Saturday, January 13, 2007

Stop developing Tier 1 cities

Most of the major cities in India have serious infrastructure crisis. These cities are characterized by high traffic, pollution, crime and sanitation problems to name a few. What is the reason for this? What can be done to improve the situation?

The reason I guess is due to much growth happening only in the major cities. A city should grow only to the extent that its infrastructure can support. A new factory or a call center brings in more employment which leads to more people moving into the city. But it puts additional burden on the city's infrastructure? Roads get more traffic, more policing required, more water, more electricity, more pollution etc. The perfect example of this is Bangalore. There was too much growth without corresponding infrastructure growth. Now MNCs and the residents are threatening to move out. Even if infrastructure is improved, a city can only support so much population.

My thoughts are governments should stop requesting investments in Tier 1 cities and start encouraging investments in Tier 2 cities. The best way is to locate industries 100 kms from Tier 1 cities. This way they have access to the Tier1 city's infrastructure but the workers will be located in the place where the industry is located.

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