Cities can make Economic Rebound equitable

A year and a half have passed since the first case of Covid-19 was reported, but still, urban economies have not returned to normalcy. Cities have begun to run, but they are not functioning at their full capacity. The worst affected industries, including hospitality and tourism, are still under the dark shadow of the Pandemic. With intense vaccination drives going on around the world, the economic rebound is expected soon in cities. It is the responsibility of cities and local governments to make the rebound equitable, inclusive and sustainable.

Cities are witnessing uncertain times. Some cities have witnessed a drastic decrease in daily Covid-19 cases, while others face difficulty controlling the contagion. History suggests that cities always thrived by adapting to the evolving challenges and building resilience. However, the ongoing situation has made it difficult for cities to cope with the evolving economic challenges as business and industrial activities are still affected. Street vendors, daily wage earners and people engaged in informal economic activities are among those severely affected by lockdowns.
The worst affected cities were those that were dependent on a single economic activity such as tourism and hospitality. On the other hand, the essential commodities-related businesses, some IT sectors and the pharmaceuticals industry remain unscathed during the first and the second waves of the Pandemic. And, the cities that dodged the Pandemic’s economic impacts were those not dependent on industries that required movement of people but the movement of information.
Generally, most of the cities have their own unique set of industries and allied activities. For example, Bengaluru and Hyderabad are known for having national and international Information Technology (IT) companies.Chennai with its thriving automotive and auto-components industry is often referred to as the ‘Detroit of Asia’. Delhi and Mumbai are headquarters of political parties and corporate giants, and Noida is a manufacturing hub. Other cities are traditionally known for specific industries such as Aligarh for locks, Kanpur for leather and jute products, Agra and Varanasi for tourism, Mysore for wooden handicrafts and furniture,and cities in Kerala for spices. Traditionally, it has been seen as an economic benefit attached to developing such an industrial system. When firms producing similar goods or dealing in the same sector are located near each other, it reduces cost. But the Pandemic taught us that it has negative implications too. When major economic activities in a city are disrupted, it had ripple effects on other industries in the region. Such a model can also lead to a complete collapse of the economic system.
It was the scenario world over. As per a news report by Reuters ‘US coronavirus downturn hits timber-reliant towns’, a major US paper producer decided to shut two of its plants over the summer, citing the drop in demand for paper amid the coronavirus pandemic. The sudden move by one private company affected thousands of jobs in Minnesota and its neighbour Wisconsin, where it also cut off the revenue that was keeping many of the state’s counties afloat. In Tunisia and Bangladesh, thousands of people working in the garment industry lost their jobs or were not paid.
After the Covid-19 Pandemic, every city has renewed its priorities and included sustainable development, resource and energy efficiency, conservation of the environment, improving livability, reducing pollution, and building green infrastructure in its futuristic agenda. But none of this could be achieved without attaining local economic sustainability. The new upcoming cities are diversifying their economic activities and are not dependent on a single industry or activity. This is making them economy wise resilient to any pandemic or disaster.

The second wave of Covid-19

India witnessed the peak of the second wave in mid-May this year when the daily cases touched 400, 000 mark and active cases reached 3.7 million. As the number of cases began to mount, health infrastructure in cities almost collapsed as people had to run pillar to post to get medical assistance and hospital beds. Further, state governments started announcing Covid curfew measures that impacted the running of economic activities.
Against the backdrop of the second wave of the Pandemic in India, GlobalData, a leading data and analytics company, released a report saying that the combined real GDP growth of nine major Indian cities has been revised downward to 9.28 per cent in May 2021 from the earlier projection of 9.61 per cent in January 2021. These cities are from the most affected states and contributed roughly 15 per cent of the country’s total GDP in 2020. In addition, the report says the real GDP growth forecast is revised downward by around 0.50 percentage points for Mumbai, Delhi and Visakhapatnam metropolitan area, followed by Chennai and Lucknow (approximately 0.40 percentage points) in May 2021 compared to January 2021.
Many other global financial agencies have predicted that the second COVID wave may derail a strong recovery in the economy and credit conditions. The economic recovery in cities is essential to bring the country back on the fast-track economic revival as cities account for almost 70 per cent of the nation’s GDP. Additionally, the role of cities is becoming increasingly important because an average of
25-30 people migrate to cities from rural areas every minute, a new study by the Geneva-based World Economic Forum has revealed.

