Surat tops GDP race at 11.5%

Surat tops GDP race at 11.5%
28 Jan, 2008, 0318 hrs IST,Shailesh Dobhal & MK Venu, TNN

NEW DELHI: India’s average GDP growth of over 8% may have lagged China’s impressive double-digit growth in recent years, but a couple of non-metro, though large Indian cities have been punching well above the national average.

They are growing at over 10% for the past five years. India’s diamond capital, Surat, has averaged 11.5% annualised growth between 2001-02 and 2006-07, even surpassing China’s 13-year record of 11.4% growth in 2007.

The Bangalore city region (which combines two districts in Bangalore city and Bangalore rural) at 10.3% and Ahmedabad city region (Ahmedabad and Gandhinagar districts) at 10.1% have delivered double-digit annualised growth within the same period, with Vadodara at 9.8%, just shy of the 10% mark.

In this first of a two-part series, ET presents an exclusive peek into the first-ever computation of GDP figures at the district and city-level by Indicus Analytics.

To be sure, metros such as Mumbai, Delhi, Kolkata, Chennai and Bangalore remain on top of the absolute GDP table, but flagging growth in many metros and big-city regions may be the source of concern for policy makers and businesses alike.

For instance, Kolkata, Chennai, Hyderabad and Pune have underperformed the national average at under 8% GDP growth. The city regions around Mumbai and Delhi have, however, managed to stay above the national average.

Mumbai city region (districts of Mumbai, Mumbai suburban and Thane) has the highest city-region GDP (at current prices 2006-07) of Rs 2,00,483 crore (and annualised growth of 8.5% between 2001-02 and 2006-07). Delhi city region (nine Delhi districts plus Noida, Faridabad, Ghaziabad and Gurgaon) with Rs 1,60,739-crore GDP (and 8.4% growth) too, managed to stay above the national average of 8%.

A wake-up call for the CPI (M) is reflected in Kolkata region’s poor show on GDP numbers. Kolkata (GDP Rs 1,00,229 crore) has an annualised growth of just 6.3% between 2001-02 and 2006-07.

This is one of the lowest among the top 20 populous city regions in the country. Chennai (Rs 63,195 crore; 6.2%), Pune (Rs 48,116 crore; 7.4%) and Hyderabad (including Hyderabad and Rangareddi districts, Rs 42,931 crore; 7.8%) underperformed the national average.
Says founder director of Indicus Analytics Laveesh Bhandari, “Growth in many of these cities is hampered by infrastructure constraints.” But if urban infrastructure-starved India’s IT capital, Bangalore, can grow at 10.3% for the past five years, surely the infrastructure can’t be an alibi for underperformers such as Pune or Hyderabad?

Well, not necessarily, for Bangalore and Delhi’s high-to-average growth and Pune or Chennai’s below-par GDP growth need not point to any infrastructure contradiction here. “The sheer economic momentum built over a decade now in cities such as Bangalore, Delhi and Mumbai is making them grow in spite of their infrastructure bottlenecks,” adds Mr Bhandari.

Needless to say, Bangalore, Delhi, Mumbai or Surat could have grown much faster, perhaps 15% plus, had it not been for their crumbling urban infrastructure. If there ever was a more clear pointer needed for policy makers at both the national and state levels to address urban infrastructure issues, everything from roads, airports, power, water, governance et al, on a war footing, they need not look further than these city-regions’ GDP growth figures.

Also, given the current concern of keeping India’s growth momentum going in the face of a US-led global economic slowdown, the finance minister may like to use his Budget 2008 speech to reinforce and re-energise the government’s two-year-old pet project in Jawaharlal Nehru National Urban Renewal Mission.

Increasing urbanisation, from just 27.8% (percentage of urban to total population) in 2001 to a projected 38.2% by 2026, also makes it imperative for the government, both at the central and state level, to focus on addressing urban infrastructure deficiency and decay on a most urgent basis.


Why District-Level GDP?

By Laveesh Bhandari
Founder Director, Indicus Analytics

While district-level income estimates are a crucial input for policy making, few states publish these estimates at this level. And even if some states have taken the initiative to publishing these estimates, there are time lags involved.

‘District GDP of India, 2006-07’ is an effort by Indicus Analytics to fill this gap and provide the first-ever estimates of district gross domestic product across all states & UT’s of India, and across primary, secondary and tertiary sector.

District-level GDP estimations have broadly followed the methodology published by CSO with appropriate changes, wherever required due to inconsistency in data availability across time, districts and states. The main data sources used for the analysis are NAS, CSO, RBI, Census (2001), National Sample Survey Organisation, NDSSPI, etc.

Income estimates across districts can be helpful in recognising industries/sectors that are driving or retarding economic growth at the district level. Also, these estimates can be very much useful in facilitating better resource management for policy implementation at micro and macro levels and to remove the constraints imposed by lack of reliable data on latest situation at the district level.

From the perspective of the corporate sector, this can help in understanding the vast Indian market and its wide variations within districts. Last but not the least, this can provide valuable background information to credit facilitating companies and investors to prioritise locations for further investment.