Madhya Pradesh celebrates its formation day on 1 November.
The state took on its present form in 1956, wading through inclusion and exclusion of territories from British and princely provinces like the Central Provinces and Berar, Madhya Bharat, Indore state, Bhopal state, and Baghelkhand, among others.
Long condemned as the member state representing the letter ‘M’ in the unfortunate “BIMARU” coinage of demographer Ashish Basu, Madhya Pradesh remained an agrarian state, working hard to find its place in the country’s socioeconomic and political journey.
The state did not have a lot going for it, with large geographical territory and low levels of urbanisation.
Madhya Pradesh has four large urban centres of growth — Indore in the west, Bhopal in the centre, Jabalpur in the east, and Gwalior in the north. However, both Indore and Bhopal — the two biggest cities in the state — are not as big as many other Indian cities. They are regionally critical, but relatively small in the national context.
With the primary engines of economic growth remaining stunted in comparison to their counterparts around the country, Madhya Pradesh remained dependent on agriculture.
While the state saw rapid advances in agriculture, the next horizon of growth seemed perennially elusive. But, finally, it seems there are green shoots of diversification visible.
This hope is emanating from the services sector. A report titled ‘Emerging Technology Hubs of India’, jointly published by Nasscom and Deloitte in August 2023, included both Indore and Bhopal in the list of emerging hubs of future technology and business process competence.
The report identified Indore as a conducive destination for startups in the edtech (educational technology) sector, with strong alignment with healthtech (healthcare technology), fintech (financial technology), and the emerging tech (artificial Intelligence/internet of things/robotics) areas.
Bhopal was ranked favourably for edtech, healthtech, and fintech areas.
At the state level, Madhya Pradesh was ranked in a good light on the initiatives taken for improving ease of doing business, which in turn helps Indore and Bhopal to project themselves approvingly over other contender cities — a long list, forming a cut-throat competition cohort.
This exhaustive report ranked Indore low on natural disaster risks. On the infrastructure front too, Indore scored well on all four parameters — educational infrastructure, medical infrastructure, cost of living, and pollution index.
Bhopal had relatively lower scores on all four, but it scored in the favourable territory.
The service sector expansion is not just about the conventional information technology (IT) outsourcing services. This wave of expansion, now touching several tier-2 cities around the country, encompasses a wide range of digitally delivered services that go beyond the traditional outsourcing models.
The services include business process management services too, where a broad range of enterprise operations can be hosted at a lower cost and higher retention rate in these cities.
After the Covid-19 pandemic, which made remote work a necessity, many professionals in the Indian service industry relocated to their hometowns. This move enabled them to be with their families in a tough time and reduce their cost base in the metro cities of their work.
Ultimately, this movement and the real-life proof-of-concept that high quality services could be delivered from smaller cities seem to have egged service firms and startups alike to find new geographies in which to expand.
One of the earliest firms, and among the new multinationals, to come to Indore was Fusion Global Business Solutions.
Hrishi Nandedkar, managing director of the firm, captured their decision to come to Indore and the journey in a blog: “For a country of 1.3+ billion people, it was well established that Indian technology companies cannot be successful with having only limited 5-6 major IT / technology hubs. Hence, in that context, it is great to see a lot of emerging cities starting to drive the next wave of sustainable growth”.
The Madhya Pradesh government has been doing its bit to shift the spotlight to the potential of Indore and Bhopal as new technology destinations.
The two cities are also getting metro trains, which will make commuting easier as the cities expand. Indore has also been planning on a road network expansion across the city.
The Global Investor Summit being held in the state, as well as the 2023 Pravasi Bharatiya Divas organised in Indore, showcased the state’s potential to a global audience.
The first wave of firms in the state has already started delivering results. The software exports from Madhya Pradesh's four IT Special Economic Zones amounted to Rs 2,926 crore in 2022-23, jumping 66 per cent from the previous financial year.
However, there is no doubt that these are very early days of this shift in trend to tier-2 cities, and specifically to Madhya Pradesh. There are challenges abound, which require regular and laser-sharp focus.
Large service firms will look for plug-and-play infrastructure, which would require all facilities to start operating a live business in a matter of a few months. There are IT parks coming up in Indore, but a ready, large space with high quality infrastructure remains limited.
Neither Indore nor Bhopal is well-connected by air internationally. This may not be a pressing requirement, but, as Pune’s experience shows, the business growth rates start to taper off without direct connectivity between the customer markets and the supplying destinations.
As new businesses move to these cities, there will be an inevitable “clash of civilisations.” Indore and Bhopal pride themselves on the strength of their local culture — value systems, personalised relationships, food, language, and more.
Some statements of exceptionalism may seem quirky to the uninitiated — such as the practice of digitally celebrating a Vishva Poha Divas every year on 7 June.
With business expansion, there will be the inevitable movement of people from around the country into these cities. The initial periods of such movements in the 1990s and 2000s have been tough even for larger metros. It remains to be seen if Indore and Bhopal can make this cultural adjustment while preserving the very basics that today line them up as challenger cities.
However, this sudden turn of events in the last few years appears like a silver lining, especially to those who grew up in the “sick” Madhya Pradesh — like this writer himself.
A state historically marred by poor human capital indices and low per-capita GDP (gross domestic product) has suddenly found a new and, for the most part, previously unthought-of instrument to make rapid strides forward.
As Madhya Pradesh turns 67, these developments augur new hope and new dreams for the next generation.
Aashish Chandorkar is Counsellor at the Permanent Mission of India to the World Trade Organization in Geneva. He took up this role in September 2021. He writes on public policy in his personal capacity.
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