May 26, 2019The Intersectioneconomicsdefence

New military bases can seed new cities and create jobs

Every new military base can create between 100,000 to 1 million jobs in construction and infrastructure alone.

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

After this column called for the shifting of state capitals as a way to create new cities and massive employment, a number of people asked if that is the only way for the government to provide an initial raison d’être for new cities. Well, there is another good one—creating new military bases.

India can create over 30 million new jobs in the short- and medium-term by creating 20 new military bases over the next 15 years.

Remember, the required run rate to avoid social turmoil is 20 million jobs per year, way higher than the current run rate of a million or two a year. New military bases can form the nucleus (or the catalyst) for new cities, providing high quality living, schooling and working conditions for the armed forces community. These in turn will create a growing spiral of economic activity that can create millions of jobs.

There is a general impression that our armed forces have superior living conditions, with palatial homes”, golf clubs and similar luxuries. The reality is more prosaic, with housing shortages, buildings too old to be maintained properly, need for better schools and employment opportunities for spouses. While military modernization itself is on top of the policy agenda, the modernization of the places where our troops live, train and operate out of gets almost no attention. We need to raise living standards, provide much better infrastructure and modern amenities to the families of both officers and the rank and file.

But where’s the money for all this? Well, under the ground.

A few years ago, my colleagues Pranay Kotasthane and Varun Ramachandra estimated that the value of land that the army owns in Bengaluru city is in the range of ₹3 trillion. The value of defence land in five big cities is upwards of ₹15 trillion, or 7.5% of gross domestic product (GDP). Cantonments and defence land holdings in the next 15 biggest tier-II cities amount to another ₹15 trillion.

Equivalent land 40-100km away from the city would be available at a fraction of the cost, allowing the surplus to be used for infrastructure development, housing and defence facilities.

So shifting parts of old cantonments to new sites can, in a single move, address many policy challenges: create new cities, provide the armed forces with modern facilities and create mass employment without adding to the nation’s fiscal burden.

To balance the interests of the Union and states, the latter could purchase land from the defence ministry in existing cities in the first transaction. The defence ministry could then purchase equivalent land, perhaps larger in size, outside the built-up areas of cities from the state government in the second transaction. State governments could develop the land acquired in the city centres for urban redevelopment, relieving congestion and building sustainable neighbourhoods.

Back-of-the-envelope estimates suggest that for every new military base or cantonment, between 100,000 to 1 million jobs will be created in the construction and infrastructure sector in the short- and medium-term. Further, redevelopment of existing city centres will itself account for 200,000-500,000 new construction jobs in each location in the short-term. Additional high-value jobs will be created in these areas given the economic potential of city centres. Around 7.5 million new construction and infrastructure industry jobs can thus be created if India were to initiate five such projects.

Over time, the military bases will germinate into new urban centres with populations of 1-5 million that can act as engines of economic and job growth for the future.

Without doubt the challenges of doing something of this nature are many and complex. Cooperative federalism has to operate at a massive scale, the armed forces have to be persuaded to part with land that has been in their possession since before India’s independence, the environmental impact must be mitigated, agricultural land acquisition must be sorted out and finally, urban real estate mafias must be kept in check.

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Of these, the most important consideration is the opinion of the armed forces, from both the military preparedness and quality-of-life perspectives. The armed forces’ reluctance to part with land under their control is understandable, even if it is frustrating to many municipalities and state governments. This is so because negotiations for exchange of land take place in the absence of a broader vision. It is the articulation of a win-win-win proposition for all the stakeholders involved that is the secret sauce in this recipe.

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