By Dr. Kala Seetharam Sridhar – Head, Public Policy Research Group.
Published in The Financial Express, December 12, 2011.
In his recent book on the triumph of the city, Edward Glaeser looks at the importance of urban life to business and innovation and suggests the most important investment in any city is human capital. In recent research, I find that the most important determinant affecting positively a city’s economic output is human capital, as measured by the literacy rate of its population, taking the case of Indian cities. While a large planned socialist economy such as India is characterised by strong land use controls such as the Urban Land Ceiling and Regulation Act, the Rent Control Act and unduly restrictive floor-area ratios or Floor Size Index (FSI) restrictions, why is this important for a city’s growth?