Kala Seetharam Sridhar

Impact of Land Use Regulations: Evidence from India’s Cities:

India’s cities are characterised by strong land use controls, but their impacts on city growth and the urban poor have drawn little attention. This paper deals with strong land use regulations prevalent in India’s cities, which have negative impacts on urban form, the consumption of floor space and affordable housing. The impact of land use controls, such as floor area ratio and urban land ceiling, on suburbanisation in India is studied using standard econometric techniques. It is found that population suburbanises in response to a relaxation of floor area ratio norms in the suburbs. However, land use controls have no impact on the suburbanisation of jobs in India’s cities. The paper concludes by summarising policy implications of the research.India’s cities are characterised by strong land use controls, but their impacts on city growth and the urban poor have drawn little attention. This paper deals with strong land use regulations prevalent in India’s cities, which have negative impacts on urban form, the consumption of floor space and affordable housing. The impact of land use controls, such as floor area ratio and urban land ceiling, on suburbanisation in India is studied using standard econometric techniques. It is found that population suburbanises in response to a relaxation of floor area ratio norms in the suburbs. However, land use controls have no impact on the suburbanisation of jobs in India’s cities. The paper concludes by summarising policy implications of the research.

Tax Costs and Employment Benefits of Enterprise Zones

This article answers a challenge raised against traditional economic development policy; recent research has shown that such policies, far from being zero sum, have positive-sum effects. The article examines these questions: Are the local benefits of tax incentives greater than the costs? Specifically, are benefits greatest in high-unemployment areas because of low reservation wages? If so, do such policies produce net benefits for a region, even if they redistribute jobs? To answer these questions, reservation wages are estimated as a function of unemployment. Net benefits and costs from new and relocated jobs are compared. The results indicate that overall local benefits are greater than the local costs of providing tax incentives. However untargeted provision of incentives is not recommended, even in high-unemployment areas. The article provides an alternative approach toward traditional policies and demonstrates that such policies do produce net benefits for the locality adopting them.

The State of Our Cities: Evidence from Karnataka

With the rapid pace of urbanization in India, adequate and reliable data is required to understand the complex forces shaping the cities and to implement effective urban policies. However, there is a glaring dearth of information and data in this area. This book attempts to fill this vacuum. Given the importance of cities in Karnatakas economic growth and development, the book undertakes a review of 15 major cities in the state. It develops indicators and benchmarks for six thematic areas that capture the dynamics and potential of urban areas: (i) history and governance; (ii) demographics; (iii) economic dimensions; (iv) infrastructure and public services; (v) resources; and (vi) quality of life. Providing a comparison of the cities along these dimensions, the book underlines the importance of sharing best practices and fostering competition among cities for infrastructure, public services, and investment. It also includes factsheets on each of the 15 cities, which provide a snapshot of key socio-economic dimensions. This book is an important starting point for researchers and policymakers to start thinking analytically and systematically for better cities, public services, and financing of services. Available in OSO: http://www.oxfordscholarship.com/oso/public/content/economicsfinance/9780198080381/toc.html

Local Employment Impact of Growth Centres: Evidence from India

Evidence regarding non-tax incentives is sparse. To promote industrialisation in the backward areas of the country, growth centres providing infrastructure incentives to enable the states to attract industries, were set up by India in 1988. The impact of GCs on unemployment is examined, accounting for the simultaneity of GC status. The findings are that the change in population of a district and its growth potential are significant in determining actual GC status. The impact of demographic and socioeconomic factors on changes in a districts unemployment, is studied. The novel finding for a developing country is that it is not demand for labour, but the supply of labour, represented by population, that is the constraint in reducing the unemployment rate.

State of Urban Services in India's Cities: Spending and Financing

With increasing population and expanding demand for urban infrastructure services, the capacities of local governments in many developing and newly industrialized countries are overburdened. Adequate infrastructure is not only necessary for increasing productivity but also raising the general quality of living. Given the primacy of municipal finances and the importance of public service delivery for cities to become engines of economic growth, this book answers two questions: Does finance, or more specifically low expenditure, explain the state of poor service delivery? If the answer to the first question is yes, how can urban local bodies have access to greater resources to enable them to improve their public delivery? Using case studies of four cities-Ahmedabad, Kolkata, Jaipur, and Bangalore-that are representative of various regions in the country, this book examines the relationship between spending and services. More specifically, it examines the role of land as a revenue-generating source in Indias cities. Available in OSO: http://www.oxfordscholarship.com/oso/public/content/economicsfinance/9780198065388/toc.html

