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The company Delhi keeps

Enterprise spreads to the capital region as it houses more firms than Maharashtra.

india Updated: Jan 28, 2010 23:20 IST

The national capital region (NCR) has, according to a news report, overtaken Maharashtra in the number of registered companies. Delhi and Haryana house 209,000 companies, ahead of Maharashtra’s 187,000. Read that alongside another statistic that the Delhi airport is handling more passengers than Mumbai and a trend is discernible. Although Mumbai’s financial heft is unchallenged still, the economic centre of gravity is shifting. Companies based in Delhi, Gurgaon and Noida brought in one in four rupees earned by the country’s 500 biggest firms. And they made every third rupee of profits. With the largest number of start-ups anywhere in the country, these shares can only grow. The question is how fast?

Four of the five biggest private companies in the NCR did not exist before 1980. Delhi’s economy is in large measure a fall-out of economic reforms while Mumbai Inc belongs to an earlier generation when brick and mortar companies commanded the industrial landscape. Yet that era is not over. Maharashtra still contributes 13.6 per cent of India’s national income and Mumbai alone yields the government every fifth rupee it collects in taxes. Nearly half of the business done by the 500 top listed companies is conducted out of Mumbai’s boardrooms. Private enterprise runs Maximum City: strike off the state-owned behemoths and the capital’s corporate czars lose much of their muscle.

When start-ups in the NCR outnumber those in Maharashtra four to one — since April 2009, 44,000 companies were founded in the Region — the story is about the spread of entrepreneurship. Delhi offers a healthy climate for new investment in the services sector and, to an extent, in manufacturing. Government largesse ensures its physical and social infrastructure outclasses that of any other Indian city. But the differentiator in the long run is politics. Both Mumbai and Delhi feed off large-scale migration to sustain their growth momentum. Where Delhi scores is in its openness to outsiders. Mumbai owes its current pre-eminence to the communist blockade of capital into Kolkata. Much the same result could ensue if Maharashtra’s politicians succeed in erecting entry barriers for labour. Mumbai is steadily losing its cost competitiveness in rents and wages. The next wave of India’s industrialisation, fed by foreign capital, could give the city a miss if this is not arrested.