6th Term - Urban Planning & Design

URBAN PLANNING AND DESIGN
History of Urbanization and Effects of Industrial Revolution
Urbanization refers to a process in which an increasing proportion of an entire population lives

in cities and the suburbs of cities. Historically, it has been closely connected with
industrialization. When more and more inanimate sources of energy were used to enhance
human productivity (industrialization), surpluses increased in both agriculture and industry.
Larger and larger proportions of a population could live in cities. Economic forces were such
that cities became the ideal places to locate factories and their workers.
The increase in the proportion of the population residing in towns, brought about by migration of
rural populations into towns and cities, and/or the higher urban levels of natural increase
resulting from the greater proportion of people of childbearing age in cities (this, in turn, reflects
patterns of migration). Urbanization indicates a change of employment structure from agriculture
and cottage industries to mass production and service industries.
This backs up the view that urbanization results from, rather than causes, social change. This is
most notable in the development of capitalism and its attendant industrialization. It is said that
the development of the landless labourer and the concentration of wealth into a few hands
encourages urbanization. Others argue that urbanization is the inevitable result of economic
growth, with the rise of specialized craftsmen, merchants, and administrators. A further view
stresses the importance of agglomeration economies; cities offer markets, labour, and capital
with a well-developed infrastructure, all of which increase their comparative advantage. In
addition, Clark observes that the effects of globalization ‗compound, rather than replace, local
processes of urban development. They introduce reasons for urban growth and urbanisation
which add to the traditional attractions of cities as central places‘.
Urbanization is a relatively recent process in the Third World where it is even more rapid than
population growth and where the largest agglomerations are growing most rapidly. The negative
effects of urbanization include the loss of agricultural land coupled with problems of urban food
supply, the destruction of habitats, and urban diseconomies.
The Urbanization of the World & Origin of Cities:

The City is a relatively recent form of social organization.
 Homo sapiens, the present human form has existed on earth for about 200,000 years, but
cities have existed for less than 10,000 years.
 Jericho in about 7000 B.C. grew from village to a "city" of about 3,000
 3,500-4,000 B.C. first large cities (population of about 25,000) were established in
Mesopotamia.
A "city" refers to a place of relatively dense settlement -- dense enough so that city residents
can not grow their own food. A city population, therefore, is always dependent upon its
"hinterlands" to provide it with food. Not until agriculture developed could hinterlands provide
food for their own populations and enough of a surplus to feed a city population. And in
agricultural societies the surplus was so small that only a tiny proportion of an entire population
S.R.P* 6TH TERM – URBAN PLANNING & DESIGN Page 1

could live in cities. Up until very recently -- about 200 years ago -- that proportion was limited to
about 5% of an entire population. So cities existed, but there was no urbanization.
In the United States, about 5% of the population lived in cities in 1800, but about 50% of the
population lived in cities by 1920. Throughout the 19th century, the US was urbanizing. The
same was true for most European societies during the 19th century. Urbanization or the
concentration of people in dense settlements is a worldwide phenomenon. In the 1800 only 2%
of the earth‘s inhabitants lived in cities of 20,000 or more, now the proportion is over one-third.
Intense urbanization is of relatively recent origin, beginning only after the Industrial Revolution.
Before 1850 no country could be described as predominantly, urban and by 1900 only Great
Britain could be referred to as such. Since then all the industrial powers have achieved this
status and many of the developing nations are moving steadily in this direction.
The most spectacular manifestations of urban growth are seen in the large human settlements
scattered across the globe. A century ago there were only five urban areas with more than a
million residents, today the number is approximately 150. Behind this phenomenal expansion is
the ―population explosion‖ that the world has experienced during the current century. From 1900
to the end of the 1970s, the number of global inhabitants almost tripled to an estimated total of
4.4 billion. During this period the fastest growth shifted from the economically advanced
countries of Europe and North America to the developing nations of Africa, Asia, and Latin
America where three-fourths of the earths populace now lives. Only recently, for the first in
history, has the world rate of increase shown a decline, dropping from a peak of 2.0% in 1966 ti
1.9% in 1976. The principle reason for the slowdown is the declining birthrate, first evidenced in
the industrially mature regions and now in the developing countries.
Measurement and process

The measurement of urbanization: any measure of urbanization based upon census data is
liable to marked error dependent on the under- or over bounded characteristics. To avoid this
can be made in two ways.
1. The use of detailed rules for the definition of areas. According to the census the
urbanized areas were based on enumeration districts which were usually no larger than
one square mile and had no more than fifteen dwellings. The urbanized area then
consisted of a central city which had a population of 50,000 together with
a) Incorporated places with 2,500 inhabitants or more.
b) Incorporated places with less than 2,500 inhabitants, provided that each had a
closely settled area of 100 dwellings or more.
c) Enumeration districts in unicorporated territory with a population density of 1,000
inhabitants or more per square mile (land devoted to such purposes as railway
goodsyards, cemeteries, etc., being excluded).
d) Enumeration districts with less than 1000 persons per square mile if they:
i. Eliminate enclaves;
ii. Close indentations‘ in the urbanized area of one mile or less across the open
end;
iii. Link outlying enumeration districts of qualifying density that were no more
than one and a half miles from the main urbanized areas.

2. The use of population densities: method which can be used in comparative studies and is
based on population densities alone. Comparisons can only be made when the densities
involved are similar, delineation of areas, using the smallest administrative unit, where minimum
densities can be equated and identification of smallest units can be done and population
densities can be calculated. Then work outward from the large city until points are reached
where the densities fall below a given figure, say 100 per square km. Although a degree of
generalization is involved, this process allows a line to be drawn around the city so that all areas
with a density which is over the given figure are included. A series of rings of different density
values can be identified and used in this way for comparative purposes. This overlaps with the
formal definitions in relying on population density as a criterion and although interesting is no
solution to the problem.
The process of urbanization
It is essential to define and understand the nature of this process as a preliminary to any further
investigation. Lampard says that there are ‗three concepts of urbanization which have currency
in the social sciences: the behavioral, the structural and the demographic. The first of these is
concerned with the experience of individuals over time and with patterns of behavior; the
second is related to the activities of the whole population and is primarily related to changes in
economic structure; the third is the demographic concept where the process is seen primarily
as one of population concentration. All three of these throw a different light on the process and
each one presents particular problems. A brief review will give some insight into the
urbanization process.
The first of the three is perhaps the most well known and is usually related to Louis Wirths
paper ‗Urbanism as a way of life‘. Where he rejects simple measurements of size, density and
occupational structure or administrative status as denoting anything fundamental, Wirth
formulated a theory of urbanism based on existing knowledge of social groups. The size of the
aggregated population will affect relations between members, increasing the process of
differentiation which ultimately leads to segregation. ‗The bonds of kinship, of neighbourliness,
and the sentiments arising out of living together for generations under a common folk tradition
are likely to be absent, or at best, relatively weak in an aggregate, the members of which have
such diverse origins and backgrounds. Under such circumstances competition and formal
control mechanisms furnish the substitutes for the bonds of solidarity that are relied upon to
hold a folk society together. Urban dwellers meet in segmented roles and face to face relations
are impersonal and superficial. In consequence of the superficiality, the anonymity and
transitory character of urban social relations the individual becomes alienated from his folk or
rural background; a sense of belonging to an integrated community is no longer held and leads
to the state of ‗anomie‘, of being lost in ‗the lonely crowd‘. Density also adds to diversification
and gives rise to characteristic urban contrasts of wealth and poverty. In addition ‗the close
living together and working together of individuals who have non sentimental and emotional ties
fosters a spirit of competition, aggrandizement and mutual exploitation. The clock and the traffic
signal are symbolic of the basis of our social order in the urban world. But diversification means
heterogeneity and this breaks down caste boundaries and gives the individual a fluctuating
status determined by his own ability and effort rather than by his birth. A social role is not given

to the urban dweller by the social order into which he is born; rather, it is achieved and during
this process a series of different roles will emerge, the result of his relations with fellow workers,
with managers, with officials. This can lead to a state role confusion where the various parts to
be played will conflict.
The consequences of the above rural- urban contrasts have been described as a ‗rural-urban
dichotomy‘.
The second interpretation of urbanization is economic and relates ti ‗the movement of people
out of agricultural communities into other and generally larger non – agricultural communities.
This conception gives primary recognition to the differential ordering of occupations within a
given territorial space‘. The crux of this approach is a direct correlation of economic
develop0ment with urbanization and it usually couched in the form of the identification of phases
of economic development each of which is associated with a degree of urbanization.
Urbanization is seen therefore as a product of increasing economic specialization and
advancing technology. The only way it is possible to advance from a subsistence basis is by
specialization of economic activities. The linkages between specialism necessitate the
accumulation of people and this is the process of urbanization.
The third interpretation of the urbanization process is termed as demographic in the sense that
it postulates that urbanization is a process of population concentration. Urbanization is seen as
the organizational component of a populations achieved capacity for adaptation. It is a way of
ordering a population to attain a certain level of subsistence and security in a given
environment. In this a given factor is the level of technology which is itself a part of social
organization so that there are four variables, population, environment, technology and social
organization by which the process of urbanization is said to explained. Three of these ideas
bear relationship to those put forward by
Reissman:
Population= Urban growth
Technology= Industrialization
Social organization= Emergence of middle class
Urbanization or Urban Drift is the physical growth of urban areas as a result of global
change. Urbanization is also defined by the United Nations as movement of people from rural to
urban areas with population growth equating to urban migration. The United Nations projected
that half of the world's population would live in urban areas at the end of 2008. Urbanization is
closely linked to modernization, industrialization, and the sociological process of rationalization.

Movement
As more and more people leave villages and farms to live in cities, urban growth results. The
rapid growth of cities like Chicago in the late 19th century and Mumbai a century later can be
attributed largely to rural-urban migration. This kind of growth is especially commonplace in
developing countries.
The rapid urbanization of the world‘s population over the twentieth century is described in
the 2005 Revision of the UN World Urbanization Prospects report. The global proportion of
urban population rose dramatically from 13% (220 million) in 1900, to 29% (732 million) in 1950,
to 49% (3.2 billion) in 2005. The same report projected that the figure is likely to rise to 60% (4.9
billion) by 2030. However, French economist Philippe Bocquier, writing in THE FUTURIST
magazine, has calculated that "the proportion of the world population living in cities and towns in
the year 2030 would be roughly 50%, substantially less than the 60% forecast by the United
Nations (UN), because the messiness of rapid urbanization is unsustainable. Both Bocquier and
the UN see more people flocking to cities, but Bocquier sees many of them likely to leave upon
discovering that there‘s no work for them and no place to live."
According to the UN State of the World Population 2007 report, sometime in the middle of
2007, the majority of people worldwide will be living in towns or cities, for the first time in history;
this is referred to as the arrival of the "Urban Millennium" or the 'tipping point'. In regard to future
trends, it is estimated 93% of urban growth will occur in developing nations, with 80% of urban
growth occurring in Asia and Africa.
Urbanization rates vary between countries. The United States and United Kingdom have a far
higher urbanization level than China, India, Swaziland or Niger, but a far slower annual
urbanization rate, since much less of the population is living in a rural area.
 Urbanization in the United States never reached the Rocky Mountains in locations such
as Jackson Hole, Wyoming; Telluride, Colorado; Taos, New Mexico; Douglas County,
Colorado and Aspen, Colorado. The state of Vermont has also been affected, as has the
coast of Florida, the Birmingham-Jefferson County, AL area, the Pacific Northwest and
the barrier islands of North Carolina.
 In the United Kingdom, two major examples of new urbanization can be seen in Swindon,
Wiltshire and Milton Keynes, Buckinghamshire[9]. These two towns show some of the
quickest growth rates in Europe.
Causes
Urbanization occurs naturally from individual and corporate efforts to reduce time and expense
in commuting and transportation while improving opportunities for jobs, education, housing, and
transportation. Living in cities permits individuals and families to take advantage of the
opportunities of proximity, diversity, and marketplace competition.
People move into cities to seek economic opportunities. A major contributing factor is
known as "rural flight". In rural areas, often on small family farms, it is difficult to improve one's
standard of living beyond basic sustenance. Farm living is dependent on unpredictable
environmental conditions, and in times of drought, flood or pestilence, survival becomes
extremely problematic. In modern times, industrialization of agriculture has negatively affected
the economy of small and middle-sized farms and strongly reduced the size of the rural labour
market.

There are better basic services as well as other specialist services that aren't found in
rural areas. There are more job opportunities and a greater variety of jobs. Health is another
major factor. People, especially the elderly are often forced to move to cities where there are
doctors and hospitals that can cater for their health needs. Other factors include a greater
variety of entertainment (restaurants, movie theaters, theme parks, etc) and a better quality of
education, namely universities. Due to their high populations, urban areas can also have much
more diverse social communities allowing others to find people like them when they might not
be able to in rural areas.
These conditions are heightened during times of change from a pre-industrial society to
an industrial one. It is at this time that many new commercial enterprises are made possible,
thus creating new jobs in cities. It is also a result of industrialization that farms become more
mechanized, putting many labourers out of work. This is currently occurring fastest in India.
Economic effects
In recent years, urbanization of rural areas has increased. As agriculture, more traditional local
services, and small-scale industry give way to modern industry the urban and related commerce
with the city drawing on the resources of an ever-widening area for its own sustenance and
goods to be traded or processed into manufactures.
Research in urban ecology finds that larger cities provide more specialized goods and services
to the local market and surrounding areas, function as a transportation and wholesale hub for
smaller places, and accumulate more capital, financial service provision, and an educated labor
force, as well as often concentrating administrative functions for the area in which they lie. This
relation among places of different sizes is called the urban hierarchy.
As cities develop, effects can include a dramatic increase in costs, often pricing the local
working class out of the market, including such functionaries as employees of the local
municipalities. Urbanization is often viewed as a negative trend, but can in fact, be perceived
simply as a natural occurrence from individual and corporate efforts to reduce expense in
commuting and transportation while improving opportunities for jobs, education, housing, and
transportation. Living in cities permits individuals and families to take advantage of the
opportunities of proximity, diversity, and marketplace competition.
Environmental effects
The urban heat island has become a growing concern and is increasing over the years. The
urban heat island is formed when industrial and urban areas are developed and heat becomes
more abundant. In rural areas, a large part of the incoming solar energy is used to evaporate
water from vegetation and soil. In cities, where less vegetation and exposed soil exists, the
majority of the sun‘s energy is absorbed by urban structures and asphalt. Hence, during warm
daylight hours, less evaporative cooling in cities allows surface temperatures to rise higher than
in rural areas. Additional city heat is given off by vehicles and factories, as well as by industrial
and domestic heating and cooling units. This effect causes the city to become 2 to 10o F (1 to 6o
C) warmer than surrounding landscapes. Impacts also include reducing soil moisture and
intensification of carbon dioxide emissions.

Changing form of urbanization
Different forms of urbanization can be classified depending on the style of architecture and
planning methods as well as historic growth of areas.
In cities of the developed world urbanization traditionally exhibited a concentration of human
activities and settlements around the downtown area, the so-called in-migration. In-migration
refers to migration from former colonies and similar places. The fact that many immigrants settle
in impoverished city centres led to the notion of the "peripheralization of the core", which simply
describes that people who used to be at the periphery of the former empires now live right in the
centre.
Recent developments, such as inner-city redevelopment schemes, mean that new arrivals in
cities no longer necessarily settle in the centre. In some developed regions, the reverse effect,
originally called counter urbanization has occurred, with cities losing population to rural areas,
and is particularly common for richer families. This has been possible because of improved
communications, and has been caused by factors such as the fear of crime and poor urban
environments. Later termed "white flight", the effect is not restricted to cities with a high ethnic
minority population.
When the residential area shifts outward, this is called suburbanization. A number of
researchers and writers suggest that suburbanization has gone so far to form new points of
concentration outside the downtown both in developed and developing countries such as India.
This networked, poly-centric form of concentration is considered by some an emerging pattern
of urbanization. It is called variously exurbia, edge city (Garreau, 1991), network city (Batten,
1995), or postmodern city (Dear, 2000). Los Angeles is the best-known example of this type of
urbanization.
Rural migrants are attracted by the possibilities that cities can offer, but often settle in shanty
towns and experience extreme poverty. Urbanization can be planned urbanization or organic.
Planned urbanization, ie: planned community or the garden city movement is based on an
advance plan, which can be prepared for military, aesthetic, economic or urban design reasons.
Examples can be seen in many ancient cities; although with exploration came the collision of
nations, which meant that many invaded cities took on the desired planned characteristics of
their occupiers. Many ancient organic cities experienced redevelopment for military and
economic purposes, new roads carved through the cities, and new parcels of land were
cordoned off serving various planned purposes giving cities distinctive geometric designs. UN
agencies prefer to see urban infrastructure installed before urbanization occurs. Landscape
planners are responsible for landscape infrastructure (public parks, sustainable urban drainage
systems, greenways etc) which can be planned before urbanization takes place, or afterward to
revitalize an area and create greater livability within a region.

Counter urbanization is a demographic and social process whereby people move from
urban areas to rural areas. It first took place as a reaction to inner-city deprivation and
overcrowding. Initial study of counter urbanization was carried out by human geographer Brian
Berry.
Process
The process involves the moving of the population away from urban areas such as towns and
cities to a new town, a new estate, a commuter town or a village. The first two of these
destinations were often encouraged by government schemes whereas the latter two were
generally the choice of more middle class, socially mobile persons from their own prerogative.
With the improvement of inner-city transport infrastructure, and more sustainable public
transport, people no-longer have to live close to their work, and so can easily commute each
day.
Factors of moving
Many factors can come in to account when someone decides to move from an urban area to a
rural area including; housing density, housing prices, pollution levels (health afflictions), crime
levels, peaceful retirement, and a wish to improve quality of life. Developments in rural
electrification and rural Internet bring to rural areas some of the amenities of urbanity; thus
eliminating one of the obstacles preventing some people from moving to a more rural setting.
Pseudo-urbanization
Pseudo-urbanization is the condition in which a large city has formed in an area without a
functional infrastructure to support it. As the population of an urbanized area grows, the city's
infrastructure must grow with it, or else shortages will develop, typically in housing, education,
transportation, clean water and waste removal services, or other services such as law
enforcement. Overpopulation in urban areas is often characterized by shanty towns, where such
services are inadequate or wholly absent. A city in which significant growth in the absence of
adequate infrastructure has taken place will be deemed "pseudo-urbanized".
Urbanization in the third world tends to consist primarily of pseudo-urbanization. This happens
largely because of so-called "rural push": factors which push people from the countryside into
the cities, without the city being prepared to accept them. Rural-urban migrants in the third
world usually move into the cities due to poverty-related reasons, leading to a demographic
explosion and a progressive concentration of poor migrants in the cities. This is a finite process,
as one city can only hold so many people due to limited infrastructure and available resources.
Urban sprawl, also known as suburban sprawl, is a multifaceted concept, which includes the
spreading outwards of a city and its suburbs to its outskirts to low-density and auto-dependent
development on rural land, high segregation of uses (e.g. stores and residential), and various
design features that encourage car dependency. As a result, some critics argue that sprawl has
certain disadvantages, including:
 High car dependence.
 Inadequate facilities e.g.: cultural, emergency, health, etc.
 Higher per-person infrastructure costs.

 Inefficient street layouts.
 Low diversity of housing and business types.
 Higher per-capita use of energy, land, and water.
 Perceived low aesthetic value.
However, critics of the current mainstream of urban planning thought (which has become
overwhelmingly anti-"sprawl") respond that sprawl also has certain advantages including:
 More single family residences on larger lots.
 Lower land prices.
 Less experience of noise and pollution.
 Suburban areas generally associated with "sprawl" tend to have lower crime and higher-
quality schools.
 Perceived overwhelming consumer preference for sprawl-type developments.
The term urban sprawl generally has negative connotations due to the health, environmental
and cultural issues associated with the phrase. Residents of sprawling neighborhoods tend to
emit more pollution per person and suffer more traffic fatalities. Sprawl is controversial, with
supporters claiming that consumers prefer lower density neighborhoods and that sprawl does
not necessarily increase traffic. Sprawl is characterized by several land use patterns which
usually occur in unison:
Single-use zoning
This refers to a situation where commercial, residential, institutional and industrial areas are
separated from one another. Consequently, large tracts of land are devoted to a single use and
are segregated from one another by open space, infrastructure, or other barriers. As a result,
the places where people live, work, shop, and recreate are far from one another, usually to the
extent that walking, transit use and bicycling are impractical, so all these activities generally
require an automobile.
Low-density zoning
Sprawl consumes much more land per-capita than traditional urban developments because
zoning laws generally require that new developments are of low density. Buildings usually have
fewer stories and are spaced farther apart, separated by lawns, landscaping, roads or parking
lots. Lot sizes are larger, and because more automobiles are used much more land is
designated for parking. The impact of low density development in many communities is that
developed or "urbanized" land is increasing at a faster rate than the population.
Overall density is often lowered by "leap-frog development". This term refers to the relationship,
or lack thereof, between subdivisions. Such developments are typically separated by large
green belts, i.e. tracts of undeveloped land, resulting in an average density far lower even than
the low density described in the previous paragraph. This is a 20th and 21st century
phenomenon generated by the current custom of requiring a developer to provide subdivision
infrastructure as a condition of development.

Car-dependent communities
Areas of urban sprawl are also characterized as highly dependent on automobiles for
transportation, a condition known as automobile dependency. Most activities, such as shopping
and commuting to work, require the use of a car as a result of both the area's isolation from the
city and the isolation the area's residential zones have from its industrial and commercial zones.
Walking and other methods of transit are not practical; therefore, many of these areas have few
or no sidewalks. In many suburban communities, stores and activities that are in close proximity
"as the crow flies" require automobiles, because the different areas are separated by fences,
walls, and drainage ditches. Some critics argue that excessive parking requirements exacerbate
car dependency.
Job Sprawl and Spatial Mismatch

Job Sprawl is another land use symptom of urban sprawl and car-dependent communities. It is
defined as low-density, geographically spread-out patterns of employment, where the majority
of jobs in a given metropolitan area are located outside of the main city's Central Business
District (CBD), and increasingly in the suburban periphery. It is often the result of urban
disinvestment, the geographic freedom of employment location allowed by predominantly car-
dependent commuting patterns of many American suburbs, and many companies' desire to
locate in low-density areas that are often more affordable and offer potential for expansion.
Spatial mismatch is related to job sprawl and economic Environmental Justice. Spatial
Mismatch is defined as the situation where poor urban, predominantly minority citizens are left
without easy access to entry-level jobs, as a result of increasing job sprawl and limited
transportation options to facilitate a reverse commute to the suburbs.
Developments characteristic of sprawl
Housing subdivisions
Housing subdivisions are large tracts of land consisting entirely of newly-built residences.
Prominent New Urbanist architectural firm Duany Plater-Zyberk & Company claim that housing
subdivisions ―are sometimes called villages, towns, and neighborhoods by their developers,
which is misleading since those terms denote places which are not exclusively residential.‖
They are also referred to as developments.
Subdivisions often incorporate curved roads and cul-de-sacs. Such subdivisions may offer only
a few places to enter and exit the development, causing traffic to use high volume collector
streets. All trips, no matter how short, must enter the collector road in a suburban system.
Strip malls
Shopping centers are locations consisting of retail space. In the U.S. and Canada, these vary
from strip malls which refer to collections of buildings sharing a common parking lot, usually
built on a high-capacity roadway with commercial functions.

Shopping malls
Another prominent form of retail development in areas characterized by "sprawl" is the shopping
mall. Unlike the strip mall, this is usually composed of a single building surrounded by a parking
lot which contains multiple shops, usually "anchored" by one or more department stores (Gruen
and Smith 1960). The function and size is also distinct from the strip mall. The focus is almost
exclusively on recreational shopping rather than daily goods. Shopping malls also tend to serve
a wider (regional) public and require higher-order infrastructure such as highway access and
can have floorspaces in excess of a million square feet (ca. 100,000 m²). Shopping malls are
often detrimental to downtown shopping centers of nearby cities since the shopping malls acts
as a surrogate for the city center.
Fast food chains

Fast food chains are common in suburban areas. They are often built early in areas with low
property values where the population is expected to boom and where large traffic is predicted,
and set a precedent for future development.
Smart growth and the Compact City

The term 'smart growth' has been particularly used in North America. The terms 'compact city'
or 'urban intensification' are often used to describe similar concepts, in Europe and particularly
the UK where it has influenced Government policy and planning practice in recent years.
Transit-, bicycling- and pedestrian-oriented developments

Transit-oriented development
While cities such as Los Angeles are well known for sprawling suburbs, policies and public
opinion are changing. Transit-oriented development, in which higher-density mixed-use areas
are permitted or encouraged near transit stops is encouraging more compact development in
certain areas-particularly those with light and heavy rail transit systems.
Bicycling-oriented development (BOD)

Bicycles are the preferred means of travel in many countries. Also, bicycles are permitted in
public transit. Businesses in areas of some towns where bicycle use is high are thriving.
Bicycles and transit are contributing in two important ways toward the success of businesses:
 First is that on average the people living the closest to these business districts have more
money to spend locally because they don‘t spend as much on their cars.
 Second, because these people rely more on bicycling, walking and transit than on driving,
they tend to focus more of their commerce on locally-owned neighborhood businesses
that are convenient for them to reach.

