Business, Economics and Jobs

India: New towns equal a new middle class




Kyle Kim

If you're a committed India watcher, you should be reading Mint -- which in many ways is setting the standard for business journalism here.

Case in point: Cordelia Jenkins' new series on the growth of so-called "census towns" on the outskirts of India's larger cities -- and their role in shaping the identity of India's new middle class.

As Jenkins lays out in part one of the series, towns like Soraon, Uttar Pradesh, were little more than villages a few years ago. But now they're India's hidden engines of growth. (“It was all jungle here before,” Jenkins quotes Kareem Bashir Ahmed as saying, raising his voice above the noise of the traffic and pointing towards the businesses that now extend for half a mile north of the main village where he owns a successful scooter and motorcycle dealership.)

'Ahmed’s choice of phrase highlights the ambiguous nature of Soraon. It is one of about 2,500 large villages to be reclassified as a “census town” by the Census of India in 2011,' Jenkins writes.

'This urban classification, which exists on census paper only, helps differentiate between India’s smaller farming communities and the larger market town-type settlements that are experiencing rapid and haphazard growth. To become a census town, a village must fulfil three criteria—it needs at least 5,000 inhabitants, a density of 400 people per sq. km, and, crucially, at least three quarters of its male working population must be “engaged in non-agricultural pursuits”.'

'Simply put, census towns are populous places where farming is no longer viable and people have turned to other professions. And they are multiplying fast: between the 2001 and 2011
census the number almost trebled, from 1,362 to 3,894, and that is probably an underestimate, given that the census relies on projections from the previous decade’s data to make its classifications.'

And these census towns have already had a huge impact on Indian life.  I'd like to reproduce the whole thing here, and I advise you to read all six-parts, which are available here.  But consider this tidbit from part three.

'In Molachur [near Chennai], the most commonplace aspects of life are now inextricable from the industrial development that has, in less than a decade, transformed it from a sleepy farming village to one of India’s new towns—they mimic a town, but there is nothing official about it,' writes Jenkins.

'Sakkayanmary is one of the few tenant farmers left in Molachur. She shares the harvest from the small plot at the back of the family’s one-room hut with the owners of the land, who, she suspects, are waiting for the plot to increase in value before selling it. Outside her hut, red chillies were spread on the ground to dry; inside, her eldest daughter Pornima sat embroidering a sari, a work for which demand has dropped since the factories arrived.'

'“Pornima keeps cursing me that I didn’t let her study like her brother and sister,” Sakkayanmary explained in Tamil. “But we didn’t have money back then and I needed her to work. If she went to school, she’d have had the option of working in a factory.”'

It's a tough climb.

'In Molachur, the factories have created job opportunities for educated villagers, but for the unschooled, the prospects are bleak. Parents prioritize education as a result, keen to make sure their children get a fighting chance for one of the coveted factory jobs—but it’s not easy.'

'In nearby Irungattukottai, schools only teach until class V and children have to travel to Sriperumbudur, a distance of 6km, to get a high school education. U. Fathima, a housewife and member of a self-help group, has four daughters, one of whom attends high school. Each month, Fathima pays Rs.1,500 for a private van to drive her daughter there.'

Still, there are signs that opportunities are increasing, and that companies are stepping in to fill the gaps left by the government.

'Ejaz Ghani, an economic adviser for South Asia at the World Bank, has studied the urbanization of India’s manufacturing sector since the 1990s,' Jenkins writes. 'In a recent report for Harvard Business School, Ghani and his colleagues found that while informal and unorganized small industries (such as Molachur’s embroidery trade) were moving from rural areas into cities, the reverse was true of the formal industrial sector—the Hyundais and the Nokias.'

'“The main message is that the organized manufacturing firms are moving out from urban areas of districts and into the rural,” Jenkins quotes Ghani as saying. '“That’s a trend which cuts across industries and states. We also found that new plants tended to open in places that had better infrastructure and better education facilities.”'

That can mean more than jobs. 

'For the residents of Irungattukottai, who live within view of the Hyundai factory, the choice is between no services at all and the ones that the private interests are willing to provide.'

'“Hyundai has built toilets for us and also distributed garbage bins,”' said G. Stella, a former school teacher. Although their children watch Sun TV, take computer courses in accounting software, and dream of working in banks or as teachers, the housewives of Irungattukottai make do with small victories when it comes to daily necessities: water now flows in their taps once every two days—compared with once in 10 previously.'