Cities are the Engines of Growth????

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Sujit Patwardhan

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Jun 24, 2015, 2:03:10 AM6/24/15
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It's fashionable to describe Cities as engines of growth and to say we need to encourage urbanization rather than rural development. But despite their capacity to raid rural areas for their inexpensive resources and use them for absorbing the city's waste; and despite receiving subsidized labour from informal population for ever living under the threat of eviction, cities - one after the other seem to be going into the red.
Where's all the money going ?

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Sujit




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Sujit Patwardhan
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su...@parisar.org
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Ashok Datar

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Jun 24, 2015, 5:21:23 AM6/24/15
to PTTF General, Sujit Patwardhan
I am v glad sujit. we need to stop discounting rural societies and just think of selfish unbalanced urbanisation which requires water, land, lot of transport, costly housing, waste disposal as compared to villages
with electronics development, lot of isolation of v illages can go away
glad . the debate should be more balanced.
ashok

Ashok R. Datar
Mumbai Environmental Social Network (MESN) &
Mumbai Transport Forum (MTF)
http://www.mesn.org/images/logo.png
20 Madhavi, Makarand Society, S.V.S.Marg, Mahim-400 016
98676 65107/0222 444 9212 see our website : www.mesn.org

A city is developed not when poor ride or aspire for cars, but where the rich use public transport


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Anil Risbud

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Jun 24, 2015, 11:55:10 AM6/24/15
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Sujit,

Very thought provoking question! Hope we have an economist in the group who answers this question.

Would like to hazard the following guess (though I am not an expert in these matters):-

The answer could vary in each case - but in general, we can say that, a huge amount of money goes in to the pockets of developers and infrastructure builders, who get paid disproportionately  (by both - owners and governments), during the "development" phase, in the hope of a stream of future returns. Naturally, the owners / governments raise long term loans to meet this expenditure.

This in effect compels both owners/ city governments to depend on future income streams to pay off the loans raised. When future income streams dwindle or get cut-off (e.g. in a recession) or when income doesn't cover loan repayments plus burgeoning costs (e.g. due to a bloated and overpaid bureaucracy like what is alleged in case of Chicago), city governments / owners become insolvent.

When this happens to a business (or an individual) nobody is alarmed. When it happens to a city government (like in case of Detroit or now Chicago), it is a disaster that attracts headlines!

In short, the root cause behind a city's failure is likely to be economic (or indirectly, political - if political compulsion has led to unnecessary gambles) : be it either a slowdown/reversal in the city's economy and/or financial mismanagement by the city's government or both.

I am not a finance expert, but one could imagine that the developers/infrastructure builders in turn would have raised long term loans and in case they don't get paid outright (but over time, via leases or toll-roads) upfront, they might end up bearing the brunt of the downturn too...

Viewed in the above context, over-development could end up being a curse not a boon w.r.t. the long-term viability of a city, esp. if the bet (that the investment will pay back via future prosperity) does not pay off. A case in point is the debate between BRT vs. Overground Metro vs. Underground metro in Pune. Has anyone (PMC, State Govt, Central govt) looked at the investment / return equation behind these investments??

Now fast forward by extending the scenario with a city like Chicago, to an entire country like India over the next few decades - if the massive upcoming investment in cities (existing ones or the new, "smart cities") that everyone is upbeat about, does not lead to a commensurate future income streams to either the local govts. or to the central govt. since it is going to fund these adventures, the country's economy as a whole would suffer as the central govt. will need to print money to fund the shortfall. Are financial planners in the govt./industry modelling future scenarios while announcing schemes like JNNURM or Smart Cities?

Request experts among the group to comment...

best regards,

Anil Risbud

On Wed, Jun 24, 2015 at 11:30 AM, Sujit Patwardhan <patwardh...@gmail.com> wrote:

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