Pedestrian-oriented development
Walk ability is a measure of how friendly an area is to walking. Walkability has many health,
environmental, and economic benefits. However, evaluating walkability is challenging because it
requires the consideration of many subjective factors. Factors influencing walkability include the
presence or absence and quality of footpaths, sidewalks or other pedestrian right-of-ways,
traffic and road conditions, land use patterns, building accessibility, and safety, among
others.Walkability is an important concept in sustainable urban design.
Health and environmental impact

Urban sprawl is associated with a number of negative environmental and public health
outcomes, with the primary result being increased dependence on automobiles. However, this is
mitigated significantly with nearby development of shopping and recreation areas. Also, many
people prefer to live close to their place of business which is increasingly centered less around
urban areas.
Increased pollution and reliance on fossil fuel

In the years following World War II, when vehicle ownership was becoming widespread, public
health officials recommended the health benefits of suburbs due to soot and industrial fumes in
the city center. However, air in modern suburbs is not necessarily cleaner than air in urban
neighborhoods. In fact, the most polluted air is on crowded highways, where people in suburbs
tend to spend more time. On average, suburban residents generate more per capita pollution
and carbon emissions than their urban counterparts because of their increased driving.
Increase in traffic and traffic-related fatalities

A heavy reliance on automobiles increases traffic throughout the city as well as automobile
crashes, pedestrian injuries, and air pollution. Motor vehicle crashes are the leading cause of
death for Americans between the ages of five and twenty-four and is the leading accident-
related cause for all age groups. Residents of more sprawling areas are at greater risk of dying
in a car crash
Decrease in social capital

Urban sprawl may be partly responsible for the decline in social capital in the United States.
Compact neighborhoods can foster casual social interactions among neighbors, while sprawl
creates barriers. Sprawl tends to replace public spaces with private spaces such as fenced-in
backyards.
Decrease in land and water quantity and quality

Due to the larger area consumed by sprawling suburbs compared to urban neighborhoods,
more farmland and wildlife habitats are displaced per resident. As forest cover is cleared and
covered with impervious surfaces (concrete and asphalt) in the suburbs, rainfall is less
effectively absorbed into the ground water aquifers. This threatens both the quality and quantity
of water supplies. Sprawl increases water pollution as rain water picks up gasoline, motor oil,

heavy metals, and other pollutants in runoff from parking lots and roads. Sprawl fragments the
land which increases the risk of invasive species spreading into the remaining forest.
Increased infrastructure costs

Living in larger, more spread out spaces generally makes public services more expensive.
Since car usage becomes endemic and public transport often becomes significantly more
expensive, city planners are forced to build large highway and parking infrastructure, which in
turn decreases taxable land and revenue, and decreases the desirability of the area adjacent to
such structures. Providing services such as water, sewers, and electricity is also more
expensive per household in less dense areas.
Increased personal transportation costs

Residents of low-density areas spend a higher proportion of their income on transportation than
residents of high density areas.
Neighborhood quality
Critics of sprawl maintain that quality of life is eroded by lifestyles promoted by sprawl promotes.
Traditional neighborhoods the nearness of the workplace to retail and restaurant space that
provides cafes and convenience stores with daytime customers is an essential component to
the successful balance of urban life. Furthermore, they state that the closeness of the workplace
to homes also gives people the option of walking or riding a bicycle to work or school and that
without this kind of interaction between the different components of life the urban pattern quickly
falls apart, poor aesthetics in suburban environments make them "places not worth caring
about", and that they lack a sense of history and identity.
White Flight
Some blame suburbs for what they see as homogeneity of society and culture, leading to
sprawling suburban developments of people with similar race, background and socioeconomic
status. They claim that segregated and stratified development was institutionalized in the early
1950s and 1960s with the financial industries' then-legal process of redlining neighborhoods to
prevent certain people from entering and residing in affluent districts. Sprawl may have a
negative impact on public schools as finances have been pulled out of city cores and diverted to
wealthier suburbs. They argue that the residential and social segregation of whites from blacks
in the United States creates a socialization process that limits whites' chances for developing
meaningful relationships with blacks and other minorities, and that the segregation experienced
by whites from blacks fosters segregated lifestyles and can lead to positive views about
themselves and negative views about blacks.
Urban Sprawl and Automobile dependency

Whether urban sprawl does increase does cause problems of automobile dependency and
whether conversely, policies of smart growth can reduce them have been fiercely contested
issues over several decades.

Suburban colonization
The suburban colonization process is observed in larger cities that have suffered population
and political power loss to suburbs. Other colonialism is often studied for the effects upon those
already inhabiting the colonized area, but students of suburban colonization tend to take greater
interest in the effects upon the metro pole.
Division of labour
Trade and economic interdependence. The division of labour makes trade necessary and is the
source of economic interdependence.
Global division of labour

There exist, as yet, few comprehensive studies of the global division of labour (an intellectual
challenge for researchers), although the ILO and national statistical offices can provide plenty of
data on request for those who wish to try.
Urban morphology
Urban morphology is the study of the form of human settlements and the process of their
formation and transformation. The study seeks to understand the spatial structure and character
of a metropolitan area, city, town or village by examining the patterns of its component parts
and the process of its development. This can involve the analysis of physical structures at
different scales as well as patterns of movement, land use, ownership or control and
occupation. Typically, analysis of physical form focuses on street pattern, lot (or, in the UK, plot)
pattern and building pattern, sometimes referred to collectively as urban grain. Analysis of
specific settlements is usually undertaken using cartographic sources and the process of
development is deduced from comparison of historic maps.
Special attention is given to how the physical form of a city changes over time and to how
different cities compare to each other. Another significant part of this subfield deals with the
study of the social forms which are expressed in the physical layout of a city, and, conversely,
how physical form produces or reproduces various social forms.
People Flow
People Flow as a concept relates to the phenomenon of masses of people moving around in
buildings in an organized, comfortable and safe way.
Urbanization and the ageing of population are the key mega trends creating the need for
managing traffic flow in cities and people flow in buildings. A ―mega trend‖ is a concept to
describe a phenomenon that significantly changes the structure of society. Often the change is
global.
As of 2005 more than 50% of the world population lived in cities and the process of urbanization
is expected to continue. As the population in cities increases, and the subsequent
environmental challenges need to be taken care of, cities are forced to grow tighter and
upwards. Challenges arising from this trend are the congestion and crowding of cities. However,
as history records show, successful urbanization is a prerequisite for economic growth.

Contributors to urbanization:
The Neolithic Revolution is the first agricultural revolution—the transition from hunting and
gathering to agriculture and settlement. Archaeological data indicate that various forms of
domestication of plants and animals arose independently in six separate locales worldwide, with
the earliest known developments taking place in India and the Middle East around 10,000 BP.
Consequences of the Neolithic Revolution

Social change
It is often argued that agriculture gave humans more control over their food supply, but this has
been disputed by the finding that nutritional standards of Neolithic populations were generally
inferior to that of hunter gatherers, and life expectancy may in fact have been shorter, in part
due to diseases.
British Agricultural Revolution

The British Agricultural Revolution describes a period of development in Britain between the
17th century and the end of the 19th century, which saw an epoch-making increase in
agricultural productivity and net output. This in turn supported unprecedented population
growth, freeing up a significant percentage of the workforce, and thereby helped drive the
Industrial Revolution. How this came about is not entirely clear. In recent decades, enclosure,
mechanization, four-field crop rotation, and selective breeding have been highlighted as primary
causes, with credit given to only a relatively few individuals
Effects on history
The agricultural productivity of Britain grew significantly in the period of the agricultural
revolution. It is estimated that the productivity of wheat was about 19 bushels per acre in 1720
and that it has grown to 21-22 bushels in the middle of the eighteenth century. It declined
slightly in the decades of 1780 and 1790 but it began to grow again by the end of the century
and reached a peak in the 1840s around 30 bushels per acre, stabilizing thereafter.
The Industrial Revolution was a period from the 18th to the 19th century where major
changes in agriculture, manufacturing, mining, transport and technology had a profound effect
on the socioeconomic and cultural conditions starting in the United Kingdom, then subsequently
spreading throughout Europe, North America, and eventually the world. The Industrial
Revolution marks a major turning point in human history; almost every aspect of daily life was
eventually influenced in some way. Most notably, average income and population began to
exhibit unprecedented sustained growth. In the two centuries following 1800, the world's
average income increased over 10-fold, while the world's population increased over 6-fold. In
the words of Nobel Prize winning Robert E. Lucas, Jr., "For the first time in history, the living
standards of the masses of ordinary people have begun to undergo sustained growth. ...
Nothing remotely like this economic behavior has happened before." Starting in the later part of
the 18th century there began a transition in parts of Great Britain's previously manual labour
and draft-animal–based economy towards machine-based manufacturing. It started with the
mechanization of the textile industries, the development of iron-making techniques and the
increased use of refined coal. Trade expansion was enabled by the introduction of canals,
improved roads and railways. The introduction of steam power fuelled primarily by coal, wider
utilization of water wheels and powered machinery (mainly in textile manufacturing)
underpinned the dramatic increases in production capacity. The development of all-metal
machine tools in the first two decades of the 19th century facilitated the manufacture of more
production machines for manufacturing in other industries. The effects spread throughout
Western Europe and North America during the 19th century, eventually affecting most of the
world, a process that continues as industrialization. The impact of this change on society was
enormous.
The first Industrial Revolution, which began in the 18th century, merged into the Second
Industrial Revolution around 1850, when technological and economic progress gained
momentum with the development of steam-powered ships, railways, and later in the 19th
century with the internal combustion engine and electrical power generation. The period of time
covered by the Industrial Revolution varies with different historians.
Industrialization is the process of social and economic change that transforms a human group
from a pre-industrial society into an industrial one. It is a part of a wider modernization process,
where social change and economic development are closely related with technological
innovation, particularly with the development of large-scale energy and metallurgy production. It
is the extensive organization of an economy for the purpose of manufacturing. Industrialization
also introduces a form of philosophical change where people obtain a different attitude towards
their perception of nature, and a sociological process of ubiquitous rationalization.
History of industrialization
Most pre-industrial economies had standards of living not much above subsistence, aming that
the majority of the populations were focused on producing their means of survival. For example,
in medieval Europe, 80% of the labour force was employed in subsistence agriculture.
Some pre-industrial economies, such as classical Athens, had trade and commerce as
significant factors, so native Greeks could enjoy wealth far beyond a sustenance standard of
living through the use of slavery. Famines were frequent in most pre-industrial societies,
although some, such as the Netherlands and England of the seventeenth and eighteenth
centuries, the Italian city states of the fifteenth century, the medieval Islamic Caliphate, and the
ancient Greek and Roman civilizations were able to escape the famine cycle through increasing
trade and commercialization of the agricultural sector. It is estimated that during the
seventeenth century Netherlands imported nearly 70% of its grain supply and in the fifth century
BC Athens imported three quarters of its total food supply.
Industrialization through innovation in manufacturing processes first started with the Industrial
Revolution in the north-west and Midlands of England in the eighteenth century. It spread to
Europe and North America in the nineteenth century, and to the rest of the world in the
twentieth.
Industrial revolution in Western Europe

In the eighteenth and nineteenth centuries, Great Britain experienced a massive increase in
agricultural productivity known as the British Agricultural Revolution, which enabled an
unprecedented population growth, freeing a significant percentage of the workforce from
farming, and helping to drive the Industrial Revolution.

Due to the limited amount of arable land and the overwhelming efficiency of mechanized
farming, the increased population could not be dedicated to agriculture. New agricultural
techniques allowed a single peasant to feed more workers than previously; however, these
techniques also increased the demand for machines and other hardware‘s, which had
traditionally been provided by the urban artisans. Artisans, collectively called bourgeoisie,
employed rural exodus workers to increase their output and meet the country's needs.
Industrialization in Asia
Apart from Japan, where industrialization began in the late 19th century, a different pattern of
industrialization followed in East Asia. China and India, while roughly following this development
pattern, made adaptations in line with their own histories and cultures, their major size and
importance in the world, and the geo-political ambitions of their governments (etc.).
Currently, China's government is actively investing in expanding its own infrastructures and
securing the required energy and raw materials supply channels, is supporting its exports by
financing the United States balance payment deficit through the purchase of US treasury bonds,
and is strengthening its military in order to endorse a major geopolitical role.
Meanwhile, India's government is investing in specific vanguard economic sectors such as
bioengineering, nuclear technology, pharmaceutics, informatics, and technologically-oriented
higher education, openly over passing its needs, with the goal of creating several specialization
poles able to conquer foreign markets.
Both Chinese and Indian corporations have also started to make huge investments in Third
World countries, making them significant players in today's world economy.
Newly industrialized countries

In recent decades, a few countries in Latin America, Asia, and Africa, such as Turkey, South
Africa, Malaysia, Philippines and Mexico have experienced substantial industrial growth, fuelled
by exportations going to countries that have bigger economies: the United States, Japan, China,
India and the EU. They are sometimes called newly-industrialized countries.
Effects of Industrial Revolution

The industrial revolution changed the world in a manner that very few other developments in the
world have. The mainly local and isolated feudal-medieval economy was made a thing of the
past and the world became increasingly interconnected.
Revolution, in the simplest terms, means a great change. The industrial revolution was a
process that started in the middle of the eighteenth century and introduced many changes in
agriculture, method and system of production of goods, transport, mining, and economic
policies. All these areas were connected, and changes in one resulted changes in the other.
Furthermore, these changes metamorphosed the social equations and relations. The process is
said to have begun in the middle of the eighteenth century in England with the mechanization of
textile production. However, many believe that this was the culmination of many other
processes that had begun almost two hundred years ago. Later, the revolution also spread to
other parts of Europe.

Starting Process
Surplus produce in agricultural sector is the basic requirement for sustaining an urban
population not engaged in food production. In the eighteenth century, English farmers started
using farm implements made from metal, instead of the wooden equipment used earlier. Some
other improvements in agricultural knowledge led to elimination of the need to keep land fallow
for restoring its fertility. This led to surplus agricultural production. Another change in this sphere
was the enclosure movement, wherein small farmers were deprived of the common village
lands by the rich farmers. As a result, the labor of these small farmers were available for other
industries.
Mechanization of production was another important change. James Hargreaves invented the
jenny, which allowed an operator to spin multiple threads at the same time. Next came
Arkwright, with his water-powered factory. These inventions led to an exponential increase in
the production of textiles. Water power, which had replaced manual and animal power, was
later replaced by steam power. Changes were also introduced into the system of production.
Earlier, production was scattered. People manufactured textiles in their house, using their own
equipment. This was a second line occupation practiced by people in their spare time. The
system was known as putting out system, where production was decentralized or given out.
This was replaced by the factory system, in which the production was done at one place - the
factory. Production equipment was provided by the owners of the factory, and the workers
worked at pre-determined salaries. Above all, workers had no rights over the produce which
was owned by the factory owner. This led to the development of capitalism - the owner provided
the initial money, equipment and location for production. He owned the produce and sold it for a
profit.
Surplus production would require an efficient transport system, right from procurement of raw
materials to transportation of finished goods. This required the development of road, rail and
shipping. The steam engine required coal, and fuel and iron would be required to make rails,
railway compartments, ships, etc. As a result, mining of coal and iron also saw many alterations.
Effects and consequences of Industrial Revolution

In the last part of the 18th century, a new revolution gripped the world that we were not ready
for. This revolution was not a political one, but it would lead to many implications later in its
existance. Neither was this a social or cultural revolution. This revolution was an economic one.
The Industrial Revolution, as it know called by historians, changed the ways by how the world
produced its goods. It also changed our societies from a mainly agricultural society to one that
in which industry and manufacturing was in control.
The industrial revolution first got its start in Great Britian, during the 18th century, which at the
time was the most powerful empire on the planet. So, it ws inevitable that the country with the
most wealth would led in this revolution. After it adoption in England, other countries such as
Germany, the United States and France joined in this revolution.
During this time there were also many new technological advancements, socioeconomic and
cultural problems that arised. On the technology front, the biggest advancements were in steam
power. New fuels such as coal and petroleum, were incorporated into new steam engines. This
revolutionized many industries including textiles and manufacturing. Also, a new communication

medium was invented called the telegraph. This made communicating across the ocean much
faster.
But, along with this great leap in technology, there was an overall downfall in the socioeconomic
and cultural situation of the people. Growth of cities were one of the major consequences of the
Industrial Revolution. Many people were driven to the cities to look for work, in turn the ended
living in the cities that could not support them. With the new industrial age, a new qauntitative
and materialistic view of the world took place. This caused the need for people to consume as
much as they could. This still happens today. Living on small wages that required small children
to work in factories for long days.
Also, during this time much international strife was occuring at this time. The American
Revolution was occurring in the beginning part of the Industrial Revolution. The French
Revolution was in the process at the turn of the 19th century. This was a great time, but resulted
in newly found democratic rights that spread through Europe and North America.
The Industrial Revolution, was not a good revolution for the planet. From the time of its start, the
factories and industry has increased the amount of carbon dioxide in the atmosphere by two-
folds. Also in our drive for consumerism, our planets natural resources are being depleted at an
alarming rate. Pollution by nuclear waste, pesticides and other chemicals are also the result of
the Industrial Revolution.
The working conditions in mines were horrible, to say the least. Furthermore, women and
children were employed as they could be paid lower wages than adult male workers. Child
laborers possessed another advantage - they could easily crawl through the narrow passages in
mines. The situation in factories was not very different. The workers could not bargain for better
conditions and payments, as there was an abundant supply of workers available in the form of
displaced peasants and farmers. If one would protest, he would be fired - and there was always
someone else ready to replace him. Also, the capitalists were becoming richer by the day.
Using their wealth, they were influencing the policies and laws of the government. This influence
was naturally harmful to the labor class. This led to the organization of labor unions, and
subsequently to the development of the concept of socialism. The migration of such a huge
population to cities resulted in the overcrowding of cities and development of slums. The pace
of urbanization quickened to unprecedented levels. The migration also broke the social ties the
worker (i.e. the former peasant or farmer) was used to in villages. This, along with the
deplorable living conditions, caused many other problems like alcoholism, illicit relationships,
loneliness, etc. This degraded the quality of life to such an extent that it was said: "the shortest
route out of Manchester is a glass of whiskey".
The capitalists emerged from the hitherto middle class. The industrial revolution was an
expression of their strength. Their power increased in leaps and bounds. They had the funds to
influence the government. They acquired a stranglehold over politics which continues till date.
Other customs like the importance of punctuality and taking appointments before meeting
people, also started during this age.
The greatest changes of the effects due to the industrial revolution were visible all over the
world. A capitalist had two main requirements for making windfall profits. One was cheap supply

of raw materials, and the other was a ready market. Both of these were available in colonies.
This led to the colonization of many lands in Asia, Africa and South America. The economies of
the colonies were comprehensively subordinated to the mother nation. This resulted in a
scramble for colonies amongst the great powers of that age. Although England was the
strongest power; France, Holland, Portugal, Denmark, and later, Germany and Italy also
entered the race. This race led to imperialism, culminating in the two World Wars. English
exports were creating problems for the industrial development of other powers. To control this,
tariffs were imposed on British goods, leading to tariff barriers. As a result of colonization,
events in one part of the world started influencing events in other parts of the world as well. This
is the simplest description of globalization.
The origin of many modern phenomena and problems can be traced back to the industrial
revolution. The industrial revolution was primarily the economic dimension of the change from
the middle age to the modern age. This subject, hence, makes valuable study material for
anyone attempting to study the modern times.
Impact of the Industrial Revolution
There were many artistic movements during the period of Britain's industrialization, each of
which was a reaction to the feelings of the time, as well as to the movement which had
preceded it. By the time that the Industrial Revolution really took hold, some artists were at
differences with the ideals which it espoused, such as those of discipline, temperance,
structure, and views of the Enlightenment. These feelings translated into the Romantic
movement, which encouraged individualism, freedom, and emotion.
Romanticism was probably the most important artistic movement to flourish during the Industrial
Revolution. It had the most widespread effects on the general population, and its artistic
achievements are still admired today.
Fundamental Shifts in Social Structure

During the Industrial Revolution, the social structure of society changed dramatically. Before the
Revolution most people lived in small villages, working either in agriculture or as skilled
craftsmen. They lived and often worked as a family, doing everything by hand. In fact, three
quarters of Britain's population lived in the countryside, and farming was the predominant
occupation. With the advent of industrialization, however, everything changed. The new
enclosure laws—which required that all grazing grounds be fenced in at the owner's expense—
had left many poor farmers bankrupt and unemployed, and machines capable of huge outputs
made small hand weavers redundant. As a result, there were many people who were forced to
work at the new factories. This required them to move to towns and cities so that they could be
close to their new jobs. It also meant that they made less money for working longer hours. Add
to this the higher living expenses due to urbanization, and one can easily see that many
families' resources would be extremely stretched.
As a result, women and children were sent out to work, making up 75% of early workers.
Families were forced to do this, since they desperately needed money, while factory owners
were happy to employ women and children for a number of reasons. First of all, they could be

paid very little, and children could be controlled more easily than adults, generally through
violent beatings. Children also had smaller hands, which were often needed to reach in among
the parts of a machine. Furthermore, employers found that children were more malleable, and
adapted to the new methods much better than adults did. Children were also sent to work in
mines, being small enough to get more coal and ore from the deep and very often unsafe pits.
They could also be forced to work as long as eighteen hours each day. For these reasons,
children as young as eight years old were sent to factories—usually those which manufactured
textiles—where they became part of a growing and profitable business
.
This unprecedented growth and profit was another social change that occurred during the
Industrial Revolution. The laissez-faire approach taken by the government—and advocated by
philosopher-economist Adam Smith—allowed capitalism to flourish. There were little or no
government regulations imposed upon factory policies, and this allowed the wealthy, middle-
class owners to pursue whichever path was most profitable, regardless of the safety and well
being of their workers. This relentless pursuit of money caused another important social
change: the ultimate breakdown of the family unit.
Since workers, especially women and children, were labouring for up to eighteen hours each
day, there was very little family contact, and the only time that one was at home was spent
sleeping. People also had to share housing with other families, which further contributed to the
breakdown of the family unit. As a result, children received very little education, had stunted
growth, and were sickly. They also grew up quite maladjusted, having never been taught how to
behave properly. The living conditions were indeed horrible; working families often lived in
slums with little sanitation, and infant mortality skyrocketed. During the early Industrial
Revolution, 50% of infants died before the age of two.
However, the social changes that took place were not all negative. Most classes eventually
benefited in some way from the huge profits that were being made, and by 1820 most workers
were making somewhat better wages. The "widespread poverty and constant threat of mass
starvation…lessened, [and] overall health and material conditions of the populace clearly
improved". The government, however, did have to eventually intervene in order to put an end to
child labour and other unacceptable practices.
Effects of the Industrial Revolution on Politics

Although Britain had become a constitutional monarchy a century earlier, the vast majority of
the population remained disenfranchised from the electoral system. As industrial strength grew
along with a more forcible middle class, electoral reform was a necessity to balance the new
society's power structure.
 Before 1832, only 6% of the male population could vote - represented by aristocrats who
owned large plots of land in the countryside and other property.
 By 1832, the middle class factory owners wanted political power to match their new-found
economic punch - this resulted in the Reform Bill of 1832 which enfranchised 20% of the
male population to vote.
 The Reform Bill also redistributed electoral districts to better reflect the large populations
of city centres. Before, most of the electoral power could be found in the countryside
where aristocrats owned vast properties.

 The middle-class became more or less satisfied, but workers were still not represented by
the British electoral system.
Chartism
The dissent and insubordination of the English workingmen reached its peak in the mid-
nineteenth century with Chartism, an ideology that called for political reform in the
country. Its name was based on the People's Charter, a document written in 1838 by
William Lovett and other radicals of the London Working Men's Association, and adopted
at a national convention of workingmen's organizations in August of that year. The
Charter called for several changes to the Parliamentary system:
o Universal Male Suffrage
o Annual Parliaments
o Vote by ballot
o Abolition of the property qualification for MPs
o Payment of MPs
o Equal electoral constituencies (Chartism - too much talk, too little action)
Chartism rapidly gained support among the poorer classes and in Northen England,
where economic depression was common and the people were upset about the new Poor
Law Amendment. The public attention was largely thanks to Feargus O'Connor, a fervent
radical with excellent oratory skills. However, the movement soon lost its momentum
when its leaders became divided over how its demands were to be enforced. A petition to
Parliament was rejected in July of 1839, and most of the movement's leaders were
arrested by the end of the year after the November clash between Chartists and the
military at Newport, Wales.
O'Connor attempted to revive Chartism in 1840 by founding the National Charter
Association, but the people had generally lost interest, appeased by better economic
conditions, a revival of trade unionism, and the growth fo the the Anti-Corn Law League.
After a mass demonstration and procession planned for London during an economic
crisis in 1848 failed to take place, the Chartist movement faded away altogether. Decades
later, in 1884, the majority of males were finally granted the right to vote unit.
The Industrial "Revolution"

The industrialization of Europe, like the French Revolution, left a permanent mark on society.
Life as it was described in the 18th century changed drastically; classes shifted, wealth
increased, and nations began assuming national identities. Describing this industrialization as a
revolution is apt - despite the longer timeframe involved, the social consequences and
economic changes that the world has faced because of industrialization easily equate the
political effects that any of the European revolutions had. The changes can not be
underestimated in importance to society today.
Effects on the Rest of the World

 The quick industrialization across Europe during the 19th century led to a great increase
in goods produced as well as a demand for raw materials.
 This demand, coupled with increased nationalist pride, led nations to seek colonies
abroad in which to produce and trade goods.

