GDP…Urban population to contribution to touch 70%

GDP…Urban population to contribution to touch 70%

India Infoline News Service / Mumbai Oct 30, 2006 15:18
ASSOCHAM estimates that the contribution of urban population to national
GDP is likely to register 16% growth & touch 70% by 2011

The contribution of urban population to national GDP is likely to
register 16% growth and touch 70% by 2011 from current level of 60% in
view of rising job opportunities that will be provided by major metros
and large cities as these will have emerged as major epicenter for
larger economic activities for domestic and overseas businesses,
according to The Associated Chambers of Commerce and Industry of India

In a Paper on `Urban India: Growth, Opportunities & Difficulties’, it
has been pointed out that metros and large townships in next 5 years
will have ample of infrastructure and adequate input access to
industrial renaissance. This will result for higher urban per capita
income which will rise by minimum of Rs.10,000 per annum and touch
Rs36,000 per annum by 2011. Currently, the urban per capita income is
estimated at.26,000 per annum. The per capita income during 2004-05 has
been estimated at Rs25,500 per annum which stood at Rs23000 per annum in

Commenting on the Paper, ASSOCHAM President, Anil K. Agarwal, ASSOCHAM
President said, the major cities including metros will offer
multifaceted job opportunities to a large number of job seekers and
qualified professionals in areas of IT, ITEs, manufacturing, services
and biotechnology. These cities will be Delhi, Mumbai, Chennai, Haryana,
Bangalore, Haryana, Hyderabad, Uttar Pradesh, Kolkata followed by other
emerging states like Kochi, Pune, Ahmedabad, Chandigarh, Dehardun and

Year Urban Population Contribution to GDP

1951 29

1981 47

1991 55

2001 60

2011 (estimated) 70

With almost 300 million Indians living in urban areas, India has the
second largest urban population in the world. Urban population comprises
about 28% of the total population and accounts for more than 90% of the
government revenues.

According to ASSOCHAM Paper, The share of urban population in total
population had grown from 25% in 1991 to 27% in 2001 is expected to
further increase to about 30 percent by 2011. In 1991, India had around
3768 towns and cities the number of which went up to 4368 in 2001 and
will further rise to over 5000 by 2011. The reason for significant rise
of urban India population is the growing economic activities, improved
infrastructure facilities and massive job opportunities in the major
cities and the emerging metros.

Employment in urban areas registered a growth of around 38% (over the
last decade), substantially exceeding the rural employment growth rate
of around 16%.

Year Urban Population (in Million) Urban Population as % of total
Population Number of UAs/Towns
1951 62.4 17.3 2,822
1961 78.9 18.0 2,334
1971 109.1 19.9 2,567
1981 159.5 23.3 3,347
1991 217.6 25.7 3,768
2001 285.9 27.8 4,378
2011 (estimated) 367 29.75 5000

While the Government has set up Jawaharlal Nehru Urban Renewal Mission
with Rs 1 lakh crore outlay to cover 60 cities with a million-plus
population in the next seven years, an additional investment of Rs 1
lakh crore will be needed for the growth of urban India for improved
infrastructure, housing and sanitation facilities. In view of ASSOCHAM,
the annual investment needs for urban water supply, sanitation and roads
are estimated at about Rs280.35bn during the next ten years. However,
the amount that will be required for urban transport infrastructure
investment in cities with population 100,000 or more during the next
15-20 years would be of the order of Rs2070bn.

In spite of this rosy picture, the ASSOCHAM Paper highlights that urban
infrastructure facilities face serious problems due to population
pressure, deterioration in physical environment and quality of life.
According to estimates, nearly one third of the urban India lives below
poverty line. About 15 percent of the urbanites do not have access to
safe drinking water and about 50 percent are not covered by sanitary
facilities. Traffic congestion has assumed critical dimensions in many
metropolitan cities due to massive increase in the number of personal
vehicles, inadequate road space and lack of public transport. There is a
huge and widening gap between demand and supply of essential services
and infrastructure. Urban poor in India are forced to live under
unhygienic conditions in slums, lacking in basic amenities. Slums have
grown in almost all major cities due to inability of major chunks of
population to afford accommodation in planned areas of the cities.

ASSOCHAM has also recommended that there is a need for urban reforms in
the sector. The Private sector investment for provisions of urban
infrastructure can not take place unless a proper legal and regulatory
framework for such investment is created and developed which ensures a
full cost plus recovery of such investment. This calls for innovative
reforms in municipal tax structure and user charges, taking into account
poor paying capacity of a sizeable section of urban population. Various
modes of Private-Public-Partnership (PPP) are being experimented by
different urban local bodies in the country. Municipal Bond, Tradable
Development Rights, Urban Shelter and Infrastructure Fund, use of Land
as a Resource are some of the new techniques that are being applied by
the city authorities.

The Chamber Paper concludes that in order to crystalise the development
of urban infrastructure, though the government has allowed 100% FDIs
under automatic route for housing and urban infrastructure, it should
take a similar bold decision in another areas so that the flight of
foreign capital becomes easier to meet domestic needs.


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Filed under JNNURM, Urban reforms Agenda

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