Cover Story: India's Best Cities For Business, 2001 [Pg.2]

The biggest gainers in terms of perceptual rank are some of the small cities. Coimbatore, for instance, has moved up six places; Chandigarh has vaulted up five, and Vizag and Nasik three places each. There are no clear cut answers as to why that has happened. Consider Coimbatore. On a lot of key parameters it lags. On law and order, it comes 16th, quality of roads 17th, and water supply 18th. Chandigarh does worse on cost of living at number 19, but on most other counts it does better than Coimbatore.

Dig a little deeper and some answers do emerge. Cleanliness, safety, ease of commuting and cost of living (although Chandigarh is a glaring exception) appear to be some of the reasons why smaller cities appeal to business. There could be another reason that has to do with the fundamental change in the nature of business itself. Large-scale manufacturing is on the decline, and knowledge-based industries are on the rise. In a business like software, distance has no meaning at all. An off-shore centre that is based in Bangalore or Delhi might as easily be located in Chandigarh or Coimbatore, provided that reliable telecommunication facilities exist. In other service sectors such as retail, the sheer availability of real estate and a virgin market are the big pluses.

Besides, smaller cities are on a hard-sell. Chandigarh, for instance, has wooed tech companies with the promise of A-class infrastructure. The Semiconductor Complex in Mohali has had no power cuts in the recent years because it has been provided a special status. Typically, real estate costs are also low, which means companies can set up bigger facilities at lower costs. And if good engineering and commerce colleges are nearby, as in the case of Mysore, the incentive to have a corporate address is even higher. Expect the trend only to grow in the coming years.

But there's one set of cities that just won't dance. In fact, with every survey, they only seem to be digging their heels in deeper. These are the bottom-scrapers, comprising Patna, Kanpur, Lucknow, Kolkata, Bhopal, and Bhubaneshwar. Law and order situation here is scary, roads almost don't exist, and power supply is erratic at best. Therefore, their rankings stand stoically on our list. Patna continues to be the most business-unfriendly at number 26. Kolkata has slipped a notch down to 25, and so have Lucknow and Bhubaneshwar. While Kanpur has moved a rank up to 24, it has a long long way to go before business takes the city seriously.

Is there a lesson that the survey offers to the straggler states? Yes, and that is to get business-friendly. The road to prosperity must be paved with corporate investment. And that will happen only under two conditions: One, companies are given an environment where they can take good quality infrastructure for granted, and also are able to source their manpower needs locally. Two, the employees get a safe and affordable city to live in, where life can be balanced with work. For, corporations may come and go. But cities live forever-well, almost.

THE METHODOLOGY BEHIND THE SURVEY

Since 1994, business today has partnered with Gallup to publish the only-one-of-its-kind survey of India's Best Cities For Business. This is the fourth such survey. Just like its 26 cities, the survey has changed too. Instead of relying solely on Perceptual Scores to rank cities, the present study has for the first time used an Objective Score (derived from data obtained from various databanks). Here's the mechanics of the survey:
The Objective: The aim of the exercise was to identify the top 10 among the 26 different cities surveyed based on a battery of 51 parameters that covered three aspects: quality of work life, quality of social life, and suitability for doing business.
The Universe: 26 Indian cities-Ahmedabad, Mumbai, Pune, Nagpur, Vadodara, Bhopal, Nasik, Surat, Chandigarh, Delhi, Lucknow, Kanpur, Jaipur, Ludhiana, Kolkata, Patna, Jamshedpur, Bhubaneshwar, Chennai, Hyderabad, Bangalore, Cochin, Coimbatore, Vizag, Trivandrum and Mysore-are included in the survey.
The Fieldwork: Conducted in September 2001, the randomised survey sample was made up of people in six categories: CEOs and industrialists, senior managers, B-school students, spouses of executives and industrialists, self-employed professionals, and policy-makers. The executives and industrialists approached in the survey were drawn from the BT-500 list of companies. A total of 964 respondents from six cities-Mumbai, Chennai, Delhi, Kolkata, Bangalore, and Hyderabad-were approached.
The Parameters: To arrive at the Perceptual Score, 51 parameters were drawn up and broadly divided into four heads: physical infrastructure, social infrastructure, labour and government support, and market potential. Each respondent was asked to select eight parameters that he thought were important. Specific sets of parameters were presented to respondents in each category, depending on its relevance to that category. For each of the parameters, the respondents were asked to identify the best city, the other good cities, the worst city, and the other bad cities. To arrive at the Objective Score, a master-list of parameters was drawn up. From this list, 10 parameters were culled for which statistics on the states, districts, and cities were available. The data was obtained from a wide range of databanks.
The Scoring: The following method was used to arrive at the Perceptual Score. A net score was derived for every city under each parameter. The formula: two points for every mention as the best city, one point for each mention as the second best city, two points deducted for each mention as the worst city, and a one-point deduction for each mention among the other bad cities. Thus, each city could end up with a positive or a negative score under each parameter. For the Objective Score, the data compiled under each parameter was classified into three-high, moderate, and low-categories. A score of one point was assigned to a city each time it scored a 'high', each time a city scored 'moderate' its score remained unchanged, and a point deducted if it was rated 'low'. Some of the negative parameters such as crime rate and pollution were, however, assigned scores in a reverse order-i.e., a minus-one for 'high' or a plus-one for 'low'.
The Weightages: In arriving at the Perceptual Score, the weightage given to each category of respondents was as follows:

CEOs and industrialists..................... 0.25
Self-employed professionals............ 0.25
Senior managers............................. 0.15
Policy-makers................................... 0.15
Spouses............................................ 0.10
B-school students.............................. 0.10

In the case of the Objective Score, each parameter was assigned weights based on its relative importance in the perceptual survey. A composite score was reached for each city based on the weights assigned and the scores they received under the respective parameters.

Finally, for a consolidated ranking, a relative weightage of 70:30 was assigned to Perceptual and Objective scores respectively. This was applied to the respective composite scores and the final ranks determined.