 The main expansion for the European colonial powers occurred in Africa. By 1914, the
entire continent with the exception of Liberia and Abyssinia were controlled by European
nations.
 England also took control of India and Hong Kong during this period of expansion. By the
beginning of WWI, England had an empire which stretched across every continent in the
world. Vast amounts of natural resources were extracted from these colonies, which
aided the British industrial effort but left many of the nations bankrupt.
 In short, industrialization in Europe had far reaching consequences for the rest of the
world. While it made Britain the ultimate power for over a century, it can be argued that its
rule over the world caused conflict and internal strife which continues to this day.
Indian Census Definition of Urban Area
In Census of India, 2001 two types of town were identified (R.G,2001):
a) Statutory towns : All places with a municipality, corporation, Cantonment board or

notified town area committee, etc. so declared by state law.
b) Census towns : Places which satisfy following criteria :-

i) a minimum population of 5000 ;
ii) atleast 75% of male working population engaged in non agricultural pursuits; and
iii) a density of population of atleast 400 persons per sq km
Urban Agglomeration
Urban agglomeration is a continuous urban spread constituting atown and its adjoining urban
outgrowths (OGs) or two or more physical contiguous town together and any adjoining urban
out growths of such towns. Examples of out growths are railway colonies, university campus,
port area, military campus etc. that may come up near a statutory town or city. For census of
India, 2001 it was decided that the core town or at least one of the constituent towns of an
urban agglomeration should necessarily be a statutory town and the total population of all the
constituents should not be less than 20,000( as per 1991Census). With these two basic criteria
(R.G 2001) having been met the following are the possible different situations in which urban
agglomerations could be constituted.
Volume and Trend of Urbanization in India
India shares most characteristic features of urbanization in the developing countries. Number of
urban agglomeration /town has grown from 1827 in 1901 to 5161 in 2001. Number of total
population has increased from 23.84 crores in 1901 to 102.7 crores in 2001 whereas number of
population residing in urban areas has increased from 2.58 crores in 1901 to 28.53 crore
in2001. This process of urbanization in India is shown in Fig 1 . It reflects a gradual increasing
trend of urbanization. India is at acceleration stage of the process of urbanization.

Pace of Urbanization
Urbanization in India has been relatively slow compared to many developing countries. The
percentage of annual exponential growth rate of urban population (table 5) reveals that in India
it grew at faster pace from the decade 1921-31 to until 1951. Thereafter it registered a sharp
drop during the decade 1951-61. The decades 1961-71 and 1971-81 showed a significant
improvement in the growth which has thereafter steadily dropped to the present level 2.7. The
sharp drop in urban rate during 1951-61 was mainly due to declassification of a very large
number of towns during that period. Rural growth has been fluctuating since 1901. The decline
in rural population growth was within small range during 1981-91 and 1991-2001
This fact is supported in case of Indian urbanization also since 1911.
Million -Plus cities in India
Number of million plus cities(table: 8) have increased from 5 in 1951 to 23 in 1991 and to 35 in
2001. About 37% of the total urban population live in these million plus/ UA cities. As per 2001
census the newly added million plus cities are 12 in numbers, they are Agra, Meerut, Nashik,
Jabalpur, Jamshedpur, Asansol, Dhanbad, Faridabad, Allahabad, Amritsar, Vijaywada, Rajkot.
Basic Feature and Pattern of India's Urbanization
1. Lopsided urbanization induces growth of class I cities

2. Urbanization occurs without industrialization and strong economic base
3. Urbanization is mainly a product of demographic explosion and poverty induced rural -
urban migration.
4. Rapid urbanization leads to massive growth of slum followed by misery,poverty,
unemployment, exploitation, inequalities, degradation in the quality of urban life.
5. Urbanization occurs not due to urban pull but due to rural push.
6. Poor quality of rural-urban migration leads to poor quality of urbanization (Bhagat,1992).
7. Distress migration initiates urban decay
Problem of Urbanization
Problem of urbanization is manifestation of lopsided urbanization, faulty urban planning,

urbanization with poor economic base and without having functional categories. Hence India's
urbanization is followed by some basic problems in the field of :
1) Housing
2) Slums
3) Transport
4) Water supply and sanitation
5) Water pollution and air pollution
6) Inadequate provision for social infrastructure ( school, hospital, etc ).

Class I cities such as Calcutta , Bombay, Delhi, Madras etc have reached saturation level of
employment generating capacity. Since these cities are suffering from of urban poverty,
unemployment, housing shortage, crisis in urban infra-structural services these large cities can
not absorb these distressed rural migrants i.e poor landless illiterate and unskilled agricultural
labourers. Hence this migration to urban class I cities causes urban crisis more acute. Most of
these cities using capital intensive technologies can not generate employment for these distress
rural poor. So there is transfer of rural poverty to urban poverty. Poverty induced migration of
illiterate and unskilled labourer occurs in class I cities addressing urban involution and urban
decay.
Indian urbanization is involuted not evoluted. Poverty induced migration occurs due to rural
push. Megacities grow in urban population not in urban prosperity, and culture. Hence it is
urbanization without urban functional characteristics. These mega cities are subject to extreme
filthy slum and very cruel mega city denying shelter, drinking water, electricity, sanitation to the
extreme poor and rural migrants.
Urbanization is degenerating social and economic inequalities which warrants social conflicts,
crimes and anti-social activities. Lopsided and uncontrolled urbanization led to environmental
degradation and degradation in the quality of urban life---- pollution in sound, air, water, created
by disposal of hazardous waste. Illiterate, low- skill or no-skill migrants from rural areas are
absorbed in poor low grade urban informal sector at a very low wage rate and urban informal
sector becomes in-efficient and unproductive.
Policy Implication
 Redirection of investment is recommended to develop strong economic base for small

and medium city neglected so far.
 Redirection of migration flows is required. Since the mega cities have reached saturation
level for employment generation and to avoid over-crowding into the over congested
slums of mega cities i.e Bombay, Calcutta, Delhi, Madras etc it is required to build strong
economic sector in the urban economy, growth efforts and investments should be
directed towards small cities which have been neglected so far so that functional base of
urban economy is strengthened. Then redirection of migration to these desirable
destination will be possible.
 Policy should also relate to proper urban planning where city planning will consist of
operational developmental and restorative planning.Operational planning should take
care of improvement of urban infrastructure, e.g roads, traffic, transport etc.
Developmental planning should emphasize on development of newly annexed urban
areas. Various urban renewal process can be used.
 Restorative planning should aim to restore original status of old building monuments
which have historic value.
In general urban planning must aim at –

a) Balanced regional and urban planning
b) Development of strong economic base for urban economy
c) Integration of rural and urban economy-- emphasis on

agro-based industry. Raw material should be processed in rural economy and then
transferred to urban economy.
c) Urban planning and housing for slum people with human face.
URBAN LABOR MARKETS AND ECONOMIC DEVELOPMENT

Urban labor markets are characterized by the spatial proximity of households and businesses,
which offers firms and workers advantages that lead to more efficient markets, enhanced
productivity, and greater economic success. Nevertheless, the nation's city, while generating a
large proportion of the nation's wealth, houses much of the nation's economic disadvantaged
workers.
In every developed economy, cities are the center of economic activity and opportunity. They
bring together businesses, workers, and customers into close physical proximity, which offers
firms and workers advantages that lead to more efficient markets, enhanced productivity, and
greater economic success. These benefits come about in several ways. Large metropolitan
areas allow firms and workers to specialize in activities in which they hold a comparative
advantage. By being close to suppliers and customers, firms can build efficient supply networks
that lower costs and enhance productivity. Also, dense, urban environments enhance the flow of
ideas and the transfer of technology through informational networks, which create growth
enhancing spillovers to firms. Workers also rely on informational networks to add to their
general knowledge, establish support groups, enhance job-related skills, and gain access to job
openings. Consequently, the physical and informational proximity of businesses and workers
within metropolitan areas yields the nation's most productive activities, spawns technological
and organizational innovations, and launches new business ventures.
For most urban residents, economic success is determined by the jobs and income generated
by labor markets. A labor market rewards those people with the appropriate skills, energy, and
ideas. Acquisition of these qualifications results from long-run decisions to invest in education
and training, to choose work over leisure, and to be networked with people who been
successful. Labor markets also provide the signals and incentives for individuals to make these
decisions and to be in a position to take advantage of opportunities when they arise. By offering
the greatest opportunity for economic success, cities attract both the nation's most talented and
successful individuals and the most disadvantaged. While people of all skills are important to
generate the economic complementarities that enhance productivity, many of the least skilled
people do not find the success they had hoped for. Therefore, cities stand as a stark dichotomy
of those who have succeeded and those who have not. They generate a large proportion of the
nation's wealth but also house much of the nation's poverty and homelessness. Cities have
always exhibited this stark contrast between those who have achieved economic success and
those who have not. The ancient Greek philosopher Plato gave commentary to his times in
observing that "there are two cities: One for the rich and one for the poor" (The Republic). The

ability of urban labor markets to improve the quality of life for all groups of workers varies over
time. In recent years, opportunities for economic advancement have diminished. Real earnings
growth has slowed to a paltry 0.9 percent during the last decade. Worse yet, only those
individuals with college degrees experienced improvements in real income; people with high
school degrees or less saw their real earnings decline.
The slowdown in earnings and the rise in income inequality have placed considerable stress on
cities. Many cities have been unable to make sufficient investments in physical and human
capital required for efficient markets and the easy flow of information. As the core structure of
cities deteriorates and the advantages of close proximity diminish, businesses and households
have left inner cities for outlying areas. This shift in location has left inner cities with fewer
resources to devote to mounting social problems. This shift has also helped to diminish the
nation's capacity to spawn high-productivity, high-growth activities. For individuals, these issues
include slow wage growth, increased earnings inequality, persistent earnings gap between
whites and minorities, disparity in job opportunities and earnings between inner cities and
suburbs, the spatial mismatch of jobs, and the increased isolation of many inner city residents.
For the nation, the issues are the social fallout from growing income disparities and reduced
income mobility and the economy's diminished growth capacity as the physical and social
infrastructure supporting urban area markets deteriorates. It is appropriate for the federal
government to create and carry out a national urban policy for two reasons. First, many of the
issues listed above are related to the redistribution of income, which is a traditional function of
the federal government. Second, the close proximity of activities within metropolitan areas
generates externalities that contribute more than proportionately to growth and that compound
the many social problems facing cities. Therefore, to reflect the urban environment that
generates these economic and social trends, a national urban policy must incorporate these
externalities. The policy statement should emphasize the effect of physical and informational
proximity on growth, the benefits of efficient urban markets, and the importance of the access of
workers to urban labor markets. These characteristics distinguish a national urban policy from
simply a national policy targeted at people who happen to live in cities.
I Metropolitan Growth
The fiscal and social distress experienced by cities in recent years has been well documented.
Yet, despite increased concern about urban crime, congestion, air quality, and high housing
prices, metropolitan areas continue to grow and to offer their expanding populations greater job
opportunities and higher income than the declining nonmetropolitan areas. This ability to create
relatively high paying jobs attests to the advantages cities offer to firms through higher labor
productivity and proximity to suppliers. The economic performance of central cities and suburbs
is strongly linked. Workers in both central cities and suburbs benefit to a large extent from the
growth of the entire region. In addition, job growth was markedly better for metropolitan areas
with smaller disparities between central city and suburban income. The linkages between the
two entities continue to strengthen as a greater percentage of holders of central city jobs reside
in the suburbs.
Even with these linkages, considerable disparity exists between central cities and outlying
suburbs. The median income of central city residents is 40 percent lower than that of suburban
residents. Also, central city residents are less educated and have a significantly higher
unemployment rate than suburbanites. This exodus from central cities and the persistent
economic disparities heighten the physical and intellectual barriers between central cities and
suburbs.

Central cities have also experienced a shift in industrial composition from manufacturing to
service jobs, which has contributed significantly to the income differential between central cities
and suburbs. The decline in the percentage of manufacturing jobs has had a large effect on low-
skilled workers. Factory jobs traditionally offered low-skilled workers higher wages than they
could find in other jobs. Metropolitan manufacturing employment substantially impacts the
employment and earnings of young men, with a high school education or less.
II. Slow Earnings Growth and Rising Income Dispersion
The traditional role of cities as a place to seek job opportunities and achieve income
advancement has been eroded during the last two decades by historically low earnings growth
for most groups of workers. The less skilled workers have experienced a loss in real income,
and consequently a decline in their living standards. While city dwellers on average have fared
better than the national average, their earnings have followed the national trend of slower
earnings growth. These trends stem from a complex assortment of economic, demographic,
and social forces. Many of the factors are symptomatic of urban problems. Focusing on the
more important factors offers perspective on how a national urban policy might prioritize the
host of problems facing urban labor markets.
Many economic factors are responsible for slower productivity growth, including a decline in
worker skills, lack of adequate investment in private and public capital, and decline in innovative
activities. With cities traditionally at the forefront of the nation's productivity gains, the slowdown
draws attention to urban concerns that may have contributed to this problem. Current urban
problems of poor educational opportunities in inner cities, the movement of jobs away from the
urban core, and the decline in investment in urban infrastructure may have contributed to the
productivity slowdown. Urban social issues, such as low skills, lack of an adequate support
structure, and lack of participation in the workforce, have also prevented many urban workers
from enjoying the benefits of productivity growth. Changes in social characteristics also
contributed to the change in household income. According to one study, social characteristics
had an even greater effect than economic factors. Ryscavage, Green and Welniak (1991) show
that the decline in married couple households as a percentage of all households and the
increase in educational attainment had large offsetting effects on household income. Of seven
factors considered--age, race, type of household, education, work experience and head of
household, work experience of spouse, and industry of household head--type of household and
education registered the largest effects.
III. Minority Earnings Gap
One of the most troubling and persistent concerns in the performance of urban labor markets,
and one that a national urban policy must address, is the earnings gap.
IV. Lack of Economic Progress
For college graduates, changed occupational composition, shifts in industry demand, and
growth in relative supply are major contributors. For high school dropouts, the reduction in the
real minimum wage lowers earnings, and the increase in the proportion of people with criminal
records are major causes of reduced employment. The fall in employment is largely accounted
for by a rise in the number of men who experienced long spells of labor market inactivity, and
not in more frequent spells. The increasing number of working age males who are detached
from the labor force has long-run economic and social consequences. Without more frequent
work experience, a growing portion of the work force loses valuable job skills, which is
detrimental to the national economy in wasting valuable labor resources as well as to individuals
who lose income. They also lose the job contacts necessary to retain employment or find better
job prospects. Nonparticipants in the labor market contribute to social problems. Those who are
unemployed and no longer actively look for employment are much less likely to marry and live
with a spouse than labor market participants.
V. Barriers to Economic Success
Urban workers benefit from metropolitan economic growth only if they have access to the urban
labor market. For minorities and low-skill workers, this access is impeded by physical barriers of
spatial isolation and intellectual barriers of poor education and inadequate support groups and
referral networks. Therefore, in designing a national urban policy, efforts should also be made to
increase access to the urban labor market. The shifting industrial mix of central cities and
suburbs has left some groups of workers isolated from decent-paying jobs. The movement of
manufacturing jobs to the suburbs has made it increasingly difficult for many inner city residents
to finds jobs close by that offer the same wages as manufacturing jobs. Various types of service
jobs have concentrated in central cities, but either the pay is lower or the skill requirements are
higher than the qualifications of many residents.
Physical distance is not the only barrier that prevents low-income inner city residents, from
gaining access to better-paying jobs. Intellectual barriers also play a major role. Intellectual
barriers prevent people from participating in the formal and informal information networks
through which people learn about job opportunities, are referred to employers, and gain
appropriate role models and support groups. These barriers stem in part from physical isolation,
such as the increasing concentration of poverty. But they also result from a growing gap in the
ability of inner city residents to meet the skill requirements of the workplace and to communicate
and move comfortably within an increasingly sophisticated work environment. While distances
may become effectively shorter because of better transportation, intellectual barriers may
continue to grow as businesses demand higher skills than many inner city workers can match.
The growing gap between skill requirements of the workplace and skills of inner city residents
deters many workers from participating in urban labor markets. Without appropriate skills and
workplace know-how, workers are shut out of many jobs, even entry-level ones.
The spatial separation of households with different income and educational levels is more
pervasive than simply between central cities and surrounding suburbs. Concentration of
poverty, and thus the loss of networks of families and friends with positive work experience, has
occurred within central cities. Studies have shown that low-income households have become
increasing concentrated in central city neighborhoods. Unfortunately, the tremendous increase
in crime in inner city neighborhoods may discourage the location of businesses, which reduces
the number of jobs available to these residents.
VI. Policy Issues and Suggestions
An effective national urban policy must embody the unique characteristics of cities while
addressing the trends that pervade the national economy. The distinguishing features of cities
include the spatial proximity of businesses and households, the flow of information between
these parties, and the linkages of markets within urban areas. Consequently, government's role
and the primary purpose of a national urban policy should be to design programs that promote
growth, internalize externalities, improve market efficiency, and strive for a more acceptable
income distribution. The slowdown in productivity growth has resulted in two major national
issues: sluggish real income growth and widening income dispersion. These trends directly
affect the welfare of urban workers and indirectly alter the structure of metropolitan areas by
promoting decentralization of businesses and households. Weakening the core structure of
metropolitan areas may diminish the economic advantages of cities. A national urban policy
should address the underlying economic and social causes of the productivity slowdown.
Increased productivity is critical to boost earnings and create additional employment
opportunities. Long-term growth hinges on investment in physical and human capital.
Consequently, a national urban policy should include provisions to increase the national savings
rate and allocate resources to education, research and development, and a more efficient flow
of technological information. Cities are the obvious place for this investment, as they offer the
greatest return per dollar spent. However, in doing so, redistributing growth across metropolitan
areas through favorable tax incentives or government subsidies for selected areas should be
minimized.
Efficient Urban Markets
Growth policies should also focus on increasing the efficiency of urban markets. Cities provide
businesses access to skilled labor, to supplier networks, to product markets, and to information.
However, access has been impeded by congestion, the decentralization of employment, and
deficiency in skills of some workers. Widening gaps between central cities and suburbs with
respect to earnings, employment, and quality of life have also reduced the efficiency of urban
markets and has impeded overall growth. In addition, inner city residents benefit from growth of
the entire metropolitan economy, not only in the neighborhoods in which they live. A national
urban policy should include measures to narrow these disparities through promoting the
establishment of regional governments, sharing tax bases, and coordinating metropolitan
provision of government services. Urban externalities can be internalized by reducing
fragmentation of metropolitan area governments, which will enhance overall metropolitan
growth. The benefits of the concentration of economic activities in the urban core as well as the
costs of supporting social problems of urban areas can be shared throughout the metropolitan
area. This would reduce the fiscal incentives to leave the inner cities and help revitalize these
areas.
Increase Access to Urban Labor Markets
Increased economic growth benefits only those people with access to urban labor markets. A
growing number of urban residents face physical and intellectual isolation from urban
opportunities. Isolation deprives individuals of greater economic success and deprives the
nation of potentially productive workers. It also breeds behavior that is burdensome to society,
such as welfare dependency, the breakdown of support networks, the decline in traditional
married-couple families, and involvement in criminal activity. A national urban policy must
address the disadvantages faced by minorities in qualifying for and obtaining jobs and the
disenfranchisement of low-income urban minorities. These programs should strive to get people
into jobs and keep them employed. Improving the quality of education and work-related training
for inner city residents will help to overcome intellectual barriers. Establishing support groups
and supplying appropriate role models through mentoring and employment advocacy programs
will provide access to the labor market and ensure that workers remain in the labor force.
Providing more convenient and affordable public transportation to people who must commute in
directions and at times not typically served by mass transit will increase access to jobs. In
addition, setting up an electronic job placement system that offers information on job seekers
and job vacancies for the greater metropolitan region would give inner city residents access to
the broader labor market. Workers benefit from on-the-job learning and from establishing a
network and support system of economically successful people, which offer opportunities for
future advancement. Programs, such as wage supplements and public service employment,
have proven successful in getting disadvantaged workers into the workplace and on their way to
more active involvement in the labor force.

Economic Growth
Economic growth is the increase of per capita gross domestic product (GDP) or other measure
of aggregate income. It is often measured as the rate of change in real GDP. Economic growth
refers only to the quantity of goods and services produced.
Economic growth can be either positive or negative. Negative growth can be referred to by
saying that the economy is shrinking. Negative growth is associated with economic recession
and economic depression.
In order to compare per capita income across multiple countries, the statistics may be quoted in
a single currency, based on either prevailing exchange rates or purchasing power parity. To
compensate for changes in the value of money (inflation or deflation) the GDP or GNP is usually
given in "real" or inflation adjusted, terms rather than the actual money figure compiled in a
given year, which is called the nominal or current figure.
Economists draw a distinction between short-term economic stabilization and long-term

economic growth. The topic of economic growth is primarily concerned with the long run. The
short-run variation of economic growth is termed the business cycle.
The long-run path of economic growth is one of the central questions of economics; despite
some problems of measurement, an increase in GDP of a country is generally taken as an
increase in the standard of living of its inhabitants. Over long periods of time, even small rates
of annual growth can have large effects through compounding (see exponential growth). A
growth rate of 2.5% per annum will lead to a doubling of GDP within 29 years, whilst a growth
rate of 8% per annum (experienced by some Four Asian Tigers) will lead to a doubling of GDP
within 10 years. This exponential characteristic can exacerbate differences across nations.
In 1377, the Arabian economic thinker Ibn Khaldun provided one of the earliest descriptions of
economic growth in his Muqaddimah (known as Prolegomena in the Western world):
"When civilization [population] increases, the available labor again increases. In turn, luxury
again increases in correspondence with the increasing profit, and the customs and needs of
luxury increase. Crafts are created to obtain luxury products. The value realized from them
increases, and, as a result, profits are again multiplied in the town. Production there is thriving
even more than before. And so it goes with the second and third increase. All the additional
labor serves luxury and wealth, in contrast to the original labor that served the necessity of life."
In the early modern period, some people in Western European nations developed the idea that
economies could "grow", that is, produce a greater economic surplus which could be expended
on something other than mere subsistence. This surplus could then be used for consumption,
warfare, or civic and religious projects. The previous view was that only increasing either
population or tax rates could generate more surplus money for the Crown or country.
Later it was theorized that economic growth also corresponds to a process of continual rapid
replacement and reorganization of human activities facilitated by investment motivated to
maximize returns. This exponential evolution of our self-organized life-support and cultural
systems is remarkably creative and flexible, but highly unpredictable in many ways. As there are
difficulties in modelling complex self-organizing systems, various efforts to model the long term
evolution of economies have produced mixed results.
During much of the "Mercantilist" period, growth was seen as involving an increase in the total
amount of specie, which is circulating medium such as silver and gold, under the control of the
state. This "Bullionist" theory led to policies to force trade through a particular state, the
acquisition of colonies to supply cheaper raw materials which could then be manufactured and
sold.
Later, such trade policies were justified instead simply in terms of promoting domestic trade and
industry. The post-Bullionist insight that it was the increasing capability of manufacturing which
led to policies in the 18th century to encourage manufacturing in itself, and the formula of
importing raw materials and exporting finished goods. Under this system high tariffs were
erected to allow manufacturers to establish "factories". Local markets would then pay the fixed
costs of capital growth, and then allow them to export abroad, undercutting the prices of
manufactured goods elsewhere. Once competition from abroad was removed, prices could then
be increased to recoup the costs of establishing the business.
Under this theory of growth, one policy attempted to foster growth was to grant monopolies,
which would give an incentive for an individual to exploit a market or resource, confident that he
would make all of the profits when all other extra-national competitors were driven out of
business. The "Dutch East India company" and the "British East India company" were examples
of such state-granted trade monopolies.
In this period the view was that growth was gained through "advantageous" trade in which
specie would flow in to the country, but to trade with other nations on equal terms was
disadvantageous. It should be stressed that Mercantilism was not simply a matter of restricting
trade. Within a country, it often meant breaking down trade barriers, building new roads, and
abolishing local toll booths, all of which expanded markets. This corresponded to the
centralization of power in the hands of the Crown (or "Absolutism"). This process helped
produce the modern nation-state in Western Europe.
Internationally, Mercantilism led to a contradiction: growth was gained through trade, but to
trade with other nations on equal terms was disadvantageous.
Classical growth theory

The modern conception of economic growth began with the critique of Mercantilism, especially
by the physiocrats and with the Scottish Enlightenment thinkers such as David Hume and Adam
Smith, and the foundation of the discipline of modern political economy. The theory of the
physiocrats was that productive capacity, itself, allowed for growth, and the improving and
increasing capital to allow that capacity was "the wealth of nations". Whereas they stressed the
importance of agriculture and saw urban industry as "sterile", Smith extended the notion that
manufacturing was central to the entire economy.
David Ricardo argued that trade was a benefit to a country, because if one could buy a good
more cheaply from abroad, it meant that there was more profitable work to be done here. This
theory of "comparative advantage" would be the central basis for arguments in favor of free
trade as an essential component of growth.
CREATIVE DESTRUCTION AND ECONOMIC GROWTH

Many economists view entrepreneurship as having a major influence on a society's rate of
technological progress and thus economic growth.[5] Joseph Schumpeter was a key figure in
understanding the influence of entrepreneurs on technological progress.[5] In Schumpeter's
Capitalism, Socialism and Democracy, published in 1942, an entrepreneur is a person who is
willing and able to convert a new idea or invention into a successful innovation.

