Demand Curve - Cities of the west: powering India, but for how long?A heady combination of location, history, circumstances, and perhaps the most important—initiative is what makes western India fare better

What is it that makes western India tick?

The great manufacturing and commercial base of Maharashtra is well known, Gujarat’s sustained dynamic rise has been well documented; but Goa, Dadra and Nagar Haveli, and Daman and Diu are not far behind. What explains this? Closeness to large ports is an important advantage. So is the relatively easy access to capital given that India’s financial hub is in Mumbai. Human capital is created within this region and whatever migrates into it is well absorbed. And perhaps the most important—overall governance is far superior in these states than in most other parts of India (though the southern states are not far behind, if not ahead, in this criterion). The answer, therefore, lies in a heady combination of location, history, circumstances, and perhaps the most important—initiative. A large entrepreneurial ecosystem has been nurtured and evolved, thereby further attracting talent into the region.

Demand Curve

Mumbai is no longer the only important metro in the west; Ahmedabad and Pune have rapidly grown to become important commercial and industrial centres. Silvassa and Daman are using their proximity to these big centres and expanding their industrial and services sectors.But these are not the only success stories. Take for example Surat, the most rapidly and consistently growing large city in the country through much of the 2000s. Already ranked within the top 10 urban economies in India, Surat is all set to surpass many of the larger cities in the next decade, just as Mumbai surpassed Kolkata in the 1960s. Pune’s success in manufacturing and now IT is well known, but Nashik is also growing rapidly.

The most important factor in long-term progress is sustained effort. This is the reason behind Gujarat’s growth, both in the 1990s and 2000s. And that is why, despite being a heterogeneous state with diverse requirements, Maharashtra remains among the states with the best infrastructure. The same holds good for Goa, Daman and Diu, and Dadra and Nagar Haveli.

These states have made a good headstart over others, but there are significant challenges ahead in keeping this achievement up, and with higher exposure to international markets, this region is also the worst hit during a global crisis. Growth has contributed to rapid in-migration, which has affected the demographic and socio-economic structure of the cities. And different cities are responding differently. While increasingly Maharashtra’s politics is reflecting opposition to incoming talent, that of Gujarat has been relatively more sanguine. While Goa has generated large employment opportunities, its youth are suffering among the highest unemployment rates in the country. The communal stresses that were once observed in Gujarat continue to simmer.

This region’s success has shown that economic growth throws up other challenges that need to be addressed at the educational, political and social levels. Otherwise, growth will be affected, stunting progress for all. Demand Curve is a weekly column by research firm Indicus Analytics Pvt. Ltd on consumer trends and markets.