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Understanding how Tamil Nadu is India's number one Urbanized State

Tamil Nadu is a huge enigma to every observer. Huge corruption, not heard of in most parts of India. Water problems. Unemployment. Still, the State keeps growing at over seven percent GDP, made possible through a thriving service sector. There are a huge number of reasons as to how this happens. This article analyses such factors in some detail.


Tamil Nadu is home to 32 districts, each of them having its own culture and even different levers of economic growth. Having a healthy seven percent GDP growth, year on year, is no mean achievement, given the numerous problems facing the State. There is no stopping the growth of the service sector, and the growth of smaller towns, thanks to a superb network of roads and bus transport. Huge money changes hands everyday, and the trading activities keep the State going. Some ramifications of this phenomenon are sought to be described in this article.

More districts, more growth

More districts, more growth.This is particularly true of Tamil Nadu, which is home to 32 districts, each with its own culture and own levers of economic growth. The service sector keeps growing at such a fast space and the small businesses thrive too. In spite of declining demand for engineering education, the State still has 500 engineering colleges, bringing in investment from outside Tamil Nadu, in the form of students. Though this number is expected to come down to around four hundred, most of the engineering colleges opting to close down, will become Arts and Science colleges and so on. The variety of courses available is simply breath taking.

The DMK Government did it. It split the slightly bigger districts into smaller districts. Ariyalur, a very small town, is now a district headquarters. The neighboring district called Perambalur, is another. The two new districts, have been carved out of the erstwhile Tiruchirapalli district. For every fifty or sixty kilometers, there is one district. The new district brings in new offices, new services, new schools, new colleges, new servant maids, new hotels, new lodges, new private hospitals, new buses and new routes for buses. The motor mechanics,electricians, plumbers, construction workers and allied service personnel come in too. All contributing to the service sector growth.

The growth of Chennai as a huge educational hub can also be attributed to the rapid growth of two branded Deemed Universities called VIT and SRM. These have huge campuses and money comes from all over India, and from the NRIs. The salaries of the teachers and the indirect employment have made South Chennai a hot development hub.

Tamil Nadu already has the best organized public transport system in the country. One can even split journeys to reach the same destination. For example, one can find a bus to Villupuram, from Koyembedu, the largest bus station in Asia, in the heart of Chennai, every five minutes. From this important bus station,one can find thousands of buses to any destination down South.

New service sector businesses thrive. Organic food shops can be found everywhere. Organic fruits and vegetables. The Kumbakonam degree coffee shops (this coffee is a special coffee, which has a special way of preparation), hundreds of NEET and JEE preparation centers and the small shops selling the traditional food items. In Madurai city, the 600 night shops (that open at 6PM and close at 4AM the next day morning) mints a turnover of an estimated three hundred crores per annum. The city that never sleeps is also home to a thriving temple economy, since it has thousands visiting the Madurai Meenakshi Temple everyday.

The roads also contribute to growth. Hundreds of entrepreneurs buy unbranded textiles from far away Surat and sell the clothes for profit in the small village in installments. There is absolutely no cheating involved and there is a win-win situation for the buyer and the seller. This happens due to the ninety days credit that is normally given to these entrepreneurs.

Cluster of Villages Concept

The cluster of Villages Concept is very interesting. A slightly bigger town acts as the nucleus and the wholesale market for some sixty villages around it. The trade is simply mind blogging. It is agricultural produce all the way. Sholinghur is a small town in the Vellore district of Tamil Nadu. It is basically a temple town. It also has two big units of a TVS group company. The direct employment is around seven thousand. And the indirect employment, including those in the sub-contract units, would be eight times this figure, enough to keep a small town with a population of 1.2 lakh people, have at least two wheeler in each house, and take up so many service businesses often classified as cottage businesses. For instance, there is a variety of soda called panneer soda available in all small retail shops. This is also called "goli soda" as one has to push down a small pebble to reach and drink the soda available inside. This is a huge business, as what is produced in the morning is sold by 6PM the same day. The transport cost is almost zero.

This keeps repeating itself in every district. Village produce is also brought to the nearest town, to be sold at a profit. Since agricultural income is not taxed, the money keeps rotating in various forms. Most families at least educate their sons and daughters in Government schools. Drop out ratios are declining everyday. That the ration holders in the below poverty line (not really now), get twenty kilograms of free rice is a very important factor that contributes to relative peace and no one goes hungry.

The phenomenon called Coimbatore

Coimbatore, a city nestled in the Western Ghats is one of the fastest growing B class towns of India. It is a phenomenon in growth. It has one of the highest number of individual entrepreneurs who work so hard to make it possible to grow and keep always growing. The massive and lovely city is growing beyond forty kilometers in all four directions.

Take this for a sample. Coimbatore is home to at least two thousand smaller shops that sell tea, coffee and some four snacks throughout the day and more so, in the evening between 4p.m. and 8p.m.. If one goes to the main bazaar street in the superb residential colony called Sai Baaba Colony ( it is over three crore rupees for a 2400 square foot plot today), one can find neatly arranged small tables. There are more than half a dozen shops. Not less than one hundred thousand rupees would change hands in a matter of four hours in at least two of the four shops!!

The growth of the city is simply ineffable. The North Indian migration to the city to take up employment in all small businesses, restaurants, lodges, motels and what have you, is growing day after day. This is is also possible because of the superb weather. Coimbatore is home to over three hundred manufacturers of wet grinding machines, mixies, and such other electronic appliances. It has superb roads linking every small village and the villages are also fast expanding. Rain water harvesting techniques are simply superb.

Coimbatore has also contributed to quality manpower. It has over seventy engineering colleges and same number of arts and science colleges. It also has a huge number of colleges for education, para medical sciences, home sciences and so on. The female literacy is huge and since it is right on the Kerala border, a thriving service sector trade with that State is in place.

Small towns within a city

Small towns within a huge city, is a particularly specific Tamil Nadu development. There are several small towns within a huge city in Tamil Nadu. Kovilpalayalam, Saravampatti, Sai Baaa Colony, R.S.Puram, Ramanathapuram among others in Coimbatore city are all small towns.

Tambaram, Guduvancheri, Mambalam, Adyar, and Perambur, among others, are literally towns, within Chennai. Madurai has such similar towns too. Tiruchirpalli has Srirangam and Salem has Chinna Salem and Aaathoor.

The self-sufficiency of the smaller towns is a huge plus for rapid urbanization of Tamil Nadu.

No industrialization, but the State grows

There has been no significant increase in industrialization which is normally attributed to institutionalized corruption. Yet, the service sector, now contributing to over fifty percent of the GDP, will keep the economic engine growing for another three decades, at the minimum. The Non-resident Indian money flowing in is another big plus, as far as the growth of the residential sector is concerned.

Yes, the story of urbanization is never complete, and the smaller towns, hundreds of them, will keep growing only because of the service sector. Industrialization can happen if there is a change in Government and the DMK is back in power. This has to wait, though.


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