Trawling through the latest annual rich list for India provides a sense of d?j? vu. It?s not just the names that are predictable, but also where they are based. Of the 100, 32 are located in Mumbai, 24 in Delhi and 14 in Bangalore. These three cities account for 70% of the richest Indians. There are four each in Chennai, Pune and Ahmedabad, three in Kolkata, two in Hyderabad, three permanently based in London, one in Dubai and one each in Kochi and Bhopal. Why do some cities attract more entrepreneurs and become engines of growth while others do not? Surveys and studies provide some answers, some obvious, others less so. Topping the list are education and infrastructure, both crucial to the development and expansion of entrepreneurship. It is no surprise that Mumbai, Delhi and Bangalore all boast of some of India?s best educational services?schools, colleges and specialised institutions for higher learning, business management and IT. Companies are able to tap into a pool of well-trained and well-educated human resources. Mumbai has, or had, the best infrastructure with long-standing 24×7 power availability while Delhi, pampered by the Central government, has seen a visible improvement in infrastructure. Bangalore was a great city to live in, but infrastructure has started to crumble though it hardly affect IT and software companies, which operate largely in the digital space.
There is also the fact that certain cities encourage a spirit of entrepreneurship?Mumbai being a prime example, while the recently recorded rise in the number of Delhi?s millionaires seem to suggest, as one survey found, that the proximity between businessmen and politicians, defined as crony capitalism, had much to do with the increase in the number. Bangalore, thanks to Infosys, Wipro and other leading multinational IT firms based there, has gained an international reputation and clientele that gives it a status equal to Silicon Valley. There is also one other critical asset?access to capital to support/expand existing and nascent businesses. Mumbai leads the list as India?s financial centre, with most leading banks headquartered there as well as financial institutions. Delhi and Bangalore not far behind. These three top cities have also acted as magnets for talented or skilled people from the rest of the country and the availability of ambitious people from diverse backgrounds and diverse skills add to the city advantage.
Three other factors have been cited in various studies. One is access to a major international airport serviced by leading international airlines, which makes it convenient for businessmen to fly anywhere in the world at very short notice. Second, forward-looking policies and encouragement from a particular state government. It is no surprise that Ahmedabad now has four businessmen in the Forbes list compared to just one a few years ago. The Gujarat government?s pro-business policies and tax holidays to attract industries have been the main trigger while a city like Kochi has been re-branding itself recently by promoting business, attracting investment and displaying dynamism. The third element in the ability of cities to attract entrepreneurs is to do with the quality of life along with social mobility, art, culture, restaurants, hotels and leisure activities as well as the law and order situation. These are increasingly being cited as incentives for people to stay in a city or move to it.
Global trends seem to mirror the India story. America has a handful of cities that have traditionally produced the most entrepreneurs?New York, Chicago, Houston and San Jose. New York and Chicago, being financial hubs, have proven to be major enabling factors. New York?s current mayor is a billionaire businessman himself. Oil-rich Houston boomed when energy began powering the economy. In San Jose, the ?capital of Silicon Valley?, it has been information technology and software services, inspirational entrepreneurs like Bill Gates, Steve Jobs, Mark Zuckerberg, et al.
That is not the only global trend that parallels the concentration of wealth in India. The latest ranking of cities with the most billionaires has thrown up a surprise leader: Moscow. Moscow has produced the largest number of billionaires (79) consisting mainly of oligarchs and those with overt connections to the state, who bagged contracts to exploit the country?s mineral and gas deposits. Sounds familiar? A recent research paper by Aditi Gandhi of Delhi?s Centre for Policy Research and Michael Walton of Harvard University found that 43% of India?s billionaires, accounting for 60% of billionaire wealth, had their primary?and original?sources of wealth from industries like property development, infrastructure, construction, mining, telecoms, cement and media. These are industries, the paper argues, which have strong links with the state.
Despite that, the message is clear. Cities apart from Mumbai, Delhi and Bangalore, will always lag behind in economic growth and wealth creation unless they get their act together in terms of infrastructure, educational facilities, connectivity, quality of life and, above all, state governments that balance populism with the benefits of encouraging entrepreneurship, investment and job creation.
The writer is Group Editor, Special Projects & Features, ?The Indian Express?