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Bangalore shines among booming cities

The Financial Express

February 19, 2011


Despite all the bad news hogging Karnataka on the political and some on business fronts, tech hub Bangalore tops the list in a new Morgan Stanley report on how India's booming cities cope with problems from infrastructure to job creation, with Mumbai, India's financial capital, trailing in 21st place.

Asia's third-largest economy is home to one-quarter of the world's 20 most densely populated cities but the slow pace of urban development has been a drag on economic growth.

The report found that second-tier cities Mysore, in the southwest, and Meerut in the country's north, came in second and sixth places out of India's 50 most populated cities.

Nearly one-quarter of India's top 200 cities have no car dealership, less than 10 percent have a 5-star hotel, and nearly two-thirds were still waiting for a large-scale retail store or hypermarket, the report found.

Its findings are based on a City Vibrancy Index (CVI), which looks at, among other factors, infrastructure, job opportunities, modern consumer services and a city's ability to mobilise savings -- what it calls key drivers of urbanization.

Bangalore, India's Silicon Valley, came in first place, with Pune in third and Hyderabad in fourth while New Delhi, India's capital, ranked eighth.

Over the next two decades, India is expected to see an urban transformation the scale and speed of which has not happened anywhere except China, with many cities becoming larger than many countries, in terms of population size and GDP.

By 2030 India will be home to about 590 million people -- nearly twice the population of the United States today.

However, India is dwarfed by China on infrastructure spending. India spends a mere $17 per capita on urban infrastructure, compared to rival China's $116. Poor infrastructure is estimated to shave a whole 2 percentage points off India's economic growth.

India's government is trying to bridge the gap and plans to double spending on infrastructure to $1 trillion in its next five-year plan, which runs from 2012-17.