Entrepreneurship forces "creative destruction" across markets and industries, simultaneously
creating new products and business models. In this way, creative destruction is largely
responsible for the dynamism of industries and long-run economic growth. Former Federal
Reserve chairman Alan Greenspan has described the influence of creative destruction on
economic growth as follows: "Capitalism expands wealth primarily through creative
destruction—the process by which the cash flow from obsolescent, low-return capital is invested
in high-return, cutting-edge technologies."
The neo-classical growth model
The notion of growth as increased stocks of capital goods (means of production) was codified
as the Solow-Swan Growth Model, which involved a series of equations which showed the
relationship between labor-time, capital goods, output, and investment. According to this view,
the role of technological change became crucial, even more important than the accumulation of
capital. This model, developed by Robert Solow[7] and Trevor Swan[8] in the 1950s, was the first
attempt to model long-run growth analytically. This model assumes that countries use their
resources efficiently and that there are diminishing returns to capital and labor increases. From
these two premises, the neoclassical model makes three important predictions. First, increasing
capital relative to labor creates economic growth, since people can be more productive given
more capital. Second, poor countries with less capital per person will grow faster because each
investment in capital will produce a higher return than rich countries with ample capital. Third,
because of diminishing returns to capital, economies will eventually reach a point at which no
new increase in capital will create economic growth. This point is called a "steady state".
The model also notes that countries can overcome this steady state and continue growing by
inventing new technology. In the long run, output per capita depends on the rate of saving, but
the rate of output growth should be equal for any saving rate. In this model, the process by
which countries continue growing despite the diminishing returns is "exogenous" and represents
the creation of new technology that allows production with fewer resources. Technology
improves, the steady state level of capital increases, and the country invests and grows. The
data does not support some of this model's predictions, in particular, that all countries grow at
the same rate in the long run, or that poorer countries should grow faster until they reach their
steady state. Also, the data suggests the world has slowly increased its rate of growth.
However modern economic research shows that the baseline version of the neoclassical model
of economic growth is not supported by the evidence. Calculations made by Solow claimed that
the majority of economic growth was due to technological progress rather than inputs of capital
and labour. Recent economic research has, however, found the calculations made to support
this claim to be invalid as they do not take into account changes in both investment and labour
inputs. Dale Jorgenson, of Harvard University, President of the American Economic Association
in 2000, concludes that: ‗Griliches and I showed that changes in the quality of capital and labor
inputs and the quality of investment goods explained most of the Solow residual. We estimated
that capital and labor inputs accounted for 85 percent of growth during the period 1945–1965,
while only 15 percent could be attributed to productivity growth… This has precipitated the
sudden obsolescence of earlier productivity research employing the conventions of Kuznets and
Solow.‘
Taking the G7 economies and the largest non-G7 economies, Jorgenson and Vu conclude: ‗the
growth of world output between input growth and productivity… input growth greatly
predominated… Productivity growth accounted for only one-fifth of the total during 1989-1995,
while input growth accounted for almost four-fifths. Similarly, input growth accounted for more
than 70 percent of growth after 1995, while productivity accounted for less than 30 percent.‘

Regarding differences in output per capita Jorgenson and Vu conclude: ‗differences in per
capita output levels are primarily explained by differences in per capital input, rather than
variations in productivity.‘
Development economics
The latter half of the 20th century, with its global economy of a few very wealthy nations and
many very poor nations, led to the study of how the transition from subsistence and resource-
based economies to production and consumption based-economies occurred. This led to the
field of development economics, including the work of Nobel laureates Amartya Sen and Joseph
Stiglitz. However this model of economic development does not meet the demands of subaltern
populations and has been severely criticized by later theorists.
New Growth Theory

Growth theory advanced again with the theories of economist Paul Romer in the late 1980s and
early 1990s. Other important new growth theorists include Robert E. Lucas and Robert J. Barro.
Unsatisfied with Solow's explanation, economists worked to "endogenize" technology in the

1980s. They developed the endogenous growth theory that includes a mathematical
explanation of technological advancement. This model also incorporated a new concept of
human capital, the skills and knowledge that make workers productive. Unlike physical capital,
human capital has increasing rates of return. Therefore, overall there are constant returns to
capital, and economies never reach a steady state. Growth does not slow as capital
accumulates, but the rate of growth depends on the types of capital a country invests in.
Research done in this area has focused on what increases human capital (e.g. education) or
technological change (e.g. innovation).
Recent empirical analyses suggest that differences in cognitive abilities, related to schooling
and other factors, can largely explain variations in growth rates across countries. Cognitive
abilities comprise intelligence and knowledge and are more important than education itself.
Cognitive abilities are more relevant than the classical growth factor "economic freedom". In
comparison of low, mean and high ability groups within societies the competence level of the
high ability group is the most important, stimulating through research and innovation economic
growth and other favorable aspects of countries like democracy.
Other theories
Theories of economic growth, the mechanisms that let it take place and its main determinants
abound. One popular theory in the 1970s for example was that of the "Big Push" which
suggested that countries needed to jump from one stage of development to another through a
virtuous cycle in which large investments in infrastructure and education coupled to private
investment would move the economy to a more productive stage, breaking free from economic
paradigms appropriate to a lower productivity stage.[16]
Analysis of recent economies' success shows a close correlation between growth and climate. It
is possible that there is absolutely no actual mechanism between the two, and the relation may
be spurious. In early human history, economic as well as cultural development was
concentrated in warmer parts of the world, like Egypt.
According to Acemoğlu, Johnson and Robinson, the positive correlation between high income
and cold climate is a by-product of history. Europeans adopted very different colonization
policies in different colonies, with different associated institutions. In places where these
colonizers faced high mortality rates (e.g., due to the presence of tropical diseases), they could
not settle permanently, and they were thus more likely to establish extractive institutions, which
persisted after independence; in places where they could settle permanently (e.g., those with
temperate climates), they established institutions with this objective in mind and modeled them
after those in their European homelands. In these 'neo-Europes' better institutions in turn
produced better development outcomes. Thus, although other economists focus on the identity
or type of legal system of the colonizers to explain institutions, these authors look at the
environmental conditions in the colonies to explain institutions. For instance, former colonies
have inherited corrupt governments and geo-political boundaries (set by the colonizers) that are
not properly placed regarding the geographical locations of different ethnic groups, creating
internal disputes and conflicts which in turn hinder development. In another example, societies
that emerged in colonies without solid native populations established better property rights and
incentives for long-term investment than those where native populations were large.
Substantial academic literature and government strategies support the finance-led growth
hypothesis, based on an observation first made almost a century ago by Joseph Schumpeter
that financial markets significantly boost real economic growth and development. Schumpeter
asserted that finance had a positive impact on economic growth as a result of its effects on
productivity growth and technological change. (Schumpeter, Joseph A. ―The theory of Economic
Development‖, 1912, translated by Redvers Opie. Cambridge. MA: Harvard University Press,
1934). As early as 1989 the World Bank also endorsed the view that financial deepening
matters for economic growth ―by improving the productivity of investment (World Bank, World
Development Report, Washington DC, 1989, 9. 30). A number of case studies on Asia and
Southern African countries show the positive nexus between development of financial
intermediation and economic growth.
Positive Effects Of Economic Growth

Income distribution
Economist Xavier Sala-i-Martin argues that global income inequality is diminishing, and the
World Bank argues that the rapid reduction in global poverty is in large part due to economic
growth. The decline in poverty has been the slowest where growth performance has been the
worst (i.e. in Africa).
Quality of life
Happiness has been shown to increase with a higher GDP per capita, at least up to a level of
$15,000 per person.
Resource depletion
Many earlier predictions of resource depletion, such as Thomas Malthus' 1798 predictions
about approaching famines in Europe, The Population Bomb (1968), Limits to Growth (1972),
and the Simon–Ehrlich wager (1980) have proven false, one reason being that advancements in
technology and science have continually allowed previously unavailable resources to be utilized
more economically.
Economists theorize that economies are driven by new technology and ongoing improvements
in efficiency. In the book The Economic Growth Engine: How useful work creates material
prosperity, 2009 Robert U. Ayres and Benjamin Warr present time series of the efficiency of
primary energy (exergy) conversion into useful work for the US, UK, Austria and Japan
revealing dramatic improvements Ayres and Warr, 2009. With useful work as a factor of
production they are able to reproduce historical rates of economic growth with considerable
precision and without recourse to exogenous and unexplained technological progress, thereby
overcoming the major flaw of the Solow Theory of economic growth. With regards ICT, we have
faster computers today than a year ago, but not necessarily computers requiring more natural
resources to build.
Also, physical limits may be very large if considering all the minerals in the planet Earth or all
possible resources from space colonization, such as solar power satellites, asteroid mining, or a
Dyson sphere. The book Mining the Sky: Untold Riches from the Asteroids, Comets, and
Planets provides an alternative example of such arguments. However, depletion and declining
production from old resources can sometimes occur before new resources are ready to replace
them. This is, in part, the logical basis of the Peak Oil theory. Although individual oil wells and
mines for other nonrenewable resources are often depleted, the availability of these resources
has generally risen and their prices have dropped over the long-run.
Environmental impact
Those more optimistic about the environmental impacts of growth believe that, although
localized environmental effects may occur, large scale ecological effects are minor. The
argument as stated by commentators Julian Lincoln Simon states that if these global-scale
ecological effects exist, human ingenuity will find ways of adapting to them.
Negative effects of economic growth
A number of critical arguments have been raised against economic growth.
Growth 'to a point'
It may be that economic growth improves the quality of life up to a point, after which it doesn't
improve the quality of life, but rather obstructs sustainable living. Historically, sustained growth
has reached its limits (and turned to catastrophic decline) when perturbations to the
environmental system last long enough to destabilise the bases of a culture.
Consumerism
Growth may lead to consumerism by encouraging the creation of what some regard as artificial
needs: Industries cause consumers to develop new taste, and preferences for growth to occur.
Consequently, "wants are created, and consumers have become the servants, instead of the
masters, of the economy."
Environmental impact
The 2007 United Nations GEO-4 report states that humans are living beyond their means.
Humanity‘s environmental demand is purported to be 21.9 hectares per person while the Earth‘s
biological capacity is purported to be 15.7 ha/person. This report reinstates the basic arguments
and observations made by Thomas Malthus in the early 19th century. Economic inequality has
increased; the gap between the poorest and richest countries in the world has been growing.
Some critics argue that a narrow view of economic growth, combined with globalization, is
creating a scenario where we could see a systemic collapse of our planet's natural resources.
Other critics draw on archaeology to cite examples of cultures they claim have disappeared
because they grew beyond the ability of their ecosystems to support them.[34] Concerns about
possible negative effects of growth on the environment and society led some to advocate lower
levels of growth, from which comes the ideas of uneconomic growth and de-growth, and Green
parties which argue that economies are part of a global society and a global ecology and cannot
outstrip their natural growth without damaging them.
Canadian scientist, David Suzuki stated in the 1990s that ecologies can only sustain typically
about 1.5-3% new growth per year, and thus any requirement for greater returns from
agriculture or forestry will necessarily cannibalize the natural capital of soil or forest. Some think
this argument can be applied even to more developed economies.
Equitable growth
While acknowledging the central role economic growth can potentially play in human
development, poverty reduction and the achievement of the Millennium Development Goals, it is
becoming widely understood amongst the development community that special efforts must be
made to ensure poorer sections of society are able to participate in economic growth. For
instance, with low inequality a country with a growth rate of 2% per head and 40% of its
population living in poverty, can halve poverty in ten years, but a country with high inequality
would take nearly 60 years to achieve the same reduction.[36] In the words of the Secretary
General of the United Nations Ban Ki-Moon:
"While economic growth is necessary, it is not sufficient for progress on reducing

poverty."
Researchers at the Overseas Development Institute compares situations such as in Uganda,

where during a period of annual growth of 2.5% between 2000 and 2003, the percentage of
people living in poverty actually increased by 3.8%. The ODI thus emphasizes the need to
ensure social protection is extended to allow universal access and that policies are introduced
to encourage the private sector to create new jobs as the economy grows (as opposed to
jobless growth) and seek to employ people from disadvantaged groups.
Implications of global warming
Up to the present there are close correlations of economic growth with carbon dioxide
emissions across nations, although there is also a considerable divergence in carbon intensity
(carbon emissions per GDP). The Stern Review notes that the prediction that "under business
as usual, global emissions will be sufficient to propel greenhouse-gas concentrations to over
550ppm CO2e by 2050 and over 650-700ppm by the end of this century is robust to a wide
range of changes in model assumptions". The scientific consensus is that planetary ecosystem
functioning without incurring dangerous risks requires stabilization at 450-550ppm.
As a consequence, growth oriented environmental economists propose massive government

intervention into switching sources of energy production, favouring wind, solar, hydroelectric
and nuclear. This would largely confine use of fossil fuels to either domestic cooking needs
(such as for kerosene burners) or where carbon capture and storage technology can be cost-
effective and reliable. The Stern Review, published by the United Kingdom Government in
2006, concluded that an investment of 1% of GDP per annum would be sufficient to avoid the
worst effects of climate change, and that failure to do so could risk global GDP being 20% lower
than it otherwise might be. Because carbon capture and storage is as yet widely unproven, and
its long term effectiveness (such as in containing carbon dioxide 'leaks') unknown, and because
of current costs of alternative fuels these policy responses largely rest on faith on technological
change.

On the other hand, Nigel Lawson claimed that people in a hundred years' time would be "seven
times as well off as we are today", therefore it is not reasonable to impose sacrifices on the
"much poorer present generation".
Indian Economy:
The economy of India is the eleventh largest economy in the world by nominal GDP and the
fourth largest by purchasing power parity (PPP). Following strong economic reforms from the
socialist inspired economy of a post-independence Indian nation, the country began to develop
a fast-paced economic growth, as free market principles were initiated in 1990 for international
competition and foreign investment. India is an emerging economic power with a very large pool
of human and natural resources, and a growing large pool of skilled professionals. According to
the book 'Contours of the World Economy, 1-2030AD' by Angus Maddison, India was the
largest economy from the year 1 AD until the colonial period whereupon it was taken over by
other countries such as China and the U.K. Economists predict that by 2020, India will be
among the leading economies of the world. According to the BRIC report, published by
Goldman Sachs, India will be the second largest economy after China by 2043.
India was under social democratic-based policies from 1947 to 1991. The economy was
characterised by extensive regulation, protectionism, public ownership, pervasive corruption
and slow growth. Since 1991, continuing economic liberalisation has moved the country toward
a market-based economy. A revival of economic reforms and better economic policy in first
decade of the 21st century accelerated India's economic growth rate. In recent years, Indian
cities have continued to liberalize business regulations. By 2008, India had established itself as
the world's second-fastest growing major economy. However, the year 2009 saw a significant
slowdown in India's GDP growth rate to 6.8% as well as the return of a large projected fiscal
deficit of 6.8% of GDP which would be among the highest in the world.
India's large service industry accounts for 55% of the country's Gross Domestic Product (GDP)
while the industrial and agricultural sector contribute 28% and 17% respectively. Agriculture is
the predominant occupation in India, accounting for about 52% of employment. The service
sector makes up a further 34%, and industrial sector around 14%. The labour force totals half a
billion workers. Major agricultural products include rice, wheat, oilseed, cotton, jute, tea,
sugarcane, potatoes, cattle, water buffalo, sheep, goats, poultry and fish. Major industries
include telecommunications, textiles, chemicals, food processing, steel, transportation
equipment, cement, mining, petroleum, machinery, information technology enabled services
and pharmaceuticals.
India's per capita income (nominal) is $1,030, ranked 139th in the world, while its per capita
(PPP) of US$2,940 is ranked 128th. Previously a closed economy, India's trade has grown fast.
India currently accounts for 1.5% of World trade as of 2007 according to the WTO. According to
the World Trade Statistics of the WTO in 2006, India's total merchandise trade (counting
exports and imports) was valued at $294 billion in 2006 and India's services trade inclusive of
export and import was $143 billion. Thus, India's global economic engagement in 2006 covering
both merchandise and services trade was of the order of $437 billion, up by a record 72% from
a level of $253 billion in 2004. India's trade has reached a still relatively moderate share 24% of
GDP in 2006, up from 6% in 1985.
India's economic history can be broadly divided into three eras, beginning with the pre-colonial
period lasting up to the 18th century. The advent of British colonisation started the colonial
period in the early 19th century, which ended with independence in 1947. The third period
stretches from independence in 1947 until now.

Pre-colonial
The citizens of the Indus Valley civilisation, a permanent settlement that flourished between
2800 BC and 1800 BC, practiced agriculture, domesticated animals, used uniform weights and
measures, made tools and weapons, and traded with other cities. Evidence of well planned
streets, a drainage system and water supply reveals their knowledge of urban planning, which
included the world's first urban sanitation systems and the existence of a form of municipal
government.
The 1872 census revealed that 99.3% of the population of the region constituting present-day
India resided in villages, whose economies were largely isolated and self-sustaining, with
agriculture the predominant occupation. This satisfied the food requirements of the village and
provided raw materials for hand-based industries, such as textiles, food processing and crafts.
Although many kingdoms and rulers issued coins, barter was prevalent. Villages paid a portion
of their agricultural produce as revenue to the rulers, while its craftsmen received a part of the
crops at harvest time for their services.
Religion, especially Hinduism, and the caste and the joint family systems, played an influential
role in shaping economic activities.[33] The caste system functioned much like medieval
European guilds, ensuring the division of labour, providing for the training of apprentices and, in
some cases, allowing manufacturers to achieve narrow specialization. For instance, in certain
regions, producing each variety of cloth was the specialty of a particular sub-caste.
Textiles such as muslin, Calicos, shawls, and agricultural products such as pepper, cinnamon,
opium and indigo were exported to Europe, the Middle East and South East Asia in return for
gold and silver.
Assessment of India's pre-colonial economy is mostly qualitative, owing to the lack of

quantitative information. One estimate puts the revenue of Akbar's Mughal Empire in 1600 at
£17.5 million, in contrast with the total revenue of Great Britain in 1800, which totalled £16
million. India, by the time of the arrival of the British, was a largely traditional agrarian economy
with a dominant subsistence sector dependent on primitive technology. It existed alongside a
competitively developed network of commerce, manufacturing and credit. After the decline of
the Mughals, western, central and parts of south and north India were integrated and
administered by the Maratha Empire. The Maratha Empire's budget in 1740s, at its peak, was
100 million. After the loss at Panipat, the Maratha Empire disintegrated into confederate states
of Gwalior, Baroda, Indore, Jhansi, Nagpur, Pune and Kolhapur. Gwalior state had a budget of
30 million. However, at this time, British East India company entered the Indian political
theatre. Until 1857, when India was firmly under the British crown, the country remained in a
state of political instability due to internecine wars and conflicts
Colonial
An aerial view of Calcutta Port taken in 1945. Calcutta, which was the economic hub of British
India, saw increased industrial activity during World War II.
Company rule in India brought a major change in the taxation environment from revenue taxes
to property taxes, resulting in mass impoverishment and destitution of majority of farmers and
led to numerous famines. The economic policies of the British Raj effectively bankrupted India's
large handicrafts industry and caused a massive drain of India's resources. Indian Nationalists
employed the successful Swadeshi movement, as strategy to diminish British economic
superiority by boycotting British products and the reviving the market for domestic-made
products and production techniques. India had become a strong market for superior finished
European goods. This was because of vast gains made by the Industrial revolution in Europe,
the effects of which was deprived to Colonial India.
The Nationalists had hoped to revive the domestic industries that were badly effected by
policies implemented by British Raj which had made them uncompetitive to British made goods.
An estimate by Cambridge University historian Angus Maddison reveals that "India's share of
the world income fell from 22.6% in 1700, comparable to Europe's share of 23.3%, to a low of
3.8% in 1952". It also created an institutional environment that, on paper, guaranteed property
rights among the colonizers, encouraged free trade, and created a single currency with fixed
exchange rates, standardized weights and measures, capital markets. It also established a well
developed system of railways and telegraphs, a civil service that aimed to be free from political
interference, a common-law and an adversarial legal system. India's colonisation by the British
coincided with major changes in the world economy—industrialisation, and significant growth in
production and trade. However, at the end of colonial rule, India inherited an economy that was
one of the poorest in the developing world, with industrial development stalled, agriculture
unable to feed a rapidly growing population, India had one of the world's lowest life
expectancies, and low rates for literacy.
The impact of the British rule on India's economy is a controversial topic. Leaders of the Indian
independence movement, and left-nationalist economic historians have blamed colonial rule for
the dismal state of India's economy in its aftermath and that financial strength required for
Industrial development in Europe was derived from the wealth taken from Colonies in Asia and
Africa. At the same time right-wing historians have countered that India's low economic
performance was due to various sectors being in a state of growth and decline due to changes
brought in by colonialism and a world that was moving towards industrialization and economic
integration.
Independence to 1947
Compare India (orange) with South Korea (yellow). Both started from about the same income
level in 1950. The graph shows GDP per capita of South Asian economies and South Korea as
a percent of the American GDP per capita.
Indian economic policy after independence was influenced by the colonial experience (which
was seen by Indian leaders as exploitative in nature) and by those leaders' exposure to Fabian
socialism. Policy tended towards protectionism, with a strong emphasis on import substitution,
industrialization, state intervention in labour and financial markets, a large public sector,
business regulation, and central planning. Five-Year Plans of India resembled central planning
in the Soviet Union. Steel, mining, machine tools, water, telecommunications, insurance, and
electrical plants, among other industries, were effectively nationalized in the mid-1950s.
Capitalism and Private enterprise did not exist before 1991. Elaborate licences, regulations and
the accompanying red tape, commonly referred to as Licence Raj, were required to set up
business in India between 1947 and 1990.
Jawaharlal Nehru, the first prime minister, along with the statistician Prasanta Chandra
Mahalanobis, carried on by Indira Gandhi formulated and oversaw economic policy. They
expected favorable outcomes from this strategy, because it involved both public and private
sectors and was based on direct and indirect state intervention, rather than the more extreme
Soviet-style central command system. The policy of concentrating simultaneously on capital-
and technology-intensive heavy industry and subsidizing manual, low-skill cottage industries
was criticized by economist Milton Friedman, who thought it would waste capital and labour,
and retard the development of small manufacturers. The rate from 1947–80 was derisively
referred to as the Hindu rate of growth, because of the unfavourable comparison with growth
rates in other Asian countries, especially the "East Asian Tigers".
The Rockefeller Foundation's research in high-yielding varieties of seeds, their introduction after
1965 and the increased use of fertilizers and irrigation are known collectively as the Green
Revolution in India, which provided the increase in production needed to make India self-
sufficient in food grains, thus improving agriculture in India. Famine in India, once accepted as
inevitable, has not returned since independence.
Since 1991
In the late 80s, the government led by Rajiv Gandhi eased restrictions on capacity expansion for
incumbents, removed price controls and reduced corporate taxes. While this increased the rate
of growth, it also led to high fiscal deficits and a worsening current account. The collapse of the
Soviet Union, which was India's major trading partner, and the first Gulf War, which caused a
spike in oil prices, caused a major balance-of-payments crisis for India, which found itself facing
the prospect of defaulting on its loans. India asked for a $1.8 billion bailout loan from IMF, which
in return demanded reforms.
An industrial zone near Mumbai, India.
In response, Prime Minister Narasimha Rao along with his finance minister and current Prime
Minister of India Dr. Manmohan Singh initiated the economic liberalization of 1991. The reforms
did away with the Licence Raj (investment, industrial and import licensing) and ended many
public monopolies, allowing automatic approval of foreign direct investment in many sectors.
Since then, the overall direction of liberalisation has remained the same, irrespective of the
ruling party, although no party has tried to take on powerful lobbies such as the trade unions
and farmers, or contentious issues such as reforming labour laws and reducing agricultural
subsidies. Since 1990 India has a free-market economy and emerged as one of the fastest-
growing economies in the developing world; during this period, the economy has grown
constantly, but with a few major setbacks. This has been accompanied by increases in life
expectancy, literacy rates and food security.
While the credit rating of India was hit by its nuclear tests in 1998, it has been raised to
investment level in 2007 by S&P and Moody's. In 2003, Goldman Sachs predicted that India's
GDP in current prices will overtake France and Italy by 2020, Germany, UK and Russia by 2025
and Japan by 2035. By 2035, it was projected to be the third largest economy of the world,
behind US and China. India is often seen by most economists as a rising economic superpower
and is believed to play a major role in the global economy in the 21st century. In 2009 India
purchased 200 Tons of Gold for $6.7 billion from IMF as a total role reversal from 1991.
Sectors
Industry and services
India has one of the world's fastest growing automobile industries. Shown here is the Tata
Motors' Nano, the world's cheapest car.
Industry accounts for 28% of the GDP and employ 14% of the total workforce. However, about
one-third of the industrial labour force is engaged in simple household manufacturing only. In
absolute terms, India is 16th in the world in terms of nominal factory output.

