Development of Bangalore city and economy

1. Bangalore, India: An overview Bangalore is the capital city of the state Karnataka, located in the south-west region of India. It has an area of approximately 2190 square kilometres, and a fast growing population of close to ten million. 1 Bangalore is India’s third most populous city, following Mumbai and Delhi, and was listed as part of the “top ten preferred entrepreneurial locations in the world” in 20122 as well as among the top ten cities in the world recommended to visit by Lonely Planet (travel advisory).

3 Bangalore houses many of the prominent educational and research institutions of India across a wide range of faculties; including science, management, fashion technology, heavy industries, technology companies, telecommunications, electricals among others. 4 However, the most prominent industry for which Bangalore is renowned for is the IT industry and the IT clusters; the ‘silicon valley of India’, which will be discussed in detail in the following sections. As per the 2001 census, 79.

4% of Bangalore’s population is Hindu,5 which interestingly plays a significant role in the development of the economy, which will be explored in greater detail in the following historical section. Furthermore, the city has a literacy rate of 89%,6 with roughly 10% of Bangalore’s population living in slums which is quite a low figure compared to the rest of the nation. 7 The cosmopolitan nature of the city has led to much migration over the past years, notably starting in the period of 1991-2001 with a growth rate of 38% during the decade.

8 This has had many positive impacts upon the growth of the city and economy, which will be discussed in following sections; however the rapid growth in population has also had the dire consequences faced by many fast growing cities in developing countries. These include a deepening of social inequalities, mass displacement and dispossession particularly in a context of rapid infrastructural change coupled with institutional corruption, and many environmental issues leading to serious health crises due to water shortage and problems in the poor neighbourhoods.

Furthermore, the 2008 National Crime Records Bureau showed that Bangalore accounted for 8. 5% of the total crime reported from the 35 major cities in India, which is a significant increase compared to about fifteen years ago. 9 What has resulted from the economic developments over the past decade and a half can perhaps best be described as the “tangible conflict between India’s oriental history, and way of its modern citizen’s expectations for the future”,10 where city malls, bars and offices stand side-by-side with temples and bazaars.

11 How this present identity formed has much to do with the long and intrinsically complicated political, sociological and economic history of India and Bangalore, coupled with its geographic location and natural assets, which will be briefly explored below. 2. Brief History The pre-colonial history of India is extremely long and equally interesting; multiple tales of battles and successive dynasties.

However, for the purposes of this paper, we will only deal with what is referred to as ‘Modern Bangalore’, which had its formal beginning in 1537, but gained a new identity under British rule after it was captured by the British Armies on 21 March 1791. 12 In this context, the geographic location of Bangalore along with the population demographics played a key factor for how it came to be the city it is today, which will be discussed in the following sub-section.

Furthermore, this section will explore the social, political and economic developments over the past decades in Bangalore, where again the demographics of the population has been a driving factor for change and growth. I highlight here that the following will be an extreme simplification of a very complicated historical trajectory which has led to contemporary Bangalore, and I aim only to point out the most relevant and pressing aspects. 2. 1. The colonial history The impact of the British Empire in its more directly influential way to the present economy is a consequence of the geographic and natural dimension of the city.

Bangalore has been known as the “Garden city of India”, derived from the area’s gentle climate and natural aesthetics. Furthermore, its location in the south is physically removed from the complex territorial politics faced in the northern borders with Pakistan, Bangladesh and China. Thus the area known as Bangalore today became the appropriate place for the British army base, which not only meant developments in the defence sector, but other crucial development projects such as the introduction of telegraph connections to all major cities within the nation in 1853, and rail connection to the capital of the time Madras in 1864.

13 The 19th century saw the area of Bangalore and its surrounds in complete British control, and thus had a large military presence, but also a cosmopolitan civilian population comprising of Britons, Anglo-Indians, migrant Tamil labourers (from further south and east) as well as central city comprising of the local largely Kannada-speaking population. At this point it is necessary to touch upon the hierarchical caste system of social categorization that has been prevalent in India for centuries.

I do this with great caution, for it is an extremely complex topic to which volumes of literature have been dedicated. What is of relevance here to the development of the economy is as follows; being a predominantly Hindu nation and one where politics and religion are closely related, the fact that the Bangalore area was comprised of many Hindus as well as Brahmins (essentially elite Hindus who were priests, and their families) in conjunction with the significant influence of the British, particularly infrastructural, placed Bangalore at a strategic advantage to many other regions in the nation.

