Lessons from Gurgaon, India's Private City

Abstract

In just thirty years, Gurgaon has grown from a tiny hamlet to a city of nearly two million people and it has done so based almost entirely on the private provision of public goods, including transportation, utilities, and security. In some rankings, Gurgaon is the best city in India in which to live and work (Behl 2009). Gurgaon, however, lacks important infrastructure, especially in areas such as sewage and electricity where the optimal scale exceeds that of most builders. Thus, for large-scale infrastructure, important externalities are not internalized. We examine where Gurgaon has succeeded, where it has failed, and how people are adapting to both the successes and the failures. We compare Gurgaon with other private cities built on a different model, including Jamshedpur in India and Walt Disney World in the United States. The developing world, including India, is urbanizing rapidly. We draw lessons from Gurgaon to suggest how new private cities could be built on an even-greater scale, thus internalizing externalities while still keeping the advantages of private provision.

Keywords: Private Provision of Public Goods, Urbanization, Private Developers, Gurgaon's Development