Economic reforms brought foreign competition, led to privatisation of certain public sector
industries, opened up sectors hitherto reserved for the public sector and led to an expansion in
the production of fast-moving consumer goods. Post-liberalisation, the Indian private sector,
which was usually run by oligopolies of old family firms and required political connections to
prosper was faced with foreign competition, including the threat of cheaper Chinese imports. It
has since handled the change by squeezing costs, revamping management, focusing on
designing new products and relying on low labour costs and technology.
Textile manufacturing is the second largest source for employment after agriculture and
accounts for 26% of manufacturing output. Ludhiana produces 90% of woolens in India and is
also known as the Manchester of India. Tirupur has gained universal recognition as the leading
source of hosiery, knitted garments, casual wear and sportswear. Dharavi slum in Mumbai has
gained fame for leather products. Tata Motors' Nano attempts to be the world's cheapest car.
India is fifteenth in services output. It provides employment to 23% of work force, and it is
growing fast, growth rate 7.5% in 1991–2000 up from 4.5% in 1951–80. It has the largest share
in the GDP, accounting for 55% in 2007 up from 15% in 1950.
Business services (information technology, information technology enabled services, business

process outsourcing) are among the fastest growing sectors contributing to one third of the total
output of services in 2000. The growth in the IT sector is attributed to increased specialization,
and an availability of a large pool of low cost, but highly skilled, educated and fluent English-
speaking workers, on the supply side, matched on the demand side by an increased demand
from foreign consumers interested in India's service exports, or those looking to outsource their
operations. The share of India's IT industry to the country's GDP increased from 4.8 % in 2005-
06 to 7% in 2008. In 2009, seven Indian firms were listed among the top 15 technology
outsourcing companies in the world. In March 2009, annual revenues from outsourcing
operations in India amounted to US$60 billion and this is expected to increase to US$225 billion
by 2020.
Organized retail such supermarkets accounts for 24% of the market as of 2008. Regulations
prevent most foreign investment in retailing. Moreover, over thirty regulations such as
"signboard licences" and "anti-hoarding measures" may have to be complied before a store can
open doors. There are taxes for moving goods to states, from states, and even within states.
Tourism in India is relatively undeveloped, but growing at double digits. Some hospitals woo
medical tourism.
Agriculture
Farmers work inside a rice field in Andhra Pradesh. India is the second largest producer of rice
in the world after China and Andhra Pradesh is the 2nd largest rice producing state in India with
West Bengal being the largest.
India ranks second worldwide in farm output. Agriculture and allied sectors like forestry, logging
and fishing accounted for 17% of the GDP in 2009, employed 52% of the total workforce and
despite a steady decline of its share in the GDP, is still the largest economic sector and plays a
significant role in the overall socio-economic development of India. Yields per unit area of all
crops have grown since 1950, due to the special emphasis placed on agriculture in the five-year
plans and steady improvements in irrigation, technology, application of modern agricultural
practices and provision of agricultural credit and subsidies since Green revolution in India.
However, international comparisons reveal the average yield in India is generally 30% to 50% of
the highest average yield in the world.
Paddy fields at Kanyakumari district in Tamil Nadu
India is the largest producer in the world of milk, cashew nuts, coconuts, tea, ginger, turmeric
and black pepper. It also has the world's largest cattle population: 193 million. It is the second
largest producer of wheat, rice, sugar, cotton, silk, peanuts and inland fish. It is the third largest
producer of tobacco. India is the largest fruit producer, accounting for 10% of the world fruit
production. It is the leading producer of bananas, sapotas and mangoes.
India is the second largest producer and the largest consumer of silk in the world, with the
majority of the 77 million kg (2005) production taking place in Karnataka State, particularly in
Mysore and the North Bangalore regions of Muddenahalli, Kanivenarayanapura, and
Doddaballapura, the upcoming sites of a INR 700 million "Silk City".
Banking and finance
The Indian money market is classified into: the organised sector (comprising private, public and
foreign owned commercial banks and cooperative banks, together known as scheduled banks);
and the unorganised sector (comprising individual or family owned indigenous bankers or
money lenders and non-banking financial companies (NBFCs)). The unorganised sector and
microcredit are still preferred over traditional banks in rural and sub-urban areas, especially for
non-productive purposes, like ceremonies and short duration loans.
Mumbai is the financial and commercial capital of India. Shown here is the World Trade Centre
of Mumbai
Prime Minister Indira Gandhi nationalised 14 banks in 1969, followed by six others in 1980, and
made it mandatory for banks to provide 40% of their net credit to priority sectors like agriculture,
small-scale industry, retail trade, small businesses, etc. to ensure that the banks fulfill their
social and developmental goals. Since then, the number of bank branches has increased from
10,120 in 1969 to 98,910 in 2003 and the population covered by a branch decreased from
63,800 to 15,000 during the same period. The total deposits increased 32.6 times between
1971 to 1991 compared to 7 times between 1951 to 1971. Despite an increase of rural
branches, from 1,860 or 22% of the total number of branches in 1969 to 32,270 or 48%, only
32,270 out of 5 lakh (500,000) villages are covered by a scheduled bank.
The public sector banks hold over 75% of total assets of the banking industry, with the private
and foreign banks holding 18.2% and 6.5% respectively. Since liberalisation, the government
has approved significant banking reforms. While some of these relate to nationalised banks (like
encouraging mergers, reducing government interference and increasing profitability and
competitiveness), other reforms have opened up the banking and insurance sectors to private
and foreign players.
More than half of personal savings are invested in physical assets such as land, houses, cattle,
and gold. Indian has the highest saving rate in the world at 36 percent.
Natural resources
India has the world's fifth largest wind power industry, with an installed wind power capacity of
9,587 MW. Shown here is a wind farm in Muppandal, Tamil Nadu.
India's total cultivable area is 1,269,219 km² (56.78% of total land area), which is decreasing
due to constant pressure from an ever growing population and increased urbanisation. India has
a total water surface area of 314,400 km² and receives an average annual rainfall of 1,100 mm.
Irrigation accounts for 92% of the water utilisation, and comprised 380 km² in 1974, and is
expected to rise to 1,050 km² by 2025, with the balance accounted for by industrial and
domestic consumers. India's inland water resources comprising rivers, canals, ponds and lakes
and marine resources comprising the east and west coasts of the Indian ocean and other gulfs
and bays provide employment to nearly 6 million people in the fisheries sector. In 2008, India
had the world's third largest fishing industry.[88]
India's major mineral resources include coal, iron, manganese, mica, bauxite, titanium,
chromite, limestone and thorium. India meets most of its domestic energy demand through its
92 billion tonnes of coal reserves (about 10% of world's coal reserves).[89]
India's huge thorium reserves — about 25% of world's reserves — is expected to fuel the
country's ambitious nuclear energy program in the long-run. India's dwindling uranium reserves
stagnated the growth of nuclear energy in the country for many years.[90] However, the Indo-US
nuclear deal has paved the way for India to import uranium from other countries.[91] India is also
believed to be rich in certain renewable sources of energy with significant future potential such
as solar, wind and biofuels (jatropha, sugarcane).
Petroleum and Natural gas

ONGC platform at Mumbai High in the Arabian Sea. As of 2010, India is the world's fifth largest
consumer of oil.
India's oil reserves, found in Mumbai High, parts of Gujarat, Rajasthan and eastern Assam,
meet 25% of the country's domestic oil demand. India's total proven oil reserves stand at 11
billion barrels, of which Mumbai High is believed to hold 6.1 billion barrels and Mangala Area in
Rajasthan an additional 3.6 billion barrels.
In 2009, India imported 2.56 million barrels of oil per day, making it one of largest buyers of
crude oil in the world. The petroleum industry in India mostly consists of public sector
companies such as Oil and Natural Gas Corporation (ONGC), Hindustan Petroleum Corporation
Limited (HPCL) and Indian Oil Corporation Limited (IOCL). There are some major private Indian
companies in oil sector such as Reliance Industries Limited (RIL) which operates the world's
largest oil refining complex.
Pharmaceuticals
India has a self reliant Pharmaceuticals industry. The majority of its medical consumables are
produced domestically. Pharmaceutical Industry in India is dotted with companies like Ranbaxy
Pharmaceutical, Dr. Reddy's Laboratories, Cipla which have created a niche for themselves at
world level. India including China, Brazil, Turkey, Mexico, Russia and South Korea are called
―pharmerging‖ countries.
Today, India is an exporter to countries like the United States and Russia. In terms of the global
market, India currently holds a modest 1-2% share, but it has been growing at approximately
10% per year. India is unable to capture much of the value as most of the innovation taking
place is by non-Indian firms. They are developing products in their own R&D centres or
outsourcing to Indian engineering services firms and getting the stuff manufactured at either
their own factories or through contract manufacturing, as in pharmaceuticals.

EXTERNAL TRADE AND INVESTMENT
Global trade relations
In March 2008, India's annual imports and exports stood at US$236 and US$155.5 billion
respectively. Shown here is the cargo of a container ship being unloaded at the Jawaharlal
Nehru Port, Navi Mumbai.
India's economy is mostly dependent on its large internal market with external trade accounting
for just 20% of the country's GDP. In 2008, India accounted for 1.45% of global merchandise
trade and 2.8% of global commercial services export. Until the liberalization of 1991, India was
largely and intentionally isolated from the world markets, to protect its economy and to achieve
self-reliance. Foreign trade was subject to import tariffs, export taxes and quantitative
restrictions, while foreign direct investment (FDI) was restricted by upper-limit equity
participation, restrictions on technology transfer, export obligations and government approvals;
these approvals were needed for nearly 60% of new FDI in the industrial sector. The restrictions
ensured that FDI averaged only around US$200 million annually between 1985 and 1991; a
large percentage of the capital flows consisted of foreign aid, commercial borrowing and
deposits of non-resident Indians. India's exports were stagnant for the first 15 years after
independence, due to the predominance of tea, jute and cotton manufactures, demand for
which was generally inelastic. Imports in the same period consisted predominantly of
machinery, equipment and raw materials, due to nascent industrialization.
Since liberalization, the value of India's international trade has become more broad-based and
has risen to 63,080,109 crores in 2003–04 from 1,250 crores in 1950–51. India's major
trading partners are China, the US, the UAE, the UK, Japan and the EU. The exports during
April 2007 were $12.31 billion up by 16% and import were $17.68 billion with an increase of
18.06% over the previous year. In 2006-07, major export commodities included engineering
goods, petroleum products, chemicals and pharmaceuticals, gems and jewellery, textiles and
garments, agricultural products, iron ore and other minerals. Major import commodities included
crude oil and related products, machinery, electronic goods, gold and silver.
India is a founding-member of General Agreement on Tariffs and Trade (GATT) since 1947 and
its successor, the WTO. While participating actively in its general council meetings, India has
been crucial in voicing the concerns of the developing world. For instance, India has continued
its opposition to the inclusion of such matters as labour and environment issues and other non-
tariff barriers into the WTO policies.
Balance of payments
Cumulative Current Account Balance 1980-2008 based on the IMF data
Since independence, India's balance of payments on its current account has been negative.
Since liberalisation in the 1990s (precipitated by a balance of payment crisis), India's exports
have been consistently rising, covering 80.3% of its imports in 2002–03, up from 66.2% in
1990–91. India's growing oil import bill is seen as the main driver behind the large current
account deficit. In 2007-08, India imported 120.1 million tonnes of crude oil, more than 3/4th of
the domestic demand, at a cost of $61.72 billion.
Although India is still a net importer, since 1996–97 its overall balance of payments (i.e.,
including the capital account balance) has been positive, largely on account of increased foreign
direct investment and deposits from non-resident Indians; until this time, the overall balance

was only occasionally positive on account of external assistance and commercial borrowings.
As a result, India's foreign currency reserves stood at $285 billion in 2008.
Due to the global late-2000s recession, both Indian exports and imports declined by 29.2% and
39.2% respectively in June 2009. The steep decline was because countries hit hardest by the
global recession, such as United States and members of the European Union, account for more
than 60% of Indian exports. However, since the decline in imports was much sharper compared
to the decline in exports, India's trade deficit reduced to 252.5 billion rupee.
India's reliance on external assistance and commercial borrowings has decreased since 1991–
92, and since 2002–03, it has gradually been repaying these debts. Declining interest rates and
reduced borrowings decreased India's debt service ratio to 4.5% in 2007. In India, External
Commercial Borrowings (ECBs) are being permitted by the Government for providing an
additional source of funds to Indian corporates. The Ministry of Finance monitors and regulates
these borrowings (ECBs) through ECB policy guidelines.
Foreign direct investment in India
As the fourth-largest economy in the world in PPP terms, India is a preferred destination for
foreign direct investments (FDI); India has strengths in telecommunication, information
technology and other significant areas such as auto components, chemicals, apparels,
pharmaceuticals, and jewellery. Despite a surge in foreign investments, rigid FDI policies
resulted in a significant hindrance. However, due to some positive economic reforms aimed at
deregulating the economy and stimulating foreign investment, India has positioned itself as one
of the front-runners of the rapidly growing Asia Pacific Region. India has a large pool of skilled
managerial and technical expertise. The size of the middle-class population stands at 300
million and represents a growing consumer market.
The inordinately high investment from Mauritius is due to routing of international funds through
the country given significant capital gains tax advantages; double taxation is avoided due to a
tax treaty between India and Mauritius, and Mauriitus is a capital gains tax haven, effectively
creating a zero-taxation FDI channel.
India's recently liberalized FDI policy (2005) allows up to a 100% FDI stake in ventures.
Industrial policy reforms have substantially reduced industrial licensing requirements, removed
restrictions on expansion and facilitated easy access to foreign technology and foreign direct
investment FDI. The upward moving growth curve of the real-estate sector owes some credit to
a booming economy and liberalized FDI regime. In March 2005, the government amended the
rules to allow 100 per cent FDI in the construction business. This automatic route has been
permitted in townships, housing, built-up infrastructure and construction development projects
including housing, commercial premises, hotels, resorts, hospitals, educational institutions,
recreational facilities, and city- and regional-level infrastructure.
A number of changes were approved on the FDI policy to remove the caps in most sectors.
Fields which require relaxation in FDI restrictions include civil aviation, construction
development, industrial parks, petroleum and natural gas, commodity exchanges, credit-
information services and mining. But this still leaves an unfinished agenda of permitting greater
foreign investment in politically sensitive areas such as insurance and retailing. FDI inflows into
India reached a record $19.5 billion in fiscal year 2006-07 (April–March), according to the
government's Secretariat for Industrial Assistance. This was more than double the total of
US$7.8bn in the previous fiscal year. The FDI inflow for 2007-08 has been reported as $24
billion and for 2008-09, it is expected to be above $35 billion. A critical factor in determining
India's continued economic growth and realizing the potential to be an economic superpower is
going to depend on how the government can create incentives for FDI flow across a large
number of sectors in India.
Currency
The RBI headquarters in Mumbai
The Indian rupee is the only legal tender accepted in India. The exchange rate as on 23 March
2010 is 45.40 INR the USD, 61.45 to a EUR, and 68.19 to a GBP. The Indian rupee is accepted
as legal tender in the neighboring Nepal and Bhutan, both of which peg their currency to that of
the Indian rupee. The rupee is divided into 100 paise. The highest-denomination banknote is the
1,000 rupee note; the lowest-denomination coin in circulation is the 25 paise coin (it earlier had
1, 2, 5, 10 and 20 paise coins which have been discontinued by the Reserve Bank of India).
The Rupee hit a record low during early 2009 on account of global recession. However, due to
a strong domestic market, India managed to bounce back sooner than the western countries.
Since September 2009 there has been a constant appreciation in Rupee versus most Tier 1
currencies. On 11 January 2010 Rupee went as high as 45.50 to a United states dollar and on
10 January 2010 as high as Rupee 73.93 to a British Pound. A rising rupee also prompted
Government of India to buy 200 tonnes of Gold from IMF.
The RBI, the country's central bank was established on 1 April 1935. It serves as the nation's
monetary authority, regulator and supervisor of the financial system, manager of exchange
control and as an issuer of currency. The RBI is governed by a central board, headed by a
governor who is appointed by the Central government of India.
Income and consumption
Percentage of population living under the poverty line of $1 (PPP) a day, currently 356.35
rupees a month in rural areas (around $7.4 a month).
As of 2005:
 85.7% of the population lives on less than $2.50 (PPP) a day, down from 92.5% in 1981.
This is much higher than the 80.5% in Sub-Saharan Africa. 75.6% of the population lives
on less than $2 a day (PPP), which is around 20 rupees or $0.5 a day in nominal terms.
 It was down from 86.6%, but is still even more than the 73.0% in Sub-Saharan Africa.
24.3% of the population earned less than $1 (PPP, around $0.25 in nominal terms) a day
in 2005, down from 42.1% in 1981.
 41.6% of its population is living below the new international poverty line of $1.25 (PPP)
per day, down from 59.8% in 1981. The World Bank further estimates that a third of the
global poor now reside in India.
Housing is modest. According to Times of India, "a majority of Indians have per capita space
equivalent to or less than a 10 feet x 10 feet room for their living, sleeping, cooking, washing
and toilet needs." and "one in every three urban Indians lives in homes too cramped to exceed
even the minimum requirements of a prison cell in the US." The average is 103 sq ft (9.6 m2)
per person in rural areas and 117 sq ft (10.9 m2) per person in urban areas.
Around half of Indian children are malnourished. The proportion of underweight children is
nearly double that of Sub-Saharan Africa. However, India has not had famines since the Green
Revolution in the early 1970s. While poverty in India has reduced significantly, official figures
estimate that 27.5% of Indians still lived below the national poverty line of $1 (PPP, around 10
rupees in nominal terms) a day in 2004-2005. A 2007 report by the state-run National
Commission for Enterprises in the Unorganised Sector (NCEUS) found that 65% of Indians, or
750 million people, lived on less than 20 rupees per daywith most working in "informal labour
sector with no job or social security, living in abject poverty."
Since the early 1950s, successive governments have implemented various schemes, under
planning, to alleviate poverty, that have met with partial success. All these programmes have
relied upon the strategies of the Food for work programme and National Rural Employment
Programme of the 1980s, which attempted to use the unemployed to generate productive
assets and build rural infrastructure. In August 2005, the Indian parliament passed the Rural
Employment Guarantee Bill, the largest programme of this type in terms of cost and coverage,
which promises 100 days of minimum wage employment to every rural household in all the
India's 600 districts. The question of whether economic reforms have reduced poverty or not
has fuelled debates without generating any clear cut answers and has also put political pressure
on further economic reforms, especially those involving the downsizing of labour and cutting
agricultural subsidies. Recent statistics in 2010 point out that the number of high income
households has crossed lower income households.
Employment
Agricultural and allied sectors accounted for about 60% of the total workforce in 2003 same as
in 1993–94. While agriculture has faced stagnation in growth, services have seen a steady
growth. Of the total workforce, 8% is in the organised sector, two-thirds of which are in the
public sector. The NSSO survey estimated that in 1999–2000, 106 million, nearly 10% of the
population were unemployed and the overall unemployment rate was 7.3%, with rural areas
doing marginally better (7.2%) than urban areas (7.7%). India's labor force is growing by 2.5%
annually, but employment only at 2.3% a year.
Official unemployment exceeds 9%. Regulation and other obstacles have discouraged the
emergence of formal businesses and jobs. Almost 30% of workers are casual workers who work
only when they are able to get jobs and remain unpaid for the rest of the time Only 10% of the
workforce is in regular employment. India's labor regulations are heavy even by developing
country standards and analysts have urged the government to abolish them.
Unemployment in India is characterized by chronic or disguised unemployment. Government

schemes that target eradication of both poverty and unemployment (which in recent decades
has sent millions of poor and unskilled people into urban areas in search of livelihoods) attempt
to solve the problem, by providing financial assistance for setting up businesses, skill honing,
setting up public sector enterprises, reservations in governments, etc. The decreased role of the
public sector after liberalization has further underlined the need for focusing on better education
and has also put political pressure on further reforms.
Child labor is a complex problem that is basically rooted in poverty. The Indian government is
implementing the world's largest child labor elimination program, with primary education
targeted for ~250 million. Numerous non-governmental and voluntary organizations are also
involved. Special investigation cells have been set up in states to enforce existing laws banning
employment of children (under 14) in hazardous industries. The allocation of the Government of
India for the eradication of child labor was $10 million in 1995-96 and $16 million in 1996-97.
The allocation for 2007 is $21 million. In 2006, remittances from Indian migrants overseas made
up $27 billion or about 3% of India's GDP.

Economic trends
India's 300 million strong middle-class population is growing at an annual rate of 5%. Shown
here is a residential area in Mumbai.
In the revised 2007 figures, based on increased and sustaining growth, more inflows into foreign
direct investment, Goldman Sachs predicts that "from 2007 to 2020, India‘s GDP per capita in
US$ terms will quadruple", and that the Indian economy will surpass the United States (in US$)
by 2043. In spite of the high growth rate, the report stated that India would continue to remain a
low-income country for decades to come but could be a "motor for the world economy" if it
fulfills its growth potential. Goldman Sachs has outlined 10 things that it needs to do in order to
achieve its potential and grow 40 times by 2050. These are
1. Improve Governance
2. Raise Educational Achievement
3. Increase Quality and Quantity of Universities
4. Control Inflation
5. Introduce a Credible Fiscal Policy
6. Liberalize Financial Markets
7. Increase Trade with Neighbours
8. Increase Agricultural Productivity
9. Improve Infrastructure
10. Improve Environmental Quality.
Issues
Agriculture
Slow agricultural growth is a concern for policymakers as some two-thirds of India‘s people
depend on rural employment for a living. Current agricultural practices are neither economically
nor environmentally sustainable and India's yields for many agricultural commodities are low.
Poorly maintained irrigation systems and almost universal lack of good extension services are
among the factors responsible. Farmers' access to markets is hampered by poor roads,
rudimentary market infrastructure, and excessive regulation.
– World Bank: "India Country Overview 2008"
The low productivity in India is a result of the following factors:
 According to "India: Priorities for Agriculture and Rural Development" by World Bank,
India's large agricultural subsidies are hampering productivity-enhancing investment.
Overregulation of agriculture has increased costs, price risks and uncertainty.
Government interventions in labor, land, and credit markets are hurting the market.
Infrastructure and services are inadequate.[150]
 Illiteracy, slow progress in implementing land reforms and inadequate or inefficient
finance and marketing services for farm produce.
 The average size of land holdings is very small (less than 20,000 m²) and is subject to
fragmentation, due to land ceiling acts and in some cases, family disputes. Such small
holdings are often over-manned, resulting in disguised unemployment and low
productivity of labour.

 Adoption of modern agricultural practices and use of technology is inadequate, hampered
by ignorance of such practices, high costs and impracticality in the case of small land
holdings.
 World Bank says that the allocation of water is inefficient, unsustainable and inequitable.
The irrigation infrastructure is deteriorating. Irrigation facilities are inadequate, as
revealed by the fact that only 52.6% of the land was irrigated in 2003–04, which result in
farmers still being dependent on rainfall, specifically the Monsoon season. A good
monsoon results in a robust growth for the economy as a whole, while a poor monsoon
leads to a sluggish growth. Farm credit is regulated by NABARD, which is the statutory
apex agent for rural development in the subcontinent.
India has many farm insurance companies that insure fruit, rice and rubber farmers in the event
of natural disasters or catastrophic crop failure, under the supervision of the Ministry of
Agriculture. One notable company that provides all of these insurance policies is Agriculture
Insurance Company of India and it alone insures almost 20 million farmers.
India's population is growing faster than its ability to produce rice and wheat. The most
important structural reform for self-sufficiency is the ITC Limited plan to connect 20,000 villages
to the Internet by 2013. This will provide farmers with up to date crop prices for the first time,
which should minimise losses incurred from neighbouring producers selling early and in turn
facilitate investment in rural areas.
Corruption
Corruption has been one of the pervasive problems affecting India. The economic reforms of
1991 reduced the red tape, bureaucracy and the Licence Raj that had strangled private
enterprise and was blamed by Chakravarthi Rajagopalachari for the corruption and
inefficiencies. Yet, a 2005 study by Transparency International (TI) India found that more than
half of those surveyed had firsthand experience of paying bribe or peddling influence to get a
job done in a public office.
The Right to Information Act (2005) and equivalent acts in the Indian states, that require
government officials to furnish information requested by citizens or face punitive action,
computerisation of services and various central and state government acts that established
vigilance commissions have considerably reduced corruption or at least have opened up
avenues to redress grievances. The 2009 report by Transparency International ranks India at
84th place and states that significant improvements were made by India in reducing corruption.
Government
The number of people employed in non-agricultural occupations in the public and private
sectors. Totals are rounded. Private sector data relates to non-agriculture establishments with
10 or more employees.
The current government has concluded that most spending fails to reach its intended recipients.
Lant Pritchett calls India's public sector "one of the world's top ten biggest problems — of the
order of AIDS and climate change".The Economist's 2008 article about the Indian civil service
stated that the Indian central government employs around 3 million people, including "vast
armies of paper-shuffling peons".
At local level, administration can be worse. It is not unheard of that a majority of a state's
assembly seats can be held by convicted criminals. One study found that 25% of public sector

teachers and 40% of public sector medical workers could not be found at the workplace. India's
absence rates are one of the worst in the world.
Education
India has made huge progress in terms of increasing primary education attendance rate and
expanding literacy to approximately two thirds of the population. The right to education at
elementary level has been made one of the fundamental rights under the Eighty-Sixth
Amendment of 2002. However, the literacy rate of 65% is still lower than the worldwide average
and the country suffers from a high dropout rate.
Infrastructure
In the past, development of infrastructure was completely in the hands of the public sector and
was plagued by corruption, bureaucratic inefficiencies, urban-bias and an inability to scale
investment. India's low spending on power, construction, transportation, telecommunications
and real estate, at $31 billion or 6% of GDP in 2002 had prevented India from sustaining higher
growth rates. This has prompted the government to partially open up infrastructure to the private
sector allowing foreign investment which has helped in a sustained growth rate of close to 9%
for the past six quarters.
Some 600 million Indians have no means of electricity at all. While 80% of Indian villages have
at least an electricity line, just 44% of rural households have access to electricity. According to a
sample of 97,882 households in 2002, electricity was the main source of lighting for 53% of rural
households compared to 36% in 1993. Some half of the electricity is stolen, compared with 3%
in China. The stolen electricity amounts to 1.5% of GDP. Almost all of the electricity in India is
produced by the public sector. Power outages are common. Many buy their own power
generators to ensure electricity supply. As of 2005 the electricity production was at 661.6 billion
kWh with oil production standing at 785,000 bbl/day. In 2007, electricity demand exceeded
supply by 15%.Multi Commodity Exchange has tried to get a permit to offer electricity future
markets.
India has the world's third largest road network in the world. Container traffic is growing at 15%
a year. Some 60% of India‘s container traffic is handled by the Jawaharlal Nehru Port Trust in
Navi Mumbai. Internet use is rare; there were only 7.57 million broadband lines in India in
November 2009, however it is still growing at slower rate and is expected to boom after the
launch of 3G and wimax services. Most urban cities have good water supply water 24 hours a
day, while some smaller cities face water shortages in summer season. A World Bank report
says it is an institutional problem in water agencies, or "how the agency is embedded in the
relationships between politics and the citizens who are the consumers."
Labour laws
India‘s labor regulations — among the most restrictive and complex in the world — have
constrained the growth of the formal manufacturing sector where these laws have their widest
application. Better designed labor regulations can attract more labor- intensive investment and
create jobs for India‘s unemployed millions and those trapped in poor quality jobs. Given the
country‘s momentum of growth, the window of opportunity must not be lost for improving the job
prospects for the 80 million new entrants who are expected to join the work force over the next
decade.– World Bank: India Country Overview 2008.
India's restrictive labor regulations hamper the large-scale creation of formal industrial jobs.

