Small towns are not clearly defined in India. We have heard of very large towns described as small towns. In the Indian context, it appears that everything outside the top eight cities is a small town. For marketers, it is not the population but the income distribution and the size of the market (purchasing power) which matters and here again, there are about 10-15 urban clusters that tower above the rest. When we look at hard data, we find that although there are over 2,000 towns in India, there are about 112 urban clusters, which account for 60 per cent of the urban population of India. These clusters account for more than 70 per cent of the city markets by size. We have estimated the total urban household income to be Rs 18.8 trillion (source: Market Skyline of India, 2008-09). The top clusters account for 71 per cent of the urban income. Stars and wannabes It is also interesting to note that the East is a laggard in terms of significant city markets, whereas the West (Maharashtra and Gujarat) is the clear leader. The top 10 clusters, namely the alpha cities, are the largest markets and will continue to be so for some time. The next 20 (beta cities) are the ones that are catching up and some of them will emerge as large, attractive markets. Many of them are actually virtual satellite cities of the alpha cities (see table and diagram). Large markets such as Mumbai, Delhi, Chennai and Kolkata continue to be attractive. Their sheer sizes ensure that even at lower percentage growth, the absolute growth remains very high. The star clusters for marketers are the high growth (large size) clusters, which consist of Surat, urban Thane (includes Navi Mumbai), Bengaluru, Ahmedabad, Pune, urban North 24 Parganas and Hyderabad. Cities such as Jamshedpur and Salem have been industrial centres for decades, but seemed to be content giving precedence to newer centres that have grown. Some, such as Indore, have been threatening to make it big for many years, but never quite managed it. Others, such as Kanpur, have somehow lost their way.

1. Indicus Analytics, An Economics Research Firm
http://indicus.net/
Defining Small
Towns
Published in Afaqs on 1st September 2009
Amit Sinha | Indicus Analytics | ., September 01, 2009
Small towns are not clearly defined in India. We have heard of very
large towns described as small towns. In the Indian context, it
appears that everything outside the top eight cities is a small town.
For marketers, it is not the population but the income distribution
and the size of the market (purchasing power) which matters and
here again, there are about 10-15 urban clusters that tower above
the rest.
When we look at hard data, we find that although there are over
2,000 towns in India, there are about 112 urban clusters, which
account for 60 per cent of the urban population of India. These
clusters account for more than 70 per cent of the city markets by
size. We have estimated the total urban household income to be
Rs 18.8 trillion (source: Market Skyline of India, 2008-09). The top
clusters account for 71 per cent of the urban income.

2. Indicus Analytics, An Economics Research Firm
http://indicus.net/
Stars and wannabes
It is also interesting to note that the East
is a laggard in terms of significant city
markets, whereas the West (Maharashtra
and Gujarat) is the clear leader. The top
10 clusters, namely the alpha cities, are
the largest markets and will continue to
be so for some time. The next 20 (beta
cities) are the ones that are catching up
and some of them will emerge as large,
attractive markets. Many of them are
actually virtual satellite cities of the alpha
cities (see table and diagram).
Large markets such as Mumbai, Delhi,
Chennai and Kolkata continue to be
attractive. Their sheer sizes ensure that even at lower percentage
growth, the absolute growth remains very high.
The star clusters for marketers are the high growth (large size)
clusters, which consist of Surat, urban Thane (includes Navi
Mumbai), Bengaluru, Ahmedabad, Pune, urban North 24 Parganas
and Hyderabad.
Cities such as Jamshedpur and Salem have been industrial
centres for decades, but seemed to be content giving precedence
to newer centres that have grown. Some, such as Indore, have
been threatening to make it big for many years, but never quite
managed it. Others, such as Kanpur, have somehow lost their
way.

3. Indicus Analytics, An Economics Research Firm
http://indicus.net/
The emerging stars are Thiruvallur
(Chennai's satellite), Vadodara,
Noida, Faridabad, Gurgaon and
Chandigarh. These are already
established and have attained
critical sizes. They continue to
grow at a fast pace. With the
exception of Vadodara, all the
others benefit from the formation
of large agglomerations.
Thiruvallur and Kanchipuram are
satellites of Chennai; Gurgaon,
Noida and Faridabad are part of
the NCR; and Chandigarh is part
of a cluster comprising Mohali and
Panchkula. These are the next
Coimbatores and Surats and this
is where one can expect
significant action and fight for
market shares.
Many of these cities were, in the
past, specialising in a few sectors
and industries; but with growing
population and large-scale
immigration, they are steadily
growing in the range of activities
that are undertaken within and in
their vicinities.
The bulk of these cities have
substandard public infrastructure
(since serious urban investment in
the past has been limited to state
capitals); however, that is
changing rapidly as demand is
pulling in investments.
These cities are currently much smaller than the top metros but
many have per capita incomes that are higher than those in the top

4. Indicus Analytics, An Economics Research Firm
http://indicus.net/
metros. Most of them also have sustained double-digit growth. It is
only a matter of time before they become important metros in their
own right.
The story of the emerging stars is largely a story of the suburbs or
satellites of the top Indian cities.
These cities fulfil an important need that the larger city was unable
to offer. In the initial phase, they may have been uni-dimensional,
but over time, they have gained a distinct character and
momentum of their own. The lack of office space in New Delhi, the
lack of new residential areas in Kolkata and Chennai and
expensive real estate in Mumbai have contributed to the growth of
Salt Lake, Gurgaon, Thiruvallur and Navi Mumbai.
Now, all of them are much more than just real estate alternatives
to larger neighbours. They are outstripping their bigger brothers in
growth and in certain specific market segments, they are already
bigger.
The impediments
Why are certain cities
falling away after
achieving
momentum? Clearly,
infrastructure, or the
lack of it, is the culprit.
Pure enterprise,
without the backing of
planning and
infrastructure, can
achieve only so
much.
Indeed, the growth in India has so far been purely enterprise-led
and planning has little to do with it.
Rising incomes are associated with urbanisation and India has
been lagging behind on this count. The pace of urbanisation has
actually slowed in the country. During 1971-81, the annual average

5. Indicus Analytics, An Economics Research Firm
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rate of urbanisation was 3.8 per cent, but declined to 3.1 per cent
between 1981 and 1991; and to 2.7 per cent between 1991 and
2001.
Urbanisation is only about 30
per cent in India. In contrast,
last year, China's urban
population crossed 600
million (46 per cent of its
population). Moreover, the
people living in cities
comprised just 20 per cent of
the total. According to
China's 'Blue Book of Cities', the country has 116 metropolises,
with nearly a million people in each. India has just 62.
Indian cities are characterised by some of the worst infrastructure
and public services in the world. This is natural, given that we
typically spend insignificant amounts to upgrade and maintain
urban India.
It also leads to the ridiculous situation of people travelling daily
from villages to cities to work. They are forced to do so because
the cities do not provide housing and necessary infrastructure to
live and work.
India needs its large cities, but even more than big cities, it needs
a well spread out network of cities that will enable the rural-urban
transition of workforce more effectively.
The writer is president, Indicus Analytics.

6. Indicus Analytics, An Economics Research Firm
http://indicus.net/
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