Proposal for city level GDP under study

Prelims level : Mains level : Paper - III Indian Economy and Issues related to its Development
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  • The Economist Intelligence unit (EIU) recently did a feasible study of various models to calculate city-level GDPs for the MOHUA. Urban India responsible for an increasingly large share of the national GDP, the centre now hopes to bring out city-level GDP data.

Why it is needed?

  • The Urban Sector is likely to contribute for about 75% of India’s GDP by 2020 comparatively from 29% by 1951 according to government data. This shows the rapid growth of the urban India.
  • In order to make the growth sustainable, it is essential to improve the economy. we cannot improve what we cannot measure. hence it is a need for the hour to calculate the GDP of the cities to ensure the potential of the cities.
  • Apart from the metro cities, calculation of GDP gives the transparent potential of the non-metro cities also. This gives the detailed idea for the investors to make wise decisions in the cities.
  • It also shows the policy makers to prepare the clear-cut plan for the improvement of the cities.
  • This helps to overcome the disadvantage of the smart cities which suffers from the fund for their own infrastructure.
  • Though schedule 12 provides local government for collection of the taxes, it is the discretionary power of the state that hinders the local government to have enough fund for their development. thus, the GDP calculation of cities let to know the performance of the city’s economy which helps to raise their own fund through the bonds.
  • It also gives the investors to analyse the risk for their investment.
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