India ranked 133th on the Ease of Doing Business Index 2010, behind countries such as China
(89th), Pakistan (85th), and Nigeria (125th). The Constitution provides protection of child labor,
slavery, equality of opportunities and forced labor etc. in form of fundamental rights, but the
implementation of provisions cited is a matter of concern.
Economic disparities
Lagging states need to bring more jobs to their people by creating an attractive investment
destination. Reforming cumbersome regulatory procedures, improving rural connectivity,
establishing law and order, creating a stable platform for natural resource investment that
balances business interests with social concerns, and providing rural finance are important.
– World Bank: India Country Overview 2008
Slums next to high-rise commercial buildings in Kaloor, Kochi. Hundreds of people, mostly
comprising migrant labourers who come to the city seeking job prospects, reside in such shabby
areas.
One of the critical problems facing India's economy is the sharp and growing regional variations
among India's different states and territories in terms of per capita income, poverty, availability
of infrastructure and socio-economic development. Six low-income states - Bihar, Chhattisgarh,
Jharkhand, Madhya Pradesh, Orissa and Uttar Pradesh - are home to more than one third of
India's population.
Between 1999 and 2008, the annualized growth rates for Maharashtra (9%), Gujarat (8.8%),
Haryana (8.7%), or Delhi (7.4%) were much higher than for Bihar (5.1%), Uttar Pradesh (4.4%),
or Madhya Pradesh (3.5%). However, In 2009-10, Bihar witnessed a growth of about 12.6%,
and ended up becoming the 'fastest growing state' , followed by Gujarat with a growth of 11.3%.
Poverty rates in rural Orissa (43%) and rural Bihar (40%) are some of the worst in the world. On
the other hand, rural Haryana (5.7%) and rural Punjab (2.4%) compare well with middle-income
countriesThe five-year plans have attempted to reduce regional disparities by encouraging
industrial development in the interior regions, but industries still tend to concentrate around
urban areas and port cities After liberalization, the more advanced states are better placed to
benefit from them, with infrastructure like well developed ports, urbanisation and an educated
and skilled workforce which attract manufacturing and service sectors. The union and state
governments of backward regions are trying to reduce the disparities by offering tax holidays,
cheap land, etc., and focusing more on sectors like tourism, which although being
geographically and historically determined, can become a source of growth and is faster to
develop than other sectors.

Housing Demand vs Housing Stock
The main determinants of the demand for housing are demographic and other factors like-
 Income
 Price of housing
 Cost and availability of credit
 Consumer preferences
 Investor preferences
 Price of substitutes
 Price of compliments all play a role
Core demographic variables –

 Population size
 Population growth
The more people in the economy, the greater the demand for housing
It is necessary to consider-
 Family size
 Age composition of the family
 Number of first and second children
 Net migration
 Non-family household formation
 Number of double family households
 Death rates
 Divorce rates
 Marriages
 Income is also an important determinant
 Many housing economists use permanent income rather than annual income because
of the high cost of purchasing real estate
 For many people, real estate will be the most costly item they will ever buy
Housing supply is produced using –

 Land
 Labour
 Various inputs such as electricity and building materials
Demand conditions for housing influence both the willingness and ability of people to make
house purchases
Most important conditions of demand are –

1. Growth of real incomes - As average living standards rise, the total demand for housing
expands, as does the demand for more expensive properties as people look to move "up
market"
2. Consumer confidence - confidence is vital in the housing sector

If expectations for the future performance of the economy deteriorate and people become less
optimistic about their own financial circumstances, they are tempted to curtail their search for a
new home or delay entry into the owner-occupied sector
Equally when the economy is enjoying sustained growth and rising prosperity - improved
confidence raises the number of home buyers and shifts the balance of power in the market
towards the seller if properties are in short supply
Jobs - financing a house purchase involves making a long-term commitment through a
mortgage lender, changes in unemployment levels exert a significant impact on housing
demand
For eg. in areas when unemployment remains persistently above the national average, average
incomes are likely to be lower and confidence among buyers will be negatively affected
These three factors, incomes, employment and confidence are critical in determining the
direction of house prices. When these three factors are rising the conditions are normally in
place for sharp upward movements in prices However other economic variables also come into
play
Expectations of future price movements - housing to be regarded as a consumer durable

that provides a flow of services to the owner over a long period
Or should we think of a house purchase, as a major financial investment that we expect will
provide us with substantial capital gains in the long run
Changes to the system of housing taxes and subsidies - government policies affect the
housing sector in different ways ranging from benefits for council taxpayers on low incomes to
the payment of stamp duty on the most expensive properties
With India's economy growing steadily, housing demand is estimated to rise to 42 lakh units
during the next five years, the majority of which will be in the affordable segment
 "The pan-India residential demand for the period 2010-14 is estimated to be approximately
4.25 million units, of which mid range and affordable sectors continue to capture a
significant share of 70 per cent," property consultant Cushman & Wakefield
(C&W) said in a report
 The report noted that out of total demand, 60 per cent is expected to come from top seven
cities, including national capital region and Mumbai
 The demand in these cities, however, is estimated to be three times higher than supply
during 2010-14
 "With India's economic environment showing signs of stability and buoyant growth, coupled
with improvement in affordability and access to finance, housing demand in the country is
expected to witness a revival in demand in the near future," C&W India Executive
Director (Investment Services) Manish Aggarwal said
 "The demand for retail space across the country is estimated to be 55 million sq ft, of which
the top seven cities will witness approximately 53 per cent,―
 Residential demand in top cities is projected to grow nearly 17% in 2010 to 5.8 lakh units
aided by strong economic growth and improved affordability, according to Cushman &
Wakefield

The housing demand in these cities (30 top cities) was estimated at 4.9 lakh units during 2009
Units wanted
Residential demand is seen at-
 6.8 lakh units in 2011 (18% growth over 2010)
 8.1 lakh units in 2012 (19%)
 9.8 lakh units in 2013 (near 20%)
 11.8 lakh units in 2014 (about 20.6% growth)
The forecast is based on parameters such as affordability, population growth, anticipated home
loan disbursements, among others
The 30 cities include large macro markets such as NCR, Mumbai, Bangalore, Chennai, Pune,
Hyderabad and Kolkata as well as smaller cities such as Ahmedabad, Jaipur, Cochin and
Nagpur
The selection of cities was based on an analysis of economic activity, infrastructure
development, population growth and presence of organized real estate developers
―The pan-India residential demand for the period 2010-2014 is estimated to be about 4.25
million units (cumulative), of which mid-range and affordable sectors continue to capture a
significant share of 70%,―
The global real estate consultant has said in its latest report
Housing stock -- the total number of residential units, including mobile homes, available for
non transient occupancy
 A renewed focus on affordable housing is in order
 There is plenty of demand out there; supply is more likely to be the constraint
 The demand for housing units in the top 112 cities is expected be 10.5 million units during
the next 7 years leading up to 2015
 The demand for housing units in the top 112 cities is expected be 10.5 million units during
the next 7 years leading up to 2015
 The Housing Skyline of India estimates the demand for housing units in the top 112 cities
to be 10.5 million units during the next 7 years leading up to 2015
 The current stock of housing units in these cities is estimated to be 41.8 million units,
which implies a growth in housing stock of over 25% within 7 years
 Of these 112, the top 30 cities will account for 60% of the demand and are expected to
add 6.36 million units during the next 7 years
 The current stock of housing units in these 30 cities is estimated to be 25 million units
 In the top 30 Cities
 Households with Plinth Area Less than 500 Sq ft -10.01 %
 Households with Plinth Area Between 500-1000 Sq ft -7.48 %
 Households with Plinth Area More than 1000 Sq ft - 7.55 %
 Demand for units (2008-2015) for Plinth Area Less than 500 Sq ft 2.14 %
 Demand for units (2008-2015) for Plinth Area Between 500-1000 Sq ft 2.07 %
 Demand for units (2008-2015) for Plinth Area More than 1000 Sq ft 2.15 %

 Whereas most of the attention of the building industry is on the upper segment, it is
middle and lower middle India which is driving demand
 The demand for housing of size less than 1000 sq ft is 6.2 million units over 7 years,
which is 2/3rd of the demand
Affordable Housing
Housing for the masses
 Comfortable living
 Location proximity
Affordability is quantified by
 Household income
 Price of the product
Affordability does not compromise on
 Quality of construction
 Provisioning of socio – economic infrastructure
Recent shift in focus towards affordable housing

Growth scenario of Indian Economy
 GDP growth surpassing target rates
 Decline in population below BPL line
Real Estate Industry Evolution

15 years ago Now
Unorganized sector Organized sector

Controlled development by development Private sector participation
authority
Traditional construction techniques Modern mechanized construction
techniques
Funding through unorganized sector Multiple funding options
Loan approval quarterly execution Loan processing in a matter of days
Property purchase at fag end of career Property owners age -27 and above
Demand Supply Dynamics

Short Supply of residential dwellings
 Supply shortfall existing since post independence
 In 2005 estimated demand is 209.5 million, supply was 189.7 Million
 Demand – Supply gap is narrowing
Low supply of housing for low income earnersAs per 11th 5 year plan
 Shortage of 24.71 million dwellings
 Close to 99 % of shortage in EWS & LIG segment
2003 2007 and above
 Continuous increase in GDP  Decline in GDP growth rate
 Increase in income levels  Income level stagnation/
 Lowering of home loan interest rates  risk of layoffs
 Affordable property prices  High lending rate
 High market sentiments  Unaffordable property prices
 Low market sentiments
Opportunities for Affordable Housing in India

 Restructuring of the housing sector
 Re-focusing product to real end user demand
 Catering to strong domestic demand
 Real estate as a widely linked sector
 Linkages with 200 industries
 Multiplier effect on growth
 Growing urban population
 Projected urban population to 533 million by 2025
Issues relating to Affordable Housing
 Lack of regulatory mechanism
 High cost of land
 Stringent land acquisition process
 Double taxation system – high transaction cost
 Constraining density norms
Suggestions
 Speedy approvals of housing projects
 Provisioning of additional FSI
 Improving connectivity to suburbs
 Rationalization of transaction cost
 Non scarcity of developed land
 Creation of Special Residential Zones (SRZ)
 Value engineering in construction
 Private Public Participation (PPP
HOUSING CONDITION IN INDIA

HOUSING STOCK AND CONSTRUCTIONS
(JULY – DECEMBER 2002)
The National Sample Survey Organization (NSSO) in the Ministry of Statistics and Programme
Implementation, Government of India, given a report on the nationwide household survey in July
2002-December 2002 on housing conditions in India
A sample of 97,882 households spread over 4,769 villages and 3,538 urban blocks in the
country had been surveyed to obtain information regarding the conditions of the dwellings in
which the rural and urban population of the country live and the number, size, structure, cost
and financing of residential constructions undertaken by the households
The survey reveals that out of every 100 households in rural areas-
 36 lived in pucca structures

 43 lived in semi-pucca structures
 21 in katcha structures
In urban areas
 77 in pucca structures
 20 in semi-pucca structures and
 only 3 in katcha structures
In urban slum areas, 67% of the dwellings were pucca

Rural areas of Delhi and Haryana, urban slums in Mizoram, Himachal Pradesh, Punjab and
Haryana, and urban areas (excluding the slums and squatter settlements) of Sikkim, Delhi,
Uttaranchal, J&K and Gujarat reported the prevalence of more pucca structures than the rest of
the country
The States of Tripura, Manipur and Chattisgarh were found to be well below the national
average in terms of prevalence of pucca structures
The floor area –

 Average rural household was 38 square metres
 Average urban household had 37 square metres
Average household size –

 Rural areas was 5.15
 Urban areas 4.47.
19 out of every 100 structures in the rural areas and 11 in the urban areas were in bad condition
and required immediate major repair 92% of rural households and 60% of urban households
owned the dwelling units
Facilities of drinking water, latrine and electricity –

 15% of the dwellings in urban slums and squatter settlements
 63% of dwelling units in other urban areas
 11% of the units in rural areas Had all the three facilities within their premises
Other extreme, none of the three facilities were available within the premises of about –
 30% of dwelling units in rural areas
 11% of dwelling units in urban slums and squatter settlements
 4% of dwelling units in other urban areas of the country97% of rural 99% of urban
dwellings Considering both rural and urban areas together, the percentage of households
lacking toilet facility in -
 Chhattisgarh (82%)
 Orissa (80%)
 Bihar (79%)
 M.P. (77%)
 Jharkhand (76%)

 Rajasthan (72%)
 U.P. (72%)
Fall in the percentage of katcha constructions in rural India from 45% to 40% and a rise in the
percentage of pucca constructions from 34% to 38%
In urban India, there was a fall in katcha constructions from 18% during 1989-93 to 12% during
1998-2002 and a rise in pucca constructions from 64% to 74%
 Rural households financed around 66%, and urban households, 62%, of their
construction costs from their own sources
 In urban slums and squatter settlements, moneylenders financed 15% of all
construction costs
 In other urban areas, moneylenders financed only 4% of the total construction costs
 In the rural areas, moneylenders financed 9% of all construction costs
THE MONO-CENTRIC CITY

 The Mono-Centric City Model
If an area meets many or all of the following criteria, it would probably be considered a CBD:
 Houses large public buildings such as libraries, churches, stations and town halls
 Contains specialist shops and branches of major department stores
 Contains social amenities such as cinema halls, clubs and theatres
 Contains little housing, but often hotels
 Contains little or no industry
 Contains offices and other professional buildings
 Contains buildings that tend to be taller than other buildings in the city (because land
prices tend to be at a premium, making high-rise buildings economically favorable)
 Has high pedestrian levels and the greatest parking restrictions
 Often is the geographical centre of the settlement
 Often is the area with the highest land value
 Is well connected by public transport, with large numbers of passengers
 Has high traffic levels
 Puerto Madero, Buenos Aires CBD, Argentina
A Mono-centric City
Cities looked very different 100 years ago:
◦ Cities had a unique center
◦ Jobs were concentrated near the city
center
◦ Manufacturing firms located near
railroad terminals
◦ Office firms clustered in the CBD
◦ Workers lived in city center and
commuted by foot or in the suburbs
and rode street cars

Rise of the Mono-centric City
 Innovations in production and energy increased concentration of production in cities
 Required some means to transport workers to factories and goods to markets
 Rise of the Mono-centric City
 Innovations in Intracity Transportation
◦ Omnibus (1827)
◦ Cable cars (1873)
◦ Electric Trolley (1886)
◦ Subways (1895)
Decrease in travel cost and increase feasible radius
 The Primitive Technology of Freight
◦ Intercity freight: manufacturers transported finished goods out of the city through
ship or rail
◦ Intra city freight: horse-drawn wagons were used for transporting goods from the
factory to port or rail terminal
◦ Tied manufacturer to the central export node: railroad terminal or port
 The Technology of Building Construction

◦ Balloon-frame building (1832), fastened with cheap nails
◦ Office buildings: masonry to cast iron (1848, five stories) to steel (1885, 11 stories)
◦ Elevator (1854): Intra-building price curve inverted by elevator; upper floors rent at
premium, not a discount
Firm Transport Costs and Rents

 Transport costs decrease with proximity to city center
 Zero Profit Condition implies:
◦ rents increase as transport costs decrease
◦ downward sloping bid rent function
Most central firm type: offices?

 Office firms require:
◦ meetings and face to face contact
◦ ability to gather, process and distribute information quickly
◦ access to services, like printing, lawyers, designers, accountants, etc.
◦ travel cost of individuals is very high due to high pay rate (skilled work)
 Implies steep bid-rent function
Land use in CBD (Office vs. Industry)

 All firms are attracted to center
 only some will be willing to bid enough
 Office firms have steepest bid rent
 will occupy the most central land
 Market allocation is efficient
 The office industry has the most to gain from being in the center
 manufacturing could gain, but not as much
Multiple land use rent gradient
Housing price function

(abstracting from non-residential uses)
Housing price function with substitution (variable lot sizes)

 With consumer substitution, residents consume less land as price of land goes up
 Hence, more central lots are smaller
 Housing producers substitute capital for land as move closer to center
◦ Higher Density (i.e. high rises) near CBD
Changes to Commuting Model

 All the following changes in assumptions make cost of commuting greater and therefore
the bid rent function is steeper:
◦ Increased commuting costs
◦ Shopping and Recreational activities become more focused at the City Center
◦ Households move from one worker to two workers
Income segregation
 Households find location providing best tradeoff between land and commuting costs
 Household move outwards as away from CBD, you save money on housing, but you
spend more on commuting
 MB from moving out (Land Consumption):
 Because the rich person consumes much more housing, they save much more for each
move out
 MC from moving out (commuting costs):
 Typically assume rich have higher marginal commuting costs (higher opportunity cost for
time)

Key Elasticity's Determine Segregation Patterns
 Income elasticity of demand for housing (IEHD):
◦ How quickly does housing consumption increase with income?
 Income elasticity of commuting costs (IECC):
◦ How quickly do commuting costs increase with income?
Income segregation (IEDH>IECC)
Income segregation (IEDH = IECC)
Empirical Evidence
 One study (Wheaton 1977) has found that IEDH is roughly equal to IECC
 If this is the case, then different income groups should be living in the same places
Other Explanations for Income Segregation

 Newer housing in suburbs: quality is higher, more modern, lower maintenance; poor get
stuck with older central city housing
 ―Urban flight:‖ crime, low school achievement, fiscal problems all more common in city
centers Rich can afford to leave
 Large-lot suburban zoning: very common, keeps price of housing high and poor are out
Exceptions
 In some cities, especially in Europe, the opposite is true: rich live in center, which is
prohibitively expensive for poor, who live out in suburbs
 Has to do with level of amenities in the city center (e.g. Paris vs. Detroit)
Policy Ramifications
 Policies that help rebuild the inner cities, bring amenities, decrease crime and pollution,
improve schools, will bring some wealthy back from suburbs
 Policies that limit exclusionary (large-lot) zoning will help bring poor out to suburbs and
allow for higher suburban densities

The complete model (with ag)
Spatial distribution in modern, multi-centric cities

 Jobs are generally far from city centers now
 40% commute from suburban home to suburban job
 Cities are increasingly decentralizing with smaller portion of population in center
 As population shifts outward, density gradients have decreased significantly
Why are we decentralizing?

 Rising income? This will cause decentralization
 If IED for housing> IE of commuting
 Lower commuting costs due to better roads, better cars, transit systems
 Urban problems: old housing, income/racial mix, fiscal problems, crime, education
◦ There is considerable empirical support for this
Manufacturing bid rent and beltways
Offices drawn to suburbs by

 Decoupling of operations: increase in splitting offices into front and back offices
 Better communication and connectivity: email, phones, Internet, teleconferences
 Many businesses now are less reliant on face to face meetings
 However, there will always be advantage to downtown clustering for certain types of firms
that require face to face contact
Demise of the Mono-centric City

 100 years ago, the spatial distribution of employment and population started to change
 Define
◦ A central city is the territory of the municipality at the center of the metropolitan
area
◦ A Suburban area is the rest of the metropolitan area

The Spatial Distribution of Jobs and People
 Distribution of Employment
 Employment decentralization
 In 1948 jobs in central city were twice those in
suburban areas
\\
The Spatial Distribution of office space

Three employment centers:
 CBD
 Sub centers: an area with a minimum of
10,000 workers and 25 worker per
hectare
 Dispersed: everywhere else
The Spatial Distribution of Population

 Central city share is 36%
 Suburban share is 64%
 The table below shows that urban population is more decentralized than urban
employment


Urban Density Worldwide
 Cities are defined
as areas of high
population density
 Variation in density
of world cities
 US cities rank
lowest
The demise of the Mono-centric City

Decentralization of Manufacturing: Trucks and Highways
◦ The intra city truck (1910). Twice as fast and half as costly as horse wagon 1910 -
1920: Number of trucks in Chicago increased 800 to 23,000
◦ Tipping the balance away from central location, Truck decreased cost of moving
output relative to the cost of moving workers, Firms moved closer to low-wage
suburbs
◦ The intercity truck (1930s), Long-distance travel became feasible, Improvement of
intercity highways facilitated truck transport, Truck freight grew at expense of
shipping and rail freight, Most manufactures oriented to highways, not rail terminal
or port

The demise of the Mono-centric City
 Decentralization of Office Employment
◦ Before 1970s: paper-processing back-office operations in suburbs
◦ Electronic transmission of information allows decoupling of office activities, with
information processors in suburb and decision-makers in CBD
 Decentralization of population: Reasons
◦ Increase in income: ambiguous effect because higher income
 Increases the opportunity cost of commuting, but also
 Increases demand for housing and land, pulling people to low-price suburbs
◦ Lower commuting cost decreases the relative cost of suburban living
◦ Old housing in center
◦ Central-city fiscal problems
◦ Crime
◦ Variation in education
Urban Sprawl
 Sprawl Facts
 1950 - 1990: urban land increased 245%; urban population increased 92%
Urban Sprawl
The role of public policy
◦ Under pricing of commuting encourages long commutes
◦ Mortgage subsidy increases housing consumption
◦ Under pricing of fringe infrastructure
◦ Zoning: Minimum lot sizes to exclude high-density housing
Consequences of Sprawl
 Environmental consequences
 Increased consumption of fossil fuels
 Increased demand for public goods, e.g., highways and schools
 Inefficient to provide mass transit
 Depletion of world reserves of fossil fuels results in a non sustainable life style
 Suburban life: more land, same residential energy, 30% more travel
 Environmental quality: cleaner cars offset increased mileage
 Greenhouse gases increase with mileage
 Loss of farmland hasn‘t increased agriculture prices
 Low transit ridership
Financing Urban Infrastructure
 Institutional models and allocation of responsibilities
 Alternative financing instruments
 Effects of financing instruments on urban planning and control
Institutional Models and Allocation of Responsibilitie\
What Is Urban Infrastructure ?