Furthermore, the governments in power both directly prior to and following Independence placed great policy focus on education and training, as well as policy changes resulting in a diversification of the public sector which “created a very large pool of well-trained persons who understood technology well”,14 setting the groundwork for the rapid developments that were about to take place. As politics got messier in the northern borders of India, the geography of Bangalore continued to make it a safe place for investments to be made by the government.

2. 2. Development of Bangalore over the past decades The Indian economy itself, directly after Independence (from the British), was highly inefficient, and in what could be described as a defensive reaction to the colonial period and distrust in ‘the West’, the national policy was protectionist and many industries were nationalized. 15 Multiple policy decisions made through successions of political parties in a context of messy and often contradictory politics for which India is renowned.

One relevant long term consequence of this was that there was a mass emigration of whole classes of graduates from Institutes of Technology; a crucial aspect which is exemplified by the statistic that in 1998 “Indian engineers were running more than 775 technology companies in California’s Silicon Valley”. 16 The impact of this was long term and pivotal to the development of the Bangalore economy, as when many of these individuals returned, they were rich in both financial and knowledge capital, both of which were invested into the economy, yielding magnificent returns.

3. Current economy 17 Often referred to as India’s “silicon valley”,18 Bangalore’s staggering 10. 3% growth rate places it as one of the fastest growing major metropolis in India. 19 Bangalore’s IT Industry is divided into three main clusters: Software Technology Parks of India (STPI), International Tech Park, Bangalore (ITPB), and Electonics City. 20 The IT companies combined make up a significant portion of the Indian economy, as exemplified in 2006-07 when 33% of India’s US$22 billion IT exports came from these clusters.

21 Beyond this, other industries have continued to flock to the area to take advantage of the dynamic changes occurring in the city and region. These include many major companies making their headquarters in Bangalore, such as the GMR Group and the United Breweries Group, as well as many major financial institutions establishing themselves in the city such as Deloitte Consulting. 22 The scale of economic growth experienced by Bangalore far exceeds that which is being experienced by India as a whole, as exemplified in the following data. Table : Annual Growth Rates, India Vs. Bangalore23 India Bangalore 1980-1993 6. 55 6. 86 1993-2004 7. 93.

20. 76 Source: Calculated by author from data from The Handbook of India (India) and Narayana, 2008, p. 42 (Bangalore) This has had a significant sociological impact on the population demographic also, with the city being reported as the “third-largest hub for high-networth individuals (HNIs)” in 2007. 24 Among the extremely rich currently inhabiting the city are “professionals, entrepreneurs, consultants, US-returned Indians and expats”. 25 This has been one of the major causes of the ideological clashes between the “new” upper class and the people of former “rural” Bangalore who form much of the electoral base for the state government.

With this ideological clash come tensions between a demand for the city’s infrastructure to continue this high development trend, and the outcry to slow down by those left behind who are being more deeply embedded in poverty or smaller businesses who are being economically marginalised. This will be discussed further in section (4), in terms of land use patterns and rent. 3. 1. City structure and Transportation The economic boom in Information Technology and related developments has had a significant impact upon the structure of the city.

The “dense and radial-concentric structure is confronted by high-speed demographic growth and urban sprawl, and risks being congested, leading to an unmanageable situation”. 26 In the absence of geographical and/or regulatory constraints, the boundaries defining Bangalore as a city are spreading in all directions, especially along major roads. 27 The continued development of major roads leading to and from the city has attracted industries and commercial activities to spread out from what was previously the city centre due to initially lower land prices, with residential development following closely and rapidly.

The following image28 roughly illustrates this trend of expansion seen from 1970-2003, and which still continues in the present context. Such rapid urban sprawl inevitably has dire environmental consequences in terms of significant increases in energy consumption, waste management, land and water consumption, widespread pollution etc. ; a rather violent and expanding overthrow of the “Garden city” by “silicon valley”.

However, one of the leading causes of environmental degradation and urban sprawl is the use of cars, with Bangalore sharing first place with Delhi in having the highest motorization ration in India: 32 Vehicles for every 100 persons. 29 “Between 1991 and 2005, the number of vehicles registered in Bangalore increased by over 200% (from 6,80,000 to 2,200,000), which corresponds to an annual growth of the number of cars and motorcycles that is three times greater than that of the population (10. 8% for car and 9. 5% for two-wheelers, compared to 3. 25% for the population).

”30 High congestion, rapidly increasing pollution and a high likelihood of extensively increased travel time to/from and within the city are the results. 31 This is particularly in light of three factors: (1) the increasingly ‘rich’ population inhabiting the city, (2) A prevailing ‘class-system’ culture whereby status and wealth are very prominently reflected in possession and lifestyle, where taking public transport signifies belonging to a certain class and the ownership and use of car is an upgrade, and (3) India being home to the relatively cheap Tata Company cars, enabling more and more of the population to have access.

