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Lack of Government Services Is No Obstacle for Indian Growth

India has stumbled onto the secret to economic growth, reports the New York Times:

In 1979, the state of Haryana created Gurgaon by dividing a longstanding political district on the outskirts of New Delhi. One half would revolve around the city of Faridabad, which had an active municipal government, direct rail access to the capital, fertile farmland and a strong industrial base. The other half, Gurgaon, had rocky soil, no local government, no railway link and almost no industrial base.

As an economic competition, it seemed an unfair fight. And it has been: Gurgaon has won, easily. Faridabad has struggled to catch India’s modernization wave, while Gurgaon’s disadvantages turned out to be advantages, none more important, initially, than the absence of a districtwide government, which meant less red tape capable of choking development.

The Times paints Gurgaon as a dysfunctional jurisdiction because it has little of the government-provided infrastructure and services taken for granted in the West. But that just means private citizens are providing these things:

To compensate for electricity blackouts, Gurgaon’s companies and real estate developers operate massive diesel generators capable of powering small towns. No water? Drill private bore-wells. No public transportation? Companies employ hundreds of private buses and taxis. Worried about crime? Gurgaon has almost four times as many private security guards as police officers. …

Gurgaon is an extreme example, but it is not an exception. In Bangalore, outsourcing companies like Infosys and Wipro transport workers with fleets of buses and use their own power generators to compensate for the weak local infrastructure. Many apartment buildings in Mumbai, the nation’s financial hub, rely on private water tankers. [“In India, Dynamism Wrestles with Dysfunction,” by Jim Yardley, New York Times, June 8, 2011.]

Posted on 06/10/11 02:27 PM by Alex Adrianson

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