Benefits and Costs of Regional Development: Evidence from Ohio's Enterprise Zone Program

As highlighted in Chapter 4, the challenge that has been raised against Ohio’s enterprise zone programme is that it is a means of lobbying by regions to get zone designation. Thus, most areas in Ohio enjoy the associated benefits of being able to offer incentives even though they may not deserve to be doing so, as in the case of limited authority zones. This results in the proliferation of such programmes, ending in the ‘pirating’ of firms and jobs from one place to another, that eventually become zero-sum in their effects. This challenge, which has been the topic of many legislative discussions in Ohio and elsewhere, provides the motivation for the research in this chapter. Further, in this chapter, as in Chapter 3, I test the theoretical model we developed in Chapter 2. The question of whether or not the cost of the EZ programme exceeds the economic rent from jobs created in the EZ, at equilibrium, forms the basis for the benefit-cost analysis reported in this chapter.

Is Urban Poverty More Challenging than Rural Poverty? A Review

In this article, we ask the question as to whether urban poverty is more challenging than rural poverty. We review the conceptual arguments and the existing literature examining the intensity of urban versus that of rural poverty, urban and rural inequality, and whether urban poverty lines should be higher than those for rural areas. The review of the existing research finds that the urban share of the poor is rising and that the ratio of urban poverty to total poverty incidence has risen with urbanization. Based on the review, we find that in many countries including India, urban inequality worsened during early 1990s to the late 2000s. We also find that there are several reasons why the defined poverty line must be higher in urban areas when compared with that in rural areas. Further, based on the survey, we find urban poverty can impose significant challenges to human capital for climate change mitigation; we summarize based on other studies why urban rather than rural poverty can be a challenge for donors and governments. Finally, we summarize the contribution made by the urban poor to the city economies, based on existing studies.

Central and State Urban Infrastructure Programs in Karnataka: What Do We Learn?

In this paper, we examine the expenditure efficiency and cost effectiveness of two urban development programs, Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT), which is a centrally (Government of India) sponsored program to boost infrastructure in small and medium towns of the country, and a state-sponsored (Government of Karnataka, GoK) infrastructure program, the Mukhyamanthrigala Nagarothana Yojane (MNY). We conducted an expenditure analysis of the above-mentioned programs including an analysis of unit costs, budget analysis of, and utilization of expenditure. We mapped the process of fund flows and mechanisms used to make the expenditures efficient and cost effective.

Benchmarking Cities: Evidence from India

Cities in India suffer from inadequate data and information, which has undermined their ability and that of analysts and policymakers to comprehend the complex forces shaping cities and to develop and implement effective urban policies. Given the importance of cities in the country’s economic growth and development, we undertake a review of the country’s four major cities—Delhi, Mumbai, Kolkata and Chennai—in this work. While it is clear that no existing studies present a state of cities in India’s context, not collecting this information has disastrous consequences for cities, as they would not be in a position to understand their own growth nor predict their future planning for public services. This research attempts to fill in this vacuum. In this chapter, indicators and benchmarks are developed for six thematic areas that capture the dynamics and potential of urban areas: history and governance, demographics, economic dimensions, infrastructure and public services, resources, and quality of life. Policymakers, city officials, investors, real estate developers, infrastructure agencies, financiers, industry, credit-rating agencies, the educated general public, and researchers would be interested in the research as it has implications for the business environment and quality of life in the cities.

Impact of growth centres on unemployment and firm location: Evidence from India

In this part of the book, we move the focus away from incentives that are primarily financial, to physical incentives offered by state and local governments to attract firms. The most important of these physical incentives is infrastructure. In Part III of this book, consisting of this chapter and the next, I focus on infrastructure incentives. I present evidence from India’s growth centres (GCs), areas which offer incentives such as power, water, telecom, and banking to enable the states to attract industries. When we consider a developing country such as India, we find much greater regional disparities than those observed in developed countries. Because of this, the debate on convergence has occupied a great deal of attention in the development literature. Convergence implies that in a steady state, poorer regions can be expected to grow more rapidly than their richer counterparts. This occurs mainly as a result of the free flow of capital to the poorer regions (because of capital shortage, the rate of return to capital in such regions will be higher). Convergence also occurs because poorer regions need not reinvent the wheel: they can imitate the technological changes adopted by the richer regions.