Impact on local community and businesses

About one billion people live in informal settlements around the world. Indian cities also house a large number of people in slums. According to government data, approximately 25 per cent of people live in slums in Indian cities. The number is much higher, above 50 per cent, in densely populated cities like Mumbai. Slum-dwellers had to face health risks,and loss of livelihood as a majority of the people living in informal settlements depend on daily earnings. Most men and women working in local industries and factories, running food stalls or working in urban homes as house help and drivers suddenly became jobless after the government announced a lockdown.
This also happened because of a drastic change in the everyday urban life of a citizen. If we compare the lives of citizens in the city today to the one in the pre-pandemic era, it has completely changed. Public transport like local trains in Mumbai and metros in Delhi used to remain packed. People worked in offices and shopped on the way back home. It has changed completely. People are shopping online. It has impacted most of the people working in the informal economy in our cities. Their income has been affected severely.
Many national, state and local governments took the initiative to help the local community and especially those from the vulnerable communities in the informal economy. For example, Indian governments announced loan assistance for street vendors, monthly allowances for women workers, and some states provided financial assistance to auto and e-rickshaw drivers. Such financial assistance programs were initiated in many countries around the world. For example,Japan had extended its stimulus programmes for small enterprises to finance pandemic-impacted medium and large entities. And, the government kept the interest rate at one per cent that is lower than the usual interest of five per cent.
Apart from national governments, local governments played an important role in providing cushion to local economies to protect them from the economic fallout. Some cities like Bilbao (Spain), Yokohama (Japan), and Seattle (USA) supported small retailers and Small and Medium Enterprises (SMEs)by providing online and telephonic consultancy. Lisbon (Portugal) created a support team with a specialist from various sectors for local small and medium-sized companies.
The team ensures information on all existing support reaches these companies. In addition, many local governments supported local businesses by providing financial aid. For example, Milan setup a mutual aid fund for supporting local economic companies. In addition to providing a three million euro fund for local businesses, it also asked citizens to participate in helping local businesses. It generated around 800,000 Euro on the launch day of the initiative.

Agenda for cities

The Pandemic has impacted the development agendas of cities globally. The shrinking financial resources for achieving the sustainable development goals and the pandemic’s impact have made it difficult for local governments to achieve the objectives by 2030. Indian cities can draw lessons from the cities which have already drafted their urban agenda for the post-pandemic world. Cities are not focusing on traditional development requirements and addressing imminent threats of climate change and pollution-related threats to urban life. The Pandemic has also underlined the significance of having health among the main priorities for cities.
Managing urban spaces and proper densification with improved service delivery is essential for cities to deal with pandemics. Many European cities are now focusing on building more public spaces and building cities where more people can stay, but there is no crowding at public spaces and public transport. To address the needs of the people living in informal settlements, there should be programmes on the agenda of cities to provide a minimum standard of services for one and all. There have been apprehensions that more people will move to private vehicles if public transportis not transformed to make people feel safe in travelling in a bus or a metro train.
According to a WEF report, as public transport slowly reopens in India, the short‑ and medium‑term effects on urban transportation could be sizeable. Recent perception studies have shown that 36 per cent people who previously travelled by trains will probably switch to using individual vehicles or other private transport options in the next few months. This is a worrying prospect, given that roads in Indian cities are already clogged. The 2019 TomTom Travel Index featured four Indian cities in the world’s top 10 most congested cities, with Bengaluru ranking first.
Covid-19 could become a game-changer for India’s urban movement if cities and government agencies draw the right lessons, transform the way the cities function, and invest in urban sectors that need immediate attention. The cities will indeed bear the load of the economic recovery of the nation. For making it a smoother ride to recovery and prosperity, policymakers have to adhere to the demands of urban spaces and thereby build a. It should not be just about returning to normalcy but about making the right choices in our development agenda, keeping in mind the impacts on the planet and people. And the transformation has to be sustainable and inclusive.