Move State capitals to secondary cities

For nearly 60 years, our politicians and bureaucrats have been undertaking foreign “study” tours. The goal has been to bring back ideas to improve economic growth, increase employment, limit urban sprawl or better manage the environment. A simple urban renewal plan can do wonders for modern India by achieving all of these: Move State capitals to secondary cities.

This idea is not new and has been working exceedingly well in the US. The capitals of 33 US states are located in a place that is not the largest city. The capital of New York state is not New York City but Albany; of California, it is not Los Angeles or San Francisco but Sacramento. Many people outside the US have never heard of Frankfort, Springfield or Harrisburg: all capitals whose states boast famous commercial centres such as Louisville, Chicago and Philadelphia, respectively. As a former colonial state, India has unfortunately adopted the British approach of locating all power in one city. Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad are not only the most populous cities in their respective States but they also retain the seats of all three branches of government. Some of these hyper-cities can bloat in a most dangerous fashion.

Just imagine what would happen if the capital of Karnataka were to move to Belgaum (or Belagavi as it is now called), which already sports the impressive Suvarna Vidhana Soudha, a modern legislature building. Or if Tamil Nadu’s capital were to move to Coimbatore or Madurai.

All State government offices and the hundreds of quasi-government agencies would move their headquarters to this secondary city. The courts and the tens of thousands of lawyers, government agents and others who primarily live off doing business with the State would presumably move too. For those who choose not to move but rather commute, this would create opportunities for entrepreneurs in the transportation and hotel sectors.

In the case of Bengaluru, the immediate result would be that the city, which is choking slowly to its death, would get to breathe again. Office space would become more affordable. Traffic density, especially in the central business district, would become more manageable. Two-hour commutes would reduce, improving worker efficiency. The smog resulting from slow traffic would slowly begin to lift. More parking spaces would become available. NGOs can hope to provide better service to a slightly smaller population. The rate of depletion of water tables would reduce; garbage would become less of a problem.

At the other end, the Belagavi economy would become vibrant again. Precise numbers for government contributions to GDP are not known but even a conservative estimate of 25 per cent would mean that north Karnataka’s economy would begin to boom. Real estate values would rise and cheap land in and around Belagavi could be put to productive use. Modern skills and competencies would slowly start developing in the region, first to service the government sector but later to spark commercial renewal. Austin, the capital of Texas, is an internationally acclaimed technology centre.

The benefit of this approach is that the redistribution of wealth and growth occurs at no cost to Bengaluru’s brand as the technology capital of the developing world. On the contrary, improving living standards would make the city an even more attractive destination for foreign investment. In Belagavi, the government only has to invest enough to build infrastructure to gear up to the increased population. The efficient private sector will easily scale to provide housing and associated services.

There would be losers, of course. The babus and the political class, who are used to a nice life in Bengaluru, would be forced to relocate. But transfers for most government workers are generally a condition of employment so this should come as no surprise. Buyout packages for those who do not wish to move should ease their transition to the commercial sector.

During the last two decades, the sprawl in India’s major metros has occurred under the watch of helpless State governments which, without concrete plans for urban development or zoning, have legalised chaos because of corrupt bureaucracies.

The only way out is to physically decongest growth. Government initiatives to incentivise the private sector to move to secondary cities have largely failed. It is time for government itself to move.

The writer is the managing director of Rao Advisors LLC

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