In India, Dynamism Wrestles With Dysfunction
In this city that barely existed two decades ago, there are 26 shopping malls, seven golf courses and luxury shops selling Chanel and Louis Vuitton. Mercedes-Benzes and BMWs shimmer in automobile showrooms. Apartment towers are sprouting like concrete weeds, and a futuristic commercial hub called Cyber City houses many of the world’s most respected corporations.
Gurgaon, located about 15 miles south of the national capital, New Delhi, would seem to have everything, except consider what it does not have: a functioning citywide sewer or drainage system; reliable electricity or water; and public sidewalks, adequate parking, decent roads or any citywide system of public transportation. Garbage is still regularly tossed in empty lots by the side of the road.
With its shiny buildings and galloping economy, Gurgaon is often portrayed as a symbol of a rising “new” India, yet it also represents a riddle at the heart of India’s rapid growth: how can a new city become an international economic engine without basic public services? How can a huge country flirt with double-digit growth despite widespread corruption, inefficiency and governmental dysfunction?
In Gurgaon and elsewhere in India, the answer is that growth usually occurs despite the government rather than because of it. India and China are often considered to be the world’s rising economic powers, yet if China’s growth has been led by the state, India’s growth is often impeded by the state. China’s authoritarian leaders have built world-class infrastructure; India’s infrastructure and bureaucracy are both considered woefully outdated.
Yet over the past decade, India has emerged as one of the world’s most important new engines of growth, despite itself. Even now, with its economy feeling the pressure from global inflation and higher interest rates, some economists predict that India will become the world’s third largest economy within 15 years and could much sooner supplant China as the fastest-growing major economy.
Moreover, India’s unorthodox path illustrates, on a grand scale, the struggles of many smaller developing countries to deliver growth despite weak, ineffective governments. Many have tried to emulate China’s top-down economic model, but most are stuck with the Indian reality. In India, Gurgaon epitomizes that reality, managing to be both a complete mess and an economic powerhouse, a microcosm of Indian dynamism and dysfunction.
In Gurgaon, economic growth is often the product of a private sector improvising to overcome the inadequacies of the government.
To compensate for electricity blackouts, Gurgaon’s companies and real estate developers operate massive diesel generators capable of powering small towns. No water? Drill private borewells. No public transportation? Companies employ hundreds of private buses and taxis. Worried about crime? Gurgaon has almost four times as many private security guards as police officers.
“You could call it the United States of Gurgaon,” said Sanjay Kaul, an activist critical of the city’s lack of planning who argues that Gurgaon is a patchwork of private islands more than an interconnected city. “You are on your own.”
Gurgaon is an extreme example, but it is not an exception. In Bangalore, outsourcing companies like Infosys and Wipro transport workers with fleets of buses and use their own power generators to compensate for the weak local infrastructure. Many apartment buildings in Mumbai, the nation’s financial hub, rely on private water tankers. And more than half of urban Indian families pay to send their children to private schools rather than the free government schools, where teachers often do not show up for work.
A Gilded Age of nouveau billionaires
With 1.2 billion people, India is the largest democracy in the world, a laboratory among developing countries for testing how well democracy is able to accommodate and improve the lives of a huge population. India is richer than ever before, with rising global influence. Yet its development is divisive at home. It is experiencing a Gilded Age of nouveau billionaires while it is cleaved by inequality and plagued in some states by poverty and malnutrition levels rivaling sub-Saharan Africa.
The volatile contradictions of rapid economic growth ricochet daily through Indian life. Middle-class rage over mounting corruption is visceral. Frustration with the government is widespread. Leftists and other critics blame India’s landmark 1991 market reforms for failing to lift the rural poor out of poverty; business leaders warn that India risks slower growth or even stagnation unless those economic changes deepen and governing improves.
Today, Gurgaon is one of India’s fastest-growing districts, having expanded more than 70 percent during the past decade to more than 1.5 million people, larger than most American cities. It accounts for almost half of all revenues for its state, Haryana, and added 50,000 vehicles to the roads last year alone. Real estate values have risen sharply in a city that has become a roaring engine of growth, if also a colossal headache as a place to live and work.
The Birth of a Boom
Before it had malls, a theme park and fancy housing compounds, Gurgaon had blue cows. Or so Kushal Pal Singh was told during the 1970s when he began describing his development vision for Gurgaon. It was a farming village whose name, derived from the Hindu epic the Mahabharata, means “village of the gurus.” It also had wild animals, similar to cows, known for their strangely bluish tint.
“Most people told me I was mad,” Mr. Singh recalled. “People said: ‘Who is going to go there? There are blue cows roaming around.’ ”
Gurgaon was widely regarded as an economic wasteland. In 1979, the state of Haryana created Gurgaon by dividing a longstanding political district on the outskirts of New Delhi. One half would revolve around the city of Faridabad, which had an active municipal government, direct rail access to the capital, fertile farmland and a strong industrial base. The other half, Gurgaon, had rocky soil, no local government, no railway link and almost no industrial base.
As an economic competition, it seemed an unfair fight. And it has been: Gurgaon has won, easily. Faridabad has struggled to catch India’s modernization wave, while Gurgaon’s disadvantages turned out to be advantages, none more important, initially, than the absence of a districtwide government, which meant less red tape capable of choking development.
By 1979, Mr. Singh had taken control of his father-in-law’s real estate company, now known as DLF, at a moment when urban development in India was largely overseen by government agencies. In most states, private developers had little space to operate, but Haryana was an exception. Slowly, Mr. Singh began accumulating 3,500 acres in Gurgaon that he divided into plots and began selling to people unable to afford prices in New Delhi.
Still, growth was slow until after 1991, when the government barely staved off default on foreign debts and began introducing market economic reforms. Demand for housing steadily increased, followed by demand for commercial space as multinational corporations began arriving to take advantage of India’s emerging outsourcing industry.
Outsourcing required workspaces for thousands of white-collar employees. In New Delhi, rents were exorbitant and space was limited, and Mr. Singh began pitching Gurgaon as an alternative. It did have advantages: it was close to the New Delhi airport and a Maruti-Suzuki automobile plant had opened in the 1980s. But Gurgaon still seemed remote and DLF needed a major company to take a risk to locate there.
The answer
The answer would be General Electric . Mr. Singh had become the company’s India representative after befriending Jack Welch, then the G.E. chairman. When Mr. Welch decided to outsource some business operations to India, he eventually opened a G.E. office inside a corporate park in Gurgaon in 1997.
“When G.E. came in,” Mr. Singh said, “others followed.”
With other Indian cities also competing for outsourcing business, DLF and other developers raced to capture the market with a helter-skelter building spree. Today, Gurgaon has 30 million square feet of commercial space, a tenfold increase from 2001, even surpassing the total in New Delhi.
“If the buildings were not there,” Mr. Singh said of multinational companies, “they would have gone somewhere else.”
