Mumbai and Delhi.

It would be easier to take business outside these choked metros and mini metros than to win the battle of logic with the politicians and hope for a magic wand that can overnight create more efficient utilities, under mass rapid transport, and better operating conditions that keep the cost of doing business in these metros cost-competitive.

Service industry leaders like Infosys [Get Quote], Wipro [Get Quote], and TCS [Get Quote], and many others even in the manufacturing sector should consciously seek other, less developed locations across India where their raw material (largely man-power) 'exists' in abundance -- e.g. towns like Lucknow, Kanpur, Allahabad, Chandigarh, Gwalior, Bhopal, Roorkee, Jaipur, Bhubaneshwar, Kozhikode, and many others.

The additional investment that may be needed to create functional "townships" rather than rented offices in many of these cities may lead to a short-term capital outflow but in the long term, these investments will pay off handsomely on account of (sustainably) lower operating costs. Fortunately, there are enough private airline start-ups who would willingly provide air-connectivity to these cities if demand is created.

There is enough entrepreneurial activity now in India to attract investments in education, hospitality, healthcare, and entertainment in these cities provided high-paying jobs are created so that India can have many more Bangalores and Punes and Hyderabads.

Not only will this be good for these businesses themselves, but will also create unprecedented opportunities for larger parts of India, reduce pressure of migration to the current metros, and generate a more equitable creation and distribution of wealth across the nation.


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