Thus Bangalore has entered a vicious cycle whereby the beginning of traffic congestion coupled with increasing ownership of private vehicles is fuelling urban sprawl and housing schemes in peripheral areas, which in turn is fuelling the private vehicle ownership and use. It is necessary to note that the infrastructure for others forms of public transportation such as bus, trains, and tut-tuts (three-wheelers) do exist: however for the reasons outlined above, major roads and private ownership of vehicles continue to rise and are a major concern.

32 4. Land use patterns and rent Following on from the previous section, a natural outcome of urbanisation is a decline in the use of land from traditional uses such as agriculture; which has definitely been the case in India. However, due to the extremely rapid pace of Bangalore’s development, the changes in land use patterns have also been extreme. The agricultural industry “decreased 69% in its share of the ross District Product of Bangalore between 1980-1993”.

33 Pivotal to the land use patterns consequent of the development of the Bangalore economy is that this has not dramatically changed the distribution of employment in the city, nor has it has it improved living conditions for the society as a whole. 34 “the disparity ratio of incomes between the first and the last quintile has changed in 10 years from 4. 9 in 1991 to 13. 6 in 2001, a significant jump that implies a profound change in the equilibrium of the city……(where) the richest 20% of the city’s inhabitants benefit from over half the city’s income, whereas the poorest 20% only see a negligible amount- 3. 8% of the total”.

35 Furthermore, the growth of the high-tech industry has been detrimental to the local employment development, with increased land values which have forced out small enterprise. The same can be said for individuals, where (as touched upon in the introduction of this paper) the major infrastructural changes have resulted in many low socio-economic sects of society being displaced and/or driven out. 5. Bangalore in context of broader Indian economy The impact of the rise of Bangalore, particularly in the IT sector, has been discussed, and has been indisputably crucial in the overall development of the Indian economy.

There is definitely an empirical basis for “continuing with and strengthening public policies for the promotion of a growth-oriented ICT sector and economic globalization”,36 however these are qualified by a multitude of unincorporated non-economic factors37 such as deeper social inequality and environmental concerns which have been discussed.

Other advantages that were used as leverage include the high level of English skills of the active working population in Bangalore, which in conjunction with the low cost of their qualified human resources and other specific advantages such as the time-zone difference with the US (allowing round-the-clock tasks)38 placed the city in a superior position to competing IT hubs such as Ireland, Israel, etc. 39 However, with the development of the city as well as other parts of the region, and Bangalore’s move away from “’body shipping’ to more advanced forms of outsourcing and an emerging phase that seems to be relying on interactive learning and innovation as a means to upgrade value”,40 the dynamics have begun to change; the long-term impacts of which are still unknown.

6. Bangalore in context of broader Asian economy Although not too much data exists to accurately quantify the impact of the Bangalore economy in Asia, there is an abundance of qualitative material which suggests that the Asian regional economy has not only profited monetarily, but also particularly through the development process and strategies which have set the groundwork for Bangalore’s success; i. e. knowledge capital.

However, questions begin to rise about whether Bangalore’s impact upon the Indian economy may be challenged by its influence upon the Asian region, with the emergence of other countries seeking to replicate similar models of growth such as China. 41 Discussion of this will be undertaken due to the limited scope of this paper. 7. Conclusion: Bangalore- A Divided City “The glass walled computer-ready office complexes, exclusive malls and entertainment facilities that rival the best in the country contrast with the dense squatter settlements and their very poor services in central areas of the city”.

42 This paper has sought to give insight into the dynamic developments which have given rise to the booming growth of the city of Bangalore. These developments have been a product of the complex interplay of history and politics with the sociology and unique conditions within India and the region. However what this paper also highlights is that development is by no means a zero-sum game; and there are many grey areas which have a significant influence upon the holistic evaluation of the success of an economy: environmental impacts, societal impacts, issue of sustainability and sufficient regulatory mechanisms etc. In this aspect it

is clear that Bangalore, like many expanding cities particularly in the developing world, needs to dedicate much greater efforts to research and alternative sustainable strategies. I once again highlight that the above arguments have been an extremely humbling simplification of a very complex city and economy, and this paper by no means claims to understand all the material presented; rather it seeks to identify some of the major stepping stones of Bangalore’s development and raise the inevitable questions regarding the consequences, for as Socrates posits, “admitting one’s ignorance is the first step in acquiring knowledge”.

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