March 18, 2019The Intersectioneconomicspublic policy

Night-time commerce offers India a growth opportunity

Nighttime economy is not merely bars and restaurants, but an extension of day-time economic activities as well.

Mint This is from The Intersection column that appears every other Monday in Mint.

With Future Retail signed up as its master franchise, the 7-Eleven convenience store chain will open its iconic shops in many Indian cities this year. Unlike in almost all the 18 other countries where it is always close, but never closed”, it won’t be able to operate round the clock in India. As Kishore Biyani says, We will be open 24 hours wherever we can.”

That is because India ignores and often looks down on its night-time economy. Mention the phrase and the first thing that comes to mostpeople’s mind is not just nightlife, but the seedy side of it, involving dance bars, prostitution, drunken driving, gang fights and other crime. Police commissioners will refuse permission for retail establishments to stay open late because of law and order” problems, some communityleaders will complain of the evils that go with nocturnal activities and civic groups will protest noise, traffic and rowdyism. In most cities, after-dark economic activity starts slowing down at 10pm, though restaurants and bars in a few big cities remain open until 1.30am.

Gurcharan Das argued that India grows at night” in a book by the same name. He is right only in a metaphorical sense—that economic growth happens despite the government. In reality, most of India sleeps at night. The economy does not grow much after dark.

It doesn’t help that we have both a policy environment and a conventional wisdom that do not see the night-time economy as an opportunity to create economic growth and generate jobs. If cities are engines of growth, we’re operating them, at best, only three-quarters of the time.

While nightlife and entertainment are certainly drivers of the night-time economy, they need not be the only ones. According to a report released by the London mayor’s office, 1.6 million people in London—constituting more than a third of the workforce—worked at night in 2017. Of these, 191,000 worked in health and 178,000 in professional services, with nightlife coming in third at 168,000. These were closely followed by transport, automotive, IT and education.

In other words, the city’s nighttime economy is not merely bars and restaurants, but an extension of its day-time economic activities as well. It is estimated that the night component comprises 6-8% of the city’s economy and contributes £18-23 billion in gross value added to the British economy. The figures are approximations but significant enough for Mayor Sadiq Khan to champion the night-time economy and appoint a Night Czar” to manage it.

It’s not just the post-industrial cities of the West that are focussing on the night economy to extract growth. Singapore has long had a vibrant night economy, and this year, China decided to wake up to the opportunity too. Looking for new ways to increase consumption and drive growth, the mayor of Beijing has announced that the city will urge malls, supermarkets and convenience stores to stay open later at night”, and the government wants more than half of convenience stores in Beijing to run 24 hours a day in 2022”.

Here’s a rough calculation. The top 10 cities in India contribute about $400 billion of the country’s $3 trillion gross domestic product (GDP). If we assume that the night-time economy will add 6% to the urban output, this amounts to $24 billion or an additional 0.8% of GDP. According to my rule of thumb, each percentage pointof GDP growth pulls 2 million people out of poverty.

We need to change the way we view the nighttime economy: not as a concession to decadence and hedonism, but as an important solution to our jobs crisis. We need to think beyond all-night dance bars. Think of street vendors who canoperate an extra hour or two, the people who can make a living driving cabs at night, and shops, banks, clinics, public transport and, yes, government offices that operate round the clock.

If the economy develops a night shift, some of the daytime demand will shift to the night; for instance, when you decide to shop for groceries at1am on a weeknight instead of Saturday morning. This is substitution and does not add to the overall output, but is still a good thing because it will decongest daytime traffic.

Additional output will come from new economic activities that could otherwise have not taken place, such as factories that add an extra shift, and through the creation of new businesses and business models.

However, the night-time economy is highly dependent on government, which not only has to permit it but, more importantly, enable it. Without effective policing, pervasive street lighting, public transport, as well as careful zoning, it will be impossible to sustain the night-time economy.

The usual response is to declare that a night-time economy is ruled out because we don’t have these provisions. We must no longer accept this Procrustean mindset. Things don’t have to change overnight, but policing, street lights, public transport and zoning are things our cities must sort out anyway.

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Indeed, to the extent that such investments are made to ensure safety at night, they contribute to overall improvement in law and order. The upshot is that the night-time economy can help improve urban governance during both day and night.

No longer fearing the dark, India too must awake to life and freedom.

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