Urban Gujarat is not even corporate or middle class haven. New MNC-sponsored study explodes the myth, if there was any

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Do Indian middle classes find Ahmedabad as the best destination? If a new study sponsored by a top UK-based property services MNC in alliance with an industry-supported association is any guide, this is just not true. Ranked eighth in a group of 21 cities, Ahmedabad is particularly found to be poor in human capital and attracting talent. State policy makers should well think why this is so despite the hype created around the state. A report by Rajiv Shah:

Is the myth, woven around India Inc and their global partners, that Gujarat is the best “neo-liberal destination” to do business, offering better governance than most other states, is starting to wane? It would seem so, if one goes by the latest high-profile study sponsored by London-based DTZ, a multinational firm claiming to provide “integrated corporate real estate solutions and facilities management”, and Global Initiative for Restructuring Environment and Management (GIRED), India’s industry-led and industry-managed association, professing “a proactive role in improving infrastructural issues that many businesses are grappling with on a day to day basis.” In its latest report, “Top 21 Business Destinations Ranking”, Ahmedabad has been given an 8thranking, way behind Indore, Bhubaneswar and Coimbatore, and Vadodara even worst – 14th.

On an overall scale of 160, the study has found, Ahmedabad’s score is 119.44, as against Bangalore’s 129.56, Chennai’s 127.87, Mumbai’s 123.64, Pune’s 122.64, Indore’s 121.04, Bhubaneswar’s 119.84, and Coimbatore’s 119.84. Worse, in none of the parameters – human capital, energy, water, mobility and transport, EHS (environment, health and safety), schools and colleges, housing, healthcare, ability to attract talent, climate, office space availability, malls and multiplexes, helping help available, infrastructure for helping hand, city culture, and getaways – Gujarat’s two cities make it to the top. Indeed, the survey should come as a shocker to those who have been citing Gujarat as a model of urbanization to the middle classes in India.

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Urban ranking

The research team – which included Shyam Sundar, Ramya R and Inayath Ulla Khan from GIREM, Rohit Kumar of DTZ, Ramesh Menon from Certes Realty Ltd, and M Sridhar Raghavendra from Mphasis – visited all 21 cities four times to have a “firsthand account on research parameters”, and used both “primary and secondary information”, to quote from the study. Among those interviewed were mainly elites of the respective cities – officials from government departments, corporate entities, office-end users and “other stakeholders of city development”, whatever it may mean. The individual parameters – 16 of them – have been calculated by taking a scale of 10 each in order to arrive at the total figure of 160 for calculating an overall score for each city.

Even as “appreciating” Ahmedabad’s “good energy and water supply”, the study says, “The city lags behind in a few parameters, viz human capital, housing and office space availability, EHS, presence of malls and multiplexes, and getaways.” But it underlines, “Ahmedabad lacks the infrastructure and approach to attract services business. Ahmedabad should focus on creating IT corridor to usher in high-end services business (i.e. creation of induced and indirect jobs). A more cosmopolitan atmosphere would go a long way in attracting quality workforce to the city.” Like Ahmedabad, Vadodara may have scored high on energy and water supply, but the study recommends that city should “work towards providing a more cosmopolitan and worldly environment. More avenues should be created in the service sector. The city needs to invest more in eco-socio-economic infrastructure in order to attract investments and create jobs.”

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Top ranking cities for individual parameters

Scores for individual parameters suggest where Ahmedabad is placed vis-à-vis other cities. On human capital index, Ahmedabad’s score is 14.5, which is lower than Bangalore (17.5), Channai (15.6), Hyderabad (15.6), Indore (15.6), Mangalore (15.6), Mumbai (17.1), and Pune (16.6). Interestingly, several cities rank equal to that of Ahmedabad, such as Bhubaneswar, Gurgaon, Jaipur, and Vishakhapattanam. On environment, health and safety (EHS), Ahmedabad’s score is 9.6, which is worse than Bangalore, Bhubaneswar, Calicut, Chandigarh, Coimbatore, Jaipur, Nagpur, Navi Mumbai, Noida and Pune.  In housing index, Gujarat scores 7.28, which is worse than Bangalore, Bhubaneswar, Calicut, Chandigarh, Gurgaon, Indore, Jaipur, Kochi, Mangalore, Nagpur, Noida and Vadodara.

As for other parameters, things are no better. Seven cities score better than Ahmedabad in healthcare index, and another eight cities score equal to that of Ahmedabad (7.2). As for the ability to attract talent, nine cities do better than Gujarat, while all other cities score equal to that of Ahmedabad (6.72).  On office space availability, Ahmedabad scores 5.6, better than only two cities, Indore and Vishakhapattanam. In the getaway index, Ahmedabad (1.12) either scores worse than other cities or is equal to them.  In city culture index, Ahmedabad scores 2.56 which is worse than Bangalore, Bhubaneswar, Chennai, Hyderabad, Jaipur, Kolkata and is better than Calicut, Chandigarh, Coimbatore, Gurgaon, Indore, Nagpur, Noida, Pune, Vadodara, and Vishakhapatnam.

Ahmedabad ranking for different parameters

Ahmedabad ranking for different parameters

The study comes almost a year after well-known neo-liberal economists Bibek Debroy of the Centre for Policy Research, Laveesh Bhandari of Indicus Analytics, Swaminathan S Anklesaria Aiyar of Cato Institute and Ashok Gulati of the Commission for Costs and Agricultural Prices ranked Gujarat as No 1 in economic freedom in their study widely cited, “Economic Freedom Rankings of States 2012″. However, on “ease of doing business”, these economists, who are known to be fans so-called Gujarat model, ranked Ahmedabad No 5, way behind Ludhiana, Hyderabad, Bhubaneswar and Gurgaon. Worse, when it comes to time taken to start a business, they ranked Ahmedabad 10th in a list of 17 cities. The cities which took lesser time than Ahmedabad (35 days) in starting business were Mumbai, Noida, Jaipur, Indore, New Delhi, Gurgaon, Hyderabad, Ludhiana and Chennai.

Vadodara ranking for different parameters

Vadodara ranking for different parameters

As for the cost of starting-steps to begin business, calculated as percentage of income per capita, Ahmedabad’s 46.3 per cent was found to be higher than Jaipur, Indore, New Delhi, Hyderabad, Chennai, Kolkata, Bhubaneswar, Patna and Guwahati. Carried out in partnership with Friedrich Naumann Stiftung, the study said that in building permit approvals and utility connections, which is the biggest hurdle in starting business, Ahmedabad took more time (around 145 days) than seven other cities – Hyderabad (performing the best with 75 days), Bengaluru, Gurgaon, Noida, Chennai and Ludhiana. By way of comparison, the study said, “In Saudi Arabia, property can be registered in just two days at zero cost. Brazil and China also have zero cost of registration, though they take 29 days and 42 days respectively. But in India, the average registration time in the 17 cities is 55 days.”

In other parameters, too, Ahmedabad was behind many other cities – as many as nine other cities out of 17 took lesser time in registering property; in the ease in paying taxes, Ahmedabad’s ranking was 11th; in enforcing contracts, the city’s ranking was one of the worst, 16th, with Mumbai being the only other city doing worse than Ahmedabad. Only in one sector, Ahmedabad ranked better than most states except Bhubaneswar and Chennai – ease in importing and exporting. Equaling Mumbai, even here, the cost of import and export for Ahmedabad was higher than 10 other states.

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