 Infrastructure is essential to urban development
 Water
o Water treatment and distribution
o Waste water disposal/treatment
 Transport
o Urban roads
o Urban transport
 Electricity
 Waste disposal
 Rapid urbanization has increased the demand for urban infrastructure in India
 Since public funds for these services are inadequate
 Urban organizations have to look for alternative sources for financing their infrastructure
needs
 Accessing capital markets and PPP have emerged as viable options to finance urban
infrastructure
 Urban population in India is 285 million (Census 2001) and is likely to be twice its present
level by 2030
 Rapid urbanization has increased the demand for urban services
 The Steering Committee on Urban Development
o for Eleventh Five Year Plan of India (2007-2012), has estimated that total fund
requirement for implementation of the Plan target in respect to urban water supply,
sewerage and sanitation, drainage and solid waste management is
o Rs. 12,702 billion
 The 74th Constitutional Amendment gave urban local bodies (ULBs) the responsibility to
provide these services
 The sources of revenue devolved to ULBs are, however, not sufficient and still depend on
higher levels of government
 Financial resources from all these sources, however, fall far short of the urban sector‘s
estimated investment requirements
 Since public funds for these services are inadequate, ULBs have to look for alternative
sources for financing their infrastructure costs
 Market-based financing and Public-Private Partnership (PPP) have emerged as a viable
alternative to finance infrastructure investments

Urban Planning
Has to Address Infrastructure Financing
• Urban infrastructure entails high initial investment and operating costs
– Infrastructure assets and facilities
– Equipment
• Urban infrastructure services share a common feature: monopolistic situation
Government Is Responsible for Infrastructure

• Infrastructure services must satisfy users‘ needs
– Capacity
– Quality standards
• Planning infrastructure development
• Ensuring that investments are financed and implemented on time
• Ensuring that operating services are provided
Delivery Model: Government

• Government can directly provide urban infrastructure services
– Especially when service costs cannot be charged to users
• Urban roads (non tolled)
• Usual institutional organization: government department
– Government Model Allocation of Responsibilities
Activities Financing responsibility Funding Financing Instrument
Sources
Investment Government Municipal Budget Taxes, Debt
Operations Government Municipal Budget Taxes,Tariff

or User
Government Can Also Transfer

Responsibilities
• Especially when service costs can be charged to users
– Water and waste water, urban transport services, electricity, waste disposal
• Two main models
– Public utility owned by government
– Private company through a PPP contract (public private partnership)
• Public Utility Model: Allocation of Responsibilities
• Activities • Financing responsibility • Funding • Financing Instrument
• Investment • Government • Municipal Budget • Taxes, debt

• or • Utility Budget • Debt
• Utility
• Operations • Utility • User • Tariff

• and (possibly) • Taxes
• Subsidy

Market-Based Financing System
Credit Rating
 Rating agencies provide investors with an independent third-party evaluation of the
credit strength or weakness of a particular bond issue
 In the India context, rating agencies do not rate cities or countries, rather they rate the
creditworthiness of a particular debt offering, essentially addressing the ability and
willingness of a government issuer to pay its debts
 Ratings of local governments establish a transparent credit record, and a reference
framework for current and future performance of local finances and debt management
 In addition to providing an initial rating of a bond offering, agencies continue to monitor the
capacity of the issuer to make timely payments of principal and interest throughout the
term of a bond
 This continued monitoring throughout the life of a bond issue is important to the effective
operation of a secondary market in local bonds
Tax-Free Municipal Bonds

 Income Tax Act provides tax preferences for investments in infrastructure projects
 These are not available for financing municipal infrastructure
 To boost the municipal bond market, the Government of India decided to provide tax-free
status to municipal bonds
Pooled Financing
 Only financially strong, large municipal corporations are in a position to directly access
capital markets
 Most small and medium ULBs are not able to directly access capital markets on the strength
of their own balance sheets
 Also, the cost of the transaction is another barrier
 In 2003, the Tamil Nadu Urban Development Fund issued a bond by pooling 14
municipalities for commercially viable water and sewerage infrastructure projects
Public-Private Partnership Options

 Service contracts
 Performance-based service contract
 Joint sector company to implement and finance the project
 A management contract for operations and maintenance (O&M)
 Construction cum build-operate-transfer (BOT) contract
Matrix of Responsibilities\]’
Model Investment Operations Payer
O&M Government Private Investment: Government

Operations: Government
Lease Government Private Investment: Government

Operations: users
BOT Private Private Investment: investors, lenders

Operations: “client”, users
Concession Private Private Investment: investors, lenders Operations : users

Alternative Financing Instruments
Instrument: Taxes
• Taxes finance the general budget
• All taxpayers contribute, even those who do not use infrastructure services
– But when proceeds of specific taxes are allocated by law to an infrastructure sector
– Or when property or income taxes in developed areas are proxy charges for some
infrastructure services
Financing Instrument: Tariff

• Charged on users of services only
• Tariff income should finance all operating costs
– But government may subsidize services
• E.G. When tariff capped for social concerns
• Utility model: + tariff income should also finance debt service
Financing Instrument: Tariff (2)
• Private company model: + tariff income or client fee (BOT) should ensure a satisfactory financial
return to private investors
– Tariff should be ruled by PPP contract provisions
– Government may contribute to investment when a low financial rate of return impedes full
market financing
Financing Instrument: Debt
• Debt can be used under all delivery models, but
– Government: local governments must be allowed to borrow funds (not in china)
• Debt should finance investments (not operations)
• Urban infrastructure requires long term debt
– 10 years + with duration linked to assets amortization schedule
• Banks assess borrower risks before lending
– Strength of financial accounts affects the cost of debt (municipal budget/utility/private Cny)
Instrument: Debt (2)
• Government model: debt finally paid by taxpayers
– Debt reimbursed by the municipal budget
• Utility model: a government guarantee may be required if utility financially weak or poorly
managed
• Private BOT or concession: project finance debt
– On the basis of the strength of operating income
Instrument: Bond
• Bond: long term lending instrument provided by financial investors
– Insurance company, pension funds
– Domestic or international investors
• Bonds should finance investment only
Instrument: Bond (2)
• Bond issues are constrained by the country legal and regulatory framework
– Municipal bonds are not allowed in china
• Bond availability and pricing depend upon the credit rating of the issuer
– Independent credit rating agencies
Instrument: Equity
• Equity is essentially accessible to private companies
– Possibly to utilities through securitization (investors, stock exchange) of assets generating
income

• Investors provide equity if the expected financial return is consistent with market level and the
project risk profile
Financing Instrument: Equity (2)
• Equity investors are prepared to take more risks than bond investors or lenders
• But equity is the most expensive financing instrument for private companies
– And utilities when they can attract investors
–
Effect of Financing Instruments on Urban Planning and Control
• Planning Infrastructure Financing Means:
– Assessing infrastructure needs
– Preparing realistic financing plans
– Planning the use of relevant financing instruments
Assessing Infrastructure Needs

• Urban development is dependent upon infrastructure
– Demand of services is driven by population growth and economic activities
– Infrastructure should be laid down before land is developed
• Infrastructure costs should be estimated as from preliminary feasibility studies
– Investment and operation costs
Preparing a Realistic Financing Plan of Infrastructure

• Balancing financing needs / funding
– Amounts and financing instruments
– Time frame: each delivery model entails its own decision process
• Setting tariff is part of financing plans
– Objectives: operating income should fully fund infrastructure services
• But for social constraints
Specificities: Government Model
• The city budget process is affected by the planning of infrastructure
• At first assess impact of infrastructure financing on budget during construction and operations
• Then size funding to balance financing plan
– Impact on tax levels and indebtedness
Specificities: Public Utility Model
– Independent budget process
– But the municipal budget is affected by government contributions to utility
– Financial controls of and reporting by utility crucial to assess financial risks for government
• Government can control as owner
Specificities: Private Company Model

• Assess very early the possibility to mobilize private sector skills and funding
– To estimate savings on public expenses
– At the early stage of urban planning
• Set the services objectives, price mechanisms and standards in the tender documentation
– Including draft PPP contract
Specificities: Private Company Model (2)
• Sponsors should be responsible for their own demand assessment when possible
– Otherwise government may have to provide unnecessary uptake guarantees
• Arm‘s length negotiations are required on grant/ subsidies/ guarantees by government
– Amounts and payment schedule should be negotiated with the PPP contract

Development Plan
• Preparation and Implementation of development plans has been the backbone of the operation
of physical planning since 1947
• The plan is a drawing; a diagram made by projection on a flat surface especially one showing the
relative position of parts of a buildings; a large scale detailed map of a town or district; a table
indicating times, places, etc. of intended proceedings, etc.; a scheme of arrangements; a project;
a design; a way of proceeding
• The development plan is a physical design of an area (district, town, city) with already existing
land use or future land use, this sort of a plan is a representation, in a geographical or spatial
sense, of actual physical structures or elements
• The development plan- define the sites of proposed roads, public and other buildings and works,
airfields, parks, pleasure grounds, nature reserves and other open spaces or allocate areas of
land for use for agricultural, residential, industrial or other purposes
• The development plans are prepared on the basis of a comprehensive survey of wide range of
factors which are related to the use, condition and quality of land and buildings which, together
with analysis of trends and needs relating to population, employment, shopping etc., would
influence the aims of the local planning authority in preparing their plan
• The development plan comprises of written statement and a series of maps
• A written statement usually contained a brief summary of the main proposals of the plan without
any substantiation of the basis on which the proposals are made
• Construction of plans for regulation of growth and extension of town, so as to secure best
conditions of housing and traffic, situation of public buildings and open spaces, etc.
The traditional concerns or objectives of town andcountry planning as:

1. The use of land to the best advantage
2. The maximum improvement in physical conditions that can be obtained within the limits of
available resources, in accordance with human needs and priorities
3. Surroundings of quality and beauty that will inspire and enrich human existence at home, at work
and at leisure
4. The conservation of natural resources and beauty and the worthwhile historical and architectural
endeavors of man
Stages in the development planning process

1. Definition and clarification of future problems and the inter-relationships between them
2. Identification of future conditions which might arise from the problems identified
3. Identification of constraints which determine the range of possible solutions to the problems
4. Determination of goals and objectives which plans are meant to achieve
5. Formulation of alternative ways of achieving the goals and objectives which plans are meant to
achieve
6. Evaluation of the alternatives
7. Recommendation of preferred alternatives
Development Control Regulations

• The control over development is an integral part of the operation of physical planning
• Development is defined as the carrying out of buildings, engineering, mining or other operations in, or
over, or under land or the making of any material change, in any building or land in the use of any building
or land and includes demolition of any existing building, structure or erection or part of such building,
structure or erection, reclamation, redevelopment and layout and sub-division of any land

The key elements of this legal framework for controlling development are :
1. Governments sanction to the Regional Plan or Development Plan
2. Requirement of obtaining Development Permission
3. Enforcement and penal provisions against carrying out development in contravention of Draft or
Sanctioned Plans
• In order to ensure that the new development takes place in conformity with the Draft or
Sanctioned Regional Plan, requires that every person who intends to carry out development in
the Region obtains a permission of the Municipal Authority in whose jurisdiction such
development is proposed
• Where the land is situated outside the jurisdiction of any Municipal area, the permission of the
Collector is required before carrying out the development
The Regional Plan - 1973, defines land use zones very broadly and divides the region into 5
principal land use zones, namely:
1. Urbanisable Zone -U Zone
2. Industrial Zone -I Zone
3. Recreational Zone- R Zone
4. Forest Zone- F Zone
5. Green Zone -G Zone
• The U Zone covers existing towns, and areas marked for their planned expansion, proposed new
towns and other new township areas. In this zone, the development control is to be exercised in
accordance with the development plans and detailed Development Control Regulations of the
respective towns
• Large industrial areas outside the existing towns are designated as I Zone they are developed
and controlled by the local Industrial Development Corporation
• Developments in F and G zone, which are essentially conservation areas, are controlled by the
D.C.
Zoning
• Zoning is the regulation and restriction of real property by a local government
• It is the most common form of land-use regulation, as municipalities rely on it to control and direct
the development of property within their borders, according to present and potential uses of the
property
• Zoning involves the division of territory based on the character of land and structures and their
fitness for particular uses
• Consideration is given to conserving the value of property and encouraging the most appropriate
use of land throughout a particular locality
• A municipality's power to enact zoning regulations is derived from the state in an exercise of its
police power
• Police power is the inherent power of the government to act for the welfare of those within its
jurisdiction
• The power to impose zoning restrictions is conferred on a municipality by a state enabling statute
• Zoning laws are intended to promote the health, safety, welfare, convenience, morals, and
prosperity of the community at large, and are meant to further the general welfare rather than to
improve the economic interests of any particular property owner
• They are designed to stabilize neighborhoods and preserve the character of the community by
guiding its future growth

• The essential purpose of zoning is to segregate residential, commercial, and industrial districts
from one another
• Within these three main types of districts there may be additional restrictions as to population
density and building height
• The use of property within a particular district is for the most part uniform
• For example, if a district is zoned for industrial use, no residential buildings are normally
permitted there Municipalities exercise wide discretion in fixing the boundaries of commercial and
industrial districts
• A number of ordinances have been enacted to protect residential zones from encroachment by
gasoline stations, public parking facilities, businesses selling intoxicating liquors, and factories
that produce smoke or odors
• Zoning is a device of land use planning used by local governments in most developed countries
• The word is derived from the practice of designating permitted uses of land based on mapped
zones which separate one set of land uses from another
• Zoning may be use-based (regulating the uses to which land may be put), or it may regulate
building height, lot coverage, and similar characteristics, or some combination of these
• Similar urban planning methods have dictated the use of various areas for particular purposes in
many cities from ancient times
• Zoning may include regulation of the kinds of activities which will be acceptable on particular lots
such as open space, residential, agricultural, commercial or industrial
• The densities at which those activities can be performed (from low-density housing such as
single family homes to high-density such as high-rise apartment buildings)
• The height of buildings
• The amount of space structures may occupy
• The location of a building on the lot (setbacks)
• The proportions of the types of space on a lot, such as how much landscaped space, impervious
surface, traffic lanes, and parking must be provided
• In practice, zoning is used to prevent new development from interfering with existing residents or
businesses and to preserve the "character" of a community
• Zoning is commonly controlled by local governments such as counties or municipalities, though
the nature of the zoning regime may be determined or limited by state or national planning
authorities or through enabling legislation
When enacting zoning ordinances, a municipality takes many factors into consideration the most
significant are-
 The density of the population

 The site and physical attributes of the land involved
 Traffic and transportation
 The fitness of the land for the permitted use
 The character of neighborhoods in the community
 The existing uses and zoning of neighboring property
 The effect of the permitted use on land in the surrounding area
 Any potential decrease in property values
 The gain to the public at large weighed against economic hardships imposed on individual
property owners
 The amount of time that the property has remained unimproved, reviewed in the context of land
development in the area as a whole

Environmental Controls
• Environmental law and regulation have significantly affected land
• Objectives are not only to conserve the environment but also protecting aesthetically pleasing
surroundings, protecting health and safety, preserving historic and cultural heritage, and
preserving natural resources
• An EIA may be required for projects such as the rerouting of an interstate highway, construction
of a new dam, or expansion of a ski resort on federally owned land
• The EIA is a tool to assist in decision making, providing information on the positive and negative
environmental effects of the proposed undertaking and alternatives
• The EIA must also examine the effect of not implementing the proposed action
• The effect of environmental policies on land use has been substantial
Selection of site location, launching a new project-site preparation & government clearances
• Site planning is a vital component of any type of building activity and is the first step
• With growing urban development and environmental degradation it has become imperative to
determine landscape design parameters, and also provide rules, regulations, controls and
procedures for the protection, preservation and modification of surrounding environment
• In most of the cases the site is selected by the developer before commencement of design phase
• Ideally the design team should be involved in site selection and should assess the
appropriateness of the site relative to the proposed development
• Analysis and assessment of the site characteristics in terms of its capacity to provide natural
resources inside the building such as light, air and water without damaging the natural
environment should be carried out during site selection and analysis process
The process has been divided into two parts:

• Site selection and site analysis
• The concerns related to all natural resources during site planning are covered in the site analysis
section
• The aim is to integrate an architecturally sustainable design with the natural environment with
least damage to the nature and at best improving it by restoring its balance
• Site selection process, which brings it upfront all elements that would affect future development
of the project
• Site analysis, which brings it upfront all those
elements and natural resources that would get affected by the project
The elements that get affected on site due to Project development are:
• Soil conditions if not preserved
• Hydrology of the site
• Topography
• Characteristics of land due to hard paving
• Built up spaces on the site
• Existing vegetation
• Solar access
• Wind patterns
The selection should be based upon severalfeasibility and impact studies related to sustainability such
as existing wind pattern, solar access, soil, air, water conditions, noise pollution, and bio diversity

Land use
• The first feature, which should influence development of a new project, is the existing land use
pattern of the neighbourhood of the project, whether the proposed development conforms to the
development for that area
• The first concern while selecting the site should be suitability of the site
• This should be analyzed with respect to the surrounding existing development, natural
environment and urban environment to define whether the site should be built or not and
secondly to judge whether the proposed development is best suited on the considered site
• Proposed land use must conform to the approved Master Plan/Development plan of the area
• If there is no approved Plan, consent from appropriate authority should be taken and should be
submitted for Environment clearance
• If the area is outside municipal limits/outside planning area, full justification for the proposed
development should be provided
Location of site with respect to existing eco-system on site

• Development of new construction projects should not have a negative impact on the existing bio-
diversity and ecosystem of the site
• It should not disturb sites with heritage and cultural values such as protected monuments
• Constructed projects on selected sites should not disturb aesthetics and scenic beauty of a
location
• Sites for new developments should be carefully assessed in context of the wider environment
particularly in relation to the habitats dwelling on site or on adjacent sites
• There may exist on the site some rare or endangered species of plants and animals, such sites
are considered unsuitable for development
• The site(s) selection can be an effective approach in minimizing the requirement of mitigation
measures
• Project siting restrictions depend on the sensitivity of the site and its surrounding environment
and the following considerations should be made while selecting a site
Analysis of cultural/historical considerations

• Review the traditional or vernacular architecture of the region
• The regional architectural style may be revealed through the use of vernacular architecture to
form a design that is responsive to the local cultural characteristics, thus enhancing community
values
Restore historical or cultural resources on-site:
• Historical features on-site can be integrated by either modifying or incorporating parts of the
existing structure into the proposed design, thus adding to the cultural fabric of the area provided
that these structures are not legally protected
• Use of historical, energy efficient building techniques Historical, energy efficient building
techniques that have been involved and sustained in response to local climatic or cultural
characteristics can be used or modified to suite the proposed suitable design
Analysis of urban context considerations
• Analyze the city form: The delineation of the city form due to layout of roads, open spaces, or
architectural forms should be analyzed
• For example, a building may be visually unifying element, providing connections and continuity
with adjacent buildings
• Sites at the end of important vistas or adjacent to major city squares should be reserved for
important public buildings

• Review the potential of views: Important city views of plazas, squares, monuments, and natural
features (such as parks and water fronts) should be considered
• It is important to design the proposed building in a manner that will enhance and preserve such
views for the public
Environmental consideration
The proposed project location should meet the standards prescribed by the Central Pollution Control
Board (CPCB) and IS standards for the following environment parameters:
• Ambient air, water and noise quality standards
• Natural disaster prone areas
• Ecologically sensitive areas
Ambient environment quality in the region

• Levels of air, noise and water pollution should be surveyed and considered carefully before
implementing the building design
• For example: High level of air, noise and water pollution and location near pollution sources such
as heavy traffic roadways should be considered carefully to implement residential
building
• Ambient air: Assess the existing air quality of the site to determine if it falls under the permissible
average levels as prescribed by Central Pollution Control Board (CPCB)
• It should also be ensured that the development would not further deteriorate the air quality
• Air quality monitoring involves estimation of concentration levels of suspended particulate matter
(SPM), Respirable suspended particulate matter (RSPM), Sulphur dioxide (SO2), oxides of
Nitrogen (NOx) and Carbon monoxide (CO) in the study area
Mitigation measures to control air pollution

• Air pollution may be caused by areas or point sources such as cities, industrial areas factories or
by linear sources such as highways
• Vegetation buffers can minimize the build-up of pollution levels in urban areas by acting as
pollution sinks
Natural disaster prone areas

• Examine historical data for past trends of natural hazards, such as earthquakes, floods, or
landslides, so that proposed development can be designed with the ability to withstand such
eventualities
• Other investigations may be carried out on relative mappings of natural winds, floods, or climatic
data to ascertain the possibility of any other risks involved
• If possible, new choices or other complementary structural techniques should be developed for
the site
Urban availability of water and other critical infrastructures like electricity, roads with
adequate width and capacity
• The infrastructure and utilities available, expected water and power requirement by the proposed
new buildings and feasibility study of how much is available and what is the source of supply for
power and water
• The design team should gauge whether the site takes maximum advantage of natural resources,
such as solar energy, natural vegetation, and geographical features, and should also analyze the
proximity or remoteness of the site from existing transportation corridors, and its ability to match
the needs of the building owner, users, and their occupancy patterns

Resource and needs‘ assessment of the project should be done at this pre-design stage. Issues
which need to be identified at pre design and site selection stage are:
• Connectivity to infrastructure and public transport networks
• Power requirement and power source
• Water requirement and water source
• Waste management on the site
• Urban infrastructure and facilities, public transport, infrastructure for power, water supply to meet
the estimated requirement, sewage system network should be available nearby or should be
made available with minimum environment impact
• For example the residential areas should be well connected to the utilities like school, market
place, sports and recreational facilities to meet the basic needs of a residential society
• Take into consideration the impact of proposed future development on the infrastructure
• Sharing of existing transportation or parking facilities may minimize the budget for infrastructure
Onsite management of waste

• Land acquired should be minimum but sufficient to provide for a green belt wherein the treated
wastewater, if possible/ suitable, could be utilized from wastewater treatment systems
• Space onsite for solid waste: Enough space may be provided for storing solid wastes. The space
and the waste can be made available for possible reuse in future
• Reuse negative urban spaces or industrial site:
This should be done when existing urban amenities and infrastructure can be utilized, thus reducing
the pressure on undeveloped land
• Conformance to existing landscape:
Layout and form of the project must conform to the landscape of the area without unduly
affecting the scenic features of that place
Guidelines/Recommendations for Site Selection

• Site selection process includes analysis of several site factors
• These are land-use, eco-system and diversity history and heritage, urban context and the
environmental considerations
Site analysis
• After the first analysis of the site evaluation and site selection, the site should be analyzed with
respect to all the issues involved in its sustainable development
• The natural functions of a plot of land (hydrology, geology and microclimate) could be seriously
disrupted by the placement of buildings on it if site analysis for optimum placement and design of
buildings is not carried out
• Layout the site activities and building requirements after carrying out detailed site analysis so as
to ensure sustainable site development is in tune with its topography, climate, ecological
character and functional requirements of the building
• The main objective is to allocate and define the use of various parts of the site in a manner that is
most appropriate to specific building activities to be carried on the proposed site
• The purpose of site analysis is to determine the site characteristics so that proper drainage
pattern and system, circulation pattern, landscape design and other site development features
can be considered in relation to the existing site features and proposed building design
parameters such as building form, solar orientation, shape, skin to volume ratio, materials etc.
• The site analysis evaluates all the environmental determinants, which include (soil, air, water,
solar access, noise), that could get affected due to development on the proposed site

• All the concerns and mitigation options for the concerns at site level are covered in this section
• Impact of development of the project on ecology and available resources on site, example impact
of building shade on open spaces, existing wind patterns on the site, impact on soil erosion,
existing vegetation, habitat protection, water and air pollution and waste handling should be
assessed and mitigation options to reduce the negative impact on the resources should be
carried out
Building siting
• Building siting Geographical latitude and microclimatic factors such as wind loads and solar
access: Improper planning and layout of buildings can affect the availability of natural resources
to the occupants
• For example, Large built volumes perpendicular to the wind divert the latter and tend to create a
wind shadow of a length equal to 15 times the building‘s height (with wind velocity halved down)
• Design of buildings could result in overshadowing existing buildings and sometimes also result in
cutting down the availability of natural light in adjacent buildings
• The way in which a building or group of buildings are sited in relation to other buildings, natural
topography and landscape could have detrimental effects on its potentialities
Impact on soil due to land disturbance

• Top soil conservation: Topsoil is rich in organic content and is essential to establish new
vegetation
• Development projects involve disturbance to the existing soil conditions, removal of existing
trees, which result into soil erosion, instability and overall change in the microclimate and
drainage pattern of the site
• Erosion, by the action of water, wind and ice, is a natural process in which soil and rock material
get loose and removed
• There are two major classifications of erosion - (1) geological erosion, and (2) man-made erosion
Preservation of vegetation and landscape

• Development projects involve disturbance to the existing soil conditions, removal of existing trees
and overall change in the microclimate and drainage pattern
• Measures to minimize hazardous effects should be put into effect
Preservation of Air environment

• Air environment of the proposed site gets affected due to wind erosion, construction on site,
transportation on site and heat island effect
• Dense urban areas tend to have higher air temperatures as compared to the surrounding low-
rise rural areas because of the absorption and storage of a high percentage of radiation received
by the built mass and minimized radiative heat losses from it
Hydrology on site
This coves two aspects, i.e. natural hydrology and quality of water
1. Natural hydrology: Undeveloped land has a certain capacity to absorb rainfall in the soils,
vegetation and trees, also has a natural drainage pattern, clearing of vegetation and or
construction of impervious surfaces (like roads, parking lots and buildings) reduce the capacity of
land to absorb rainfall and increase the amount of storm water runoff and change the natural
pattern of drainage
2. Quality of water: Storm water run off volumes generated from imperviousness of the developed site is
transported into the receiving waters via urban infrastructure like gutters, pipes and sewers

The storm water volumes contain sediment and other contaminants that have a negative impact
on water quality, navigation and recreation
• Health and well being of construction workers
• Construction activities pollutes environment
• Large volumes of suspended particulate matters are released during construction work leading to
air pollution
• Unhygienic site sanitation facilities cause damage to environment and to health of the
construction workers
Recommendations and guidelines

• Design layout should ensure adequate solar access and ventilation
• Depending upon the geographical latitude and sky conditions a precise analysis of the local
climate; surroundings, urban development and surrounding terrain in relation to solar access,
daylight availability and predominant air movement should be carried out
• This would control minimum distances to be kept between the built up volume and open spaces
• The design of the layout should allow for wind protection and solar access in winter, and at the
same time provide adequate sun protection and ventilation in summer months
• The size and density of the layout should provide desired comfort levels maximum from natural
resources
• Solar path analysis and wind pattern assessment should be carried out in the design stage that
would help developers decide upon the alternatives for the type of layout and the proportion of
the built volume and open space in the layout
• For this section the submittals should be provided only to indicate the optimized layout of
buildings on the site with respect to sun path and optimized solar access and availability of wind
for natural ventilation
Factors which shall affect the layout of a sustainable design Solar access
• Solar access in the morphology of clusters can be understood in terms of utilization of direct (and
not reflected or diffused) solar radiation mainly for day lighting and heat gain
• Solar path analysis would help define the minimal distances between the buildings and the
relations between built-up volume and open space
Building types
• Choice of building types depends mainly on the cost of the land, infrastructure, land availability
and suitability as per the requirements
• Each building type and combination of different type forms a matrix of environmental conditions,
which affect the macro as well as the microclimate around and inside the building
• Building types may be detached/semi-detached, with courtyard /patio, high-rise, row house
Open spaces
• The proportion of open space and its built-up edges should be designed such that it ensures
winter solar access and summer ventilation
• Vegetation may provide as shading and promote evaporative cooling
• In hot dry climates, evaporative cooling through appropriately sized wet surfaces or fountains
have a desirable effect

Soil Conservation
• Topsoil removal and preservation is mandatory for development projects larger than 1, 00
hectare (Source: National Building Code 2005)
• Topsoil shall be stripped to a depth of 200 mm from areas proposed to be occupied by buildings,
roads, paved areas and external services
• Top soil shall be stockpiled to a height of 400 mm in pre – designated areas for preservation and
shall be reapplied to site during plantation of the proposed vegetation
• Measures to control erosion of preserved top soil
• Top soil shall be separated from sub-soil debris and stones larger than 50 mm diameter
• Sites that have area less than 1,000 hectare, soil should be preserved if soil test reports predict
that its nutrient rich and landscape consultant finds it usable for re application in post
construction landscape design
• Measures on site should be adopted both during construction stage and post construction to
minimize soil erosion through wind and storm water run off
Soil preservation
• It is important to consider and understand factors such as soil characteristics, climate, rainfall
intensity and duration, vegetation and topography to predict the extent and consequences of soil
erosion
• Human activities during construction can accelerate erosion by removing vegetation, compacting
or disturbing the soil, changing natural drainage patterns, and by covering the ground with
impermeable surfaces (pavement, concrete, buildings)
Guidelines
A. Revised requirement of environmental clearance for construction projects
B. Impacts and mitigation Measures for Site, Planning & Development
C. Impacts and mitigation for Water Management
D. Impacts and Mitigation Measures for transport Management and Air Pollution Control
E. Impacts from Building materials and Constructions, including Solid Waste Management
F. Energy conservation Measures including Bio-climatic Design
G. Set of mandatory and expected criteria to be followed by the developer
H. Submittals required to address questions in Form1 and 1A of the notification
Broad framework of notification

• The Government of India enacted Environment Protection Act, in 1986
• The process of Environmental Impact Assessment was made mandatory in 1994 under the
provisions of the Act
• From time to time amendments have been made to the EIA Notifications
• Extending the provisions of the Act to cover additional activities, the notification was amended on
7.7.04 to include large construction projects including new townships and industrial estates
 The notification was further amended on 14.09.06 and the environmental clearance for large
construction projects was redefined and modified
 The environmental clearance for large construction projects can be summarized as follows:
• All Building /Construction projects/Area Development projects and Townships with threshold limits as
given in table below shall need environmental clearanceThe environmental clearance procedure for
project can be summarized as below:
• Application for Prior Environmental Clearance (EC)
• An application seeking prior environmental clearance in all cases shall be made in the prescribed
Form 1 annexed herewith and Supplementary Form 1A as given in Appendix II, after the

identification of prospective site(s) for the project and/or activities to which the application relates,
before commencing any construction activity, or preparation of land, at the site by the applicant
• The applicant shall furnish, along with the application, in addition to Form 1 and the
Supplementary Form 1A, a copy of the conceptual plan
Stages in the Prior Environmental Clearance (EC) Process for New Projects: -
The environmental clearance process for new projects will comprise of a maximum of 2 stages
These stages in sequential order are
• Screening
• Appraisal
Screening
• Scrutiny of an application by the concerned State level Expert Appraisal Committee (SEAC) for
determining whether or not the project or activity requires further environmental studies for
preparation of an Environmental Impact Assessment (EIA) for its appraisal prior to the grant of
environmental clearance depending up on the nature and location specificity of the project
• Applications for prior environmental clearance may be rejected by the regulatory authority
concerned on the recommendation of the EAC or SEAC concerned at this stage itself
• In case of such rejection, the decision together with reasons for the same shall be communicated
to the applicant in writing within sixty days of the receipt of the application
Appraisal:
1. Appraisal means the detailed scrutiny by the Expert Appraisal Committee or State Level Expert
Appraisal Committee of the application and other documents like the Final EIA report, submitted by the
applicant to the regulatory authority concerned for grant of environmental clearance
• Transparent manner in a proceeding to which the applicant shall be invited for furnishing
necessary clarifications in person or through an authorized representative
2. The appraisal of all projects or activities which are not required to undergo public consultation, or
submit an Environment Impact Assessment report, shall be carried out on the basis of the prescribed
application Form 1 and Form 1A as applicable, any other relevant validated information available and
the site visit wherever the same is considered as necessary by the Expert Appraisal Committee or State
Level Expert Appraisal Committee concerned
3. The appraisal of an application be shall be completed by the Expert Appraisal Committee or State
Level Expert Appraisal Committee concerned within sixty days of the receipt of the final Environment
Impact Assessment report and other documents or the receipt of Form 1 and Form 1 A, where public
consultation is not necessary and the recommendations of the Expert Appraisal Committee or State
Level Expert Appraisal Committee shall be placed before the competent authority for a final decision
within the next fifteen days
Grant or Rejection of Prior Environmental Clearance (EC):

The regulatory authority shall consider the recommendations of the EAC or SEAC concerned
and convey its decision to the applicant within forty five days of the receipt of the recommendations
of the Expert Appraisal Committee or State Level Expert Appraisal Committee concerned within one
hundred and five days of the receipt of the complete application with requisite documents, except as
provided below 90 days?
1. The regulatory authority shall normally accept the recommendations of the Expert Appraisal
Committee or State Level Expert Appraisal Committee concerned
2. In cases it disagrees with the recommendations of the Expert Appraisal Committee or State
Level Expert Appraisal Committee concerned, the regulatory authority shall request
reconsideration by the Expert Appraisal Committee or State Level Expert Appraisal Committee

concerned within forty five days of the receipt of the recommendations of the Expert Appraisal
Committee or State Level Expert Appraisal Committee concerned while stating the reasons for
the disagreement
3. An intimation conveyed to the applicant
4. The Expert Appraisal Committee or State Level Expert Appraisal Committee concerned, in turn,
shall consider the observations of the regulatory authority and furnish its views on the same
within a further period of sixty days
5. The decision of the regulatory authority after considering the views of the Expert Appraisal
Committee or State Level Expert Appraisal Committee concerned shall be final and conveyed to
the applicant by the regulatory authority concerned within the next thirty days
a. In the event that the decision of the regulatory authority is not communicated to the applicant
within the period specified in sub-paragraphs (1) or (2) above, as applicable, the applicant
may proceed as if the environment clearance sought for has been granted or denied by the
regulatory authority in terms of the final recommendations of the Expert Appraisal Committee
or State Level Expert Appraisal Committee concerned
b. On expiry of the period specified for decision by the regulatory authority under paragraph (1)
and (2) above, as applicable, the decision of the regulatory authority, and the final
recommendations of the Expert Appraisal Committee or State Level Expert Appraisal
Committee concerned shall be public documents
c. Clearances from other regulatory bodies or authorities shall not be required prior to receipt of
applications for prior environmental clearance of projects or activities, or screening, or
scoping, or appraisal, or decision by the regulatory authority concerned, unless any of these
is sequentially dependent on such clearance either due to a requirement of law, or for
necessary technical reasons
d. Deliberate concealment and/or submission of false or misleading information or data which is
material to screening or scoping or appraisal or decision on the application shall make the
application liable for rejection, and cancellation of prior environmental clearance granted on
that basis
e. Rejection of an application or cancellation of a prior environmental clearance already
granted, on such ground, shall be decided by the regulatory authority, after giving a personal
hearing to the applicant, and following the principles of natural justice

Design of Townships
•
• The words “Integrated” , “Townships” are very loosely used and they don‘t mean to the fullest
extent of living in the ―Township‖ where all the basic facilities are ―Fully Integrated‖
Essential Elements of a township:

a. Residences
b. Basic facilities –
i. School
ii. Hospital
iii.Departmental Stores for day to day needs
iv. Entertainment and Health related amenities
c. Infrastructure to enhance life style
i. Clean, Green and Wide roads
ii. Safe and Secure Community
iii. Clean Water, etc
• ―Indian Culture‖ and evolution of ―Indian societies‖ is missing in most of our townships
• These townships seem to be just replicas of western culture where the independent families are
widely accepted while Indian culture and societies are ―Patriarchal and Joint Families‖ in nature
The essential elements of Indian Societies are:

a. Head of the House Hold – 1st Generation
b. Young and Middle Age children – 2nd Generation
c. Grand Children – 3rd Generation and the future of the country
d. Guests
• To create all these kinds of facilities in a township requires large land parcels
• Due to high cost of land inside the city, the suburbs of the city is the only option
• Even after going to suburbs, due to the current models of making plots and selling them as
investment vehicles in India, the land parcels on the roads where there is good connectivity is
hard to get
• Thus most of the townships are developed far from the city
• When away from the city it is even more important to create the ―Integration‖ of all basic facilities
Methodology and Approach

1. Define the ―Need Hierarchy‖
2. Product Mix Definition
3. Financial Viability of the project
4. Final Product Mix Design
• In an effort to define the above steps, the first important thing is to understand the customer
needs, which is step #1
The following is the approach:

1. Primary Research: Primary research is to directly speak to the customer and get the inputs
2. Secondary Research: Secondary research is done by talking to various types of users such as
local developers, suppliers, some sample customers, working class people such as masons,
carpenters, plumbers, etc

Concept and Master Plan
• The center of the concept is ―Connecting all ages of people‖ in one township to ensure ―A
complete life cycle‖
• Thus population dynamics is essential while planning for a township
• In the master plan, the residences can be divided in four major individual communities for social
and physical separation while keeping all of them in one township
Product Mix
After blending the research data and the underlying concept along with the social and physical
separation to ensure privacy for each segment, the product mix is finalized:
1. Elite Residences , 2. Apartments, 3. Villas,4. Guest houses

1. Facilities and Amenities
1. Commercial Space
2. School
3. Tot lots
4. Multi Specialty Hospital
5. Infrastructure-Physical & Social
a. Recreational facilities- club house, swimming pool, gym
b. Open Spaces- parks
Social infrastructure:
An integrated township always has the basic social infrastructure essentials.
School:
A quality school with education up to at least 10th standard is set up within the township, reducing
the travelling time between home and school and in turn providing the children with more time for play
and studies
Medicare:
A good healthcare facility with at least 50-plus beds and an emergency care is set up within the
township, thereby facilitating residents
Recreation:
Adequate space for basic sports such as football, cricket, tennis and badminton, fitness facilities
including a gymnasium and swimming pools are set up within the township to enhance social lifestyle
Community centre:
A spacious, well-decorated community centre with a club house and a function hall is set up
within the township
Infrastructure and services:

An integrated township needs to be self-contained in most aspects, essentially on basic
infrastructure
Road network:
A well-planned road network both within the township and connecting to the nearest highway or
main road is built, thereby easing communication

Water supply and management:
A well-planned and sustainable water management system is built within the township, providing
round the clock water supply to residents as well as treating the waste water generated within the
township
Electricity supply and management:

Although an integrated township depends on a public or private utility supplier for basic power
supply, it should have adequate, if not abundant, back-up power for both homes and common areas
during temporary or scheduled power cuts or disruptions by the utility supplier
Communication infrastructure:
Good quality telecom services should be made available within the township
Estate management:
An integrated township should incorporate a well-equipped estate management
Garbage and waste management:

Good garbage collection, aggregation, treatment and disposal system is a must for a healthier
and eco-friendly township
Infrastructure maintenance:
Proper and regular maintenance of roads, pathways, parks, electrical and plumbing
infrastructure, children play areas and common areas including community centre is essential for a well-
developed integrated township
Security:
Security and safety for all residents is a critical element of a township
Shopping and entertainment:

An integrated township is incomplete without shopping centers and entertainment areas
Entertainment:
Quality cinema or multiplex, popular games and kid entertainment facilities should be established
within the township
Shopping:
Well-stocked grocery stores as well as shopping centers including garment stores, electronic
goods should be established within the township
Food courts:
Good quality and hygienic food courts should be established within the townships to cater the
residents
Proximity to workplace:
• While the intent of an integrated township is always to have the workplace and the residential
dwelling in close proximity
• It should establish adequate, well-equipped office space infrastructure and offer lower rentals to
attract companies, banks and corporate houses and create ample opportunities for residents

• To smoothen communication between the township and the workplace for rest of the residents,
the location of the township should be such that it is easily accessible from various parts of the
city
• Government (2001 series) permitted FDI up to 100% for development of integrated townships,
including housing, commercial premises, hotels, resorts, city and regional level urban
infrastructure facilities such as roads and bridges, mass rapid transit systems and manufacture of
building materials
• Development of land and providing allied infrastructure will form an integrated part of township‘s
development
FDI in the development of integrated townships will be subject to the following guidelines:
i) The foreign company intending to invest, shall be registered as an Indian Company under
Companies Act 1956 and will henceforth be allowed to take up land assembly and its development as a
part of Integrated Township Development
All such cases would be processed by FIPB (Foreign Investment Promotion Board )on the
recommendation of Ministry of Urban Development & Poverty Alleviation and other concerned Ministries
/ Departments Ministry of Urban Development & Poverty Alleviation will develop an exclusive cell to
deal with such cases
ii) The core business of the company seeking to make investment, should be integrated township
development with a record of successful execution of such projects elsewhere
iii)The minimum area to be developed by such a company should be 100 acres for which norms and
standards are to be followed as per local bylaws / rules, In the absence of such bylaws / rules, a
minimum of two thousand dwelling units for about ten thousand population will need to be developed by
the investor
iv) The investing Foreign company should achieve clear milestones once their proposal has been
approved-
a. The minimum capitalisation norm shall be US$ 10 million for a wholly owned subsidiary
and
b) US$ 5 million for joint ventures with Indian partner/s the funds would have to be brought in
upfront
c) A minimum lock-in period of three years from completion of minimum capitalisation shall apply
before repatriation of original investment is permitted
d) A minimum of 50% of the integrated project development must be completed within a period of
five years from the date of possession of the first piece of land. However, if the investor intends
to exit earlier due to reasons beyond his control, it shall be decided by FIPB on a case-to-case
basis
v) Conditions regarding the use of land for commercial purposes, development charges, external
development charges and other charges as laid down in Master Plan / Bylaws, preparation of layout
and building plan, development of internal and peripheral development, development of other
infrastructure facilities including the trunk services etc., will be the responsibility of the investor as per
planning norms and standards on similar lines as those applicable to local investors
• In the absence of such standards and norms, every State Government may decide their own
conditions for which the Urban Development Plan Formulation and Implementation guidelines
circulated by the Ministry of Urban Development & Poverty Alleviation may serve as a guiding
principle
vi) Land with assembled area for peripheral services such as police stations, milk booths will be
handed over free of cost to the Government / local authority / agency as the case may be \]]

vii) The Developer will retain the lands for community services such as
(i) Schools
(ii) Shopping complex
(iii) Community centres
(iv) Ration shop
(v) Hospital / dispensary
These services will be developed by developer himself and shall be made operational before
the houses are occupied viii) The developer, after properly developing playgrounds, park, will
make it available to the local authorities free of cost
ix) The developer will ensure the norms and standards as applicable under local laws / rules
x) For companies investing in Special Economic Zones,Foreign Investment Promotion Board may
accord exemption to any of the above mentioned conditions on a case-to-case basis, this will,
however, be an interim measure till guidelines are evolved in due course in a need based
manner
xi)
• High Rise Buildings
• Generally considered as one that is taller than the maximum height which people are willing to
walk up; it thus requires mechanical vertical transportation
• This includes a rather limited range of building uses, primarily residential apartments, hotels and
office building, though occasionally including retail and educational facilities
• High rise building is defined as a building 35 mts or greater in height, which are divided into
regular intervals into occupiable levels
• To be considered a high rise building the structure must be based on a solid ground, and
fabricated along its full height through deliberate processes ( as opposed to naturally-occurring
formations )
• A high rise building is distinguished by other tall man-made structures by the following guidelines:
• It must be divided into multiple levels of at least 2 mts height
• If it has fewer than 12 such interval levels, than the highest undivided portion must not exceed
50% of the total height
• Distinct divisions of levels such as stairways shall not be considered floors for purposes of
eligibility in this definition
• Any method of structural support, which is consistent with this definition, is allowable, whether
masonry, concrete or metal frame
• In few cases where such a building is not structurally self-supporting (e.g. resting on a slope or
braced against a cliff), it may still be considered a high rise building but is not eligible for any
height records unless the record stipulates inclusions of this type
Minimum height
• The cutoff between high-rise and low-rise buildings is 35 mts
• This height was chosen based on an original 12 floor cutoff, used for the following reasons:
1. Twelve floor is normally the minimum height needed to achieve the physical presence which
earns the name high-rise
2. The twelve floor limit represents a compromise between ambition and manageability for a
worldwide database
• A building of fewer floors may only be included as a high-rise when its exact height is known, in
most cases a city is considered to have a satisfactory listing of high-rise buildings when all 12
floor buildings are counted

Single vs. Multiple buildings
• In most cases there is no trouble in deciding what constitutes a separate building, only when they
are linked in unusual ways is their a logical difficulty
• The following rules have been adopted to set a uniform standard:
1. Any two towers which are separated for at least 2/3 of each towers height, are considered separate
buildings unless the connection(s) form an unmistakable architectural unity, such as an arch-shaped
building, sky bridges are generally not sufficient to unify two separate towers
2. Any structures which adjoin each other for more than1/3 of any of their heights should be considered
one building unless-
• They were built as separate structures and neither one can be considered an addition to the
other, this means that the interiors are not integrated at any level, including the ground floor or
the basement; or
• The structures are separated at ground level and connected for most of their heights but are
normally considered separate buildings; or
• An addition to a buildings forms a significant architectural disjunction
3. An addition on top of an existing building is never counted as a separate building from the one
underneath unless it overhangs the lower building from another base
High-rise market
• Undeniably the high-rise building is also seen as a wealth generating mechanism working in an
urban economy
• High-rise buildings are constructed largely because they can create a lot of real estate out of a
fairly small piece of land
• Because of the availability of the global technology and the growing demand for real estate,
skyscrapers are seen as the most fitting solution to any city that is spatially challenged and can‘t
comfortably house its inhabitants
• There has always been a relentless quest for height in architecture through the ages
• The pyramids and spiraling towers are instances of man striving to create something awe-
inspiring in the past
• The two main reasons people go for skyscrapers are either sheer necessity or to depict power
and glory and both are justifiable says architect Hafiz Contractor
• Skyscrapers are always associated with power and grandeur and they may well become
indispensable in future Indian cities
• The word ―Skyscraper‖ was coined in the late 19th century, reflecting public amazement at the tall
buildings being built in the New York City
• The structural definition of the word ―skyscraper‖ was later created by architectural historians,
based on engineering developments of the 1880s which had enabled the construction of tall
multistory buildings
• This definition was based on the steel skeleton, as opposed to constructions of load-bearing
masonry, which passed their practical limit in 1891
Skyscrapers in Hyderabad
• Treating open space as an urban amenity
• Urban open space is a term used in land use planning to define open space areas for ―parks‖,
―green spaces‖, and other open areas
• The landscape of urban open spaces can range from playing fields to highly maintained
environments to relatively natural landscapes
• They are commonly open to public access, however, urban open spaces may be privately owned

• Streets, piazzas, plazas and urban squares are not always defined as urban open space in land
use planning
• "As the counterpart of development, urban open space is a natural and cultural resource,
synonymous with neither 'unused land' nor 'park and recreation areas‖
• Open space is land and/or water area with its surface open to the sky, consciously acquired or
publicly regulated to serve conservation and urban shaping function in addition to providing
recreational opportunities‖
Ownership
• Generally considered open to the public, urban open spaces are nevertheless sometimes
privately owned
• Some examples of such places include higher education campuses, neighborhood/community
parks/gardens, and institutional or corporate grounds
• These areas still function to provide ―aesthetic and psychological relief from urban development‖
• Nevertheless, most commonly the term is used to reference spaces that are public and ―green‖
Values
The value that urban open space provides to citizens can be broken into three basic forms;
recreation, ecology, and aesthetic
Recreational: Urban open space is often appreciated for the recreational opportunities it provides.
Recreation in urban open space may include active recreation (such as organized sports and
individual exercise) or passive recreation, which may simply entail being in the open space. Time
spent in an urban open space for recreation offers a reprieve from the urban environment is offered
Ecological
• The conservation of nature in an urban environment has direct impact on people for another
reason as well
• As human live more and more in man-made surroundings – i.e., cities – he risks harming himself
by building and acting in ignorance of natural processes‖
• Beyond this man-nature benefit, urban open spaces also serve as islands of nature, promoting
biodiversity and providing a home for natural species in environments that are otherwise
uninhabitable due to city development
Aesthetic
• The aesthetic value of urban open spaces is self-evident
• People enjoy viewing nature, especially when it is otherwise extensively deprived, as is the case
in urban environments
• Therefore, open space offers the value of ―substituting gray infrastructure‖
• Value of urban open space can also be considered with regards to the specific functions it
provides; essentially this is just another way to organize the basic reasons urban open space is
valued
One study categorizes the measures of value into six groups:
1) Utility
2) Function
3) Contemplative
4) Aesthetic
5) recreational
6) Ecological

• These categories account for the value an urban open space holds to the development of the city
in addition to just those things citizens consciously appreciate
• For example, the ―function value‖ of an open space accounts for the advantages an urban open
space may provide in controlling runoff
• The final three values listed, aesthetic, recreational, and ecological, are essentially the same as
the values that make urban open spaces consciously valuable to citizens
• Of course, there are several different ways to organize and refer to the merit of open space in
urban planning
Public health
• Urban open spaces offer health benefits to city residents through exposure to a natural
environment
• They offer citizens relief from the strains of urban environments and everyday demands
• That respite can come in the form of a walk or run, time spent sitting or reading, watching the
birds, essentially any time spent in the natural environment the open space offers
• Research shows that when open spaces are attractive and accessible, people are more likely to
engage in physical activity, which has obvious inherent health benefits
Landscaping
 The enhancement of an area‘s aesthetic beauty is directly related to that area‘s
landscaping
 Each parcel of land should be landscaped thereby reinforcing the area‘s sense of place
 It adds to the visual appeal and contiguity of a site, it also performs important and
invaluable function relating to the reduction of pollutants and storm water treatment
 Landscape improvements have been implemented as well as pedestrian amenities
 Increased landscaping enhances the aesthetic appeal of the area
 The landscape is the green part of the city that weaves throughout - in the form of urban
parks, street trees, plants, flowers, and water in many forms
 The landscape helps define the character and beauty of a city and creates soft, contrasting
spaces and elements
 Green spaces in cities range from grand parks such as Central Park in New York City and the
Washington DC Mall, to small intimate pocket parks

6th Term - Urban Planning & Design

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URBAN PLANNING AND DESIGN

History of Urbanization and Effects of Industrial Revolution

Urbanization refers to a process in which an increasing proportion of an entire population lives

The Urbanization of the World & Origin of Cities:

S.R.P* 6TH TERM – URBAN PLANNING & DESIGN Page 1

Measurement and process

S.R.P* 6TH TERM – URBAN PLANNING & DESIGN Page 2

The process of urbanization

S.R.P* 6TH TERM – URBAN PLANNING & DESIGN Page 3

S.R.P* 6TH TERM – URBAN PLANNING & DESIGN Page 4

S.R.P* 6TH TERM – URBAN PLANNING & DESIGN Page 5

S.R.P* 6TH TERM – URBAN PLANNING & DESIGN Page 6

S.R.P* 6TH TERM – URBAN PLANNING & DESIGN Page 7

S.R.P* 6TH TERM – URBAN PLANNING & DESIGN Page 8

S.R.P* 6TH TERM – URBAN PLANNING & DESIGN Page 9

Job Sprawl and Spatial Mismatch

Developments characteristic of sprawl

S.R.P* 6TH TERM – URBAN PLANNING & DESIGN Page 10

Fast food chains

Smart growth and the Compact City

Transit-, bicycling- and pedestrian-oriented developments

Bicycling-oriented development (BOD)

S.R.P* 6TH TERM – URBAN PLANNING & DESIGN Page 11

Health and environmental impact

Increased pollution and reliance on fossil fuel

Increase in traffic and traffic-related fatalities

Decrease in social capital

Decrease in land and water quantity and quality

S.R.P* 6TH TERM – URBAN PLANNING & DESIGN Page 12

Increased infrastructure costs

Increased personal transportation costs

Urban Sprawl and Automobile dependency

S.R.P* 6TH TERM – URBAN PLANNING & DESIGN Page 13

Global division of labour

S.R.P* 6TH TERM – URBAN PLANNING & DESIGN Page 14

Consequences of the Neolithic Revolution

British Agricultural Revolution

Industrial revolution in Western Europe

S.R.P* 6TH TERM – URBAN PLANNING & DESIGN Page 16

Newly industrialized countries

Effects of Industrial Revolution

S.R.P* 6TH TERM – URBAN PLANNING & DESIGN Page 17

Effects and consequences of Industrial Revolution

S.R.P* 6TH TERM – URBAN PLANNING & DESIGN Page 18

S.R.P* 6TH TERM – URBAN PLANNING & DESIGN Page 19

Impact of the Industrial Revolution

Fundamental Shifts in Social Structure

S.R.P* 6TH TERM – URBAN PLANNING & DESIGN Page 20

Effects of the Industrial Revolution on Politics

S.R.P* 6TH TERM – URBAN PLANNING & DESIGN Page 21

The Industrial "Revolution"

Effects on the Rest of the World

S.R.P* 6TH TERM – URBAN PLANNING & DESIGN Page 22

Indian Census Definition of Urban Area

In Census of India, 2001 two types of town were identified (R.G,2001):

a) Statutory towns : All places with a municipality, corporation, Cantonment board or

b) Census towns : Places which satisfy following criteria :-

Volume and Trend of Urbanization in India