Explainer: What is an economic master plan?

The Institute for Sustainability, Employment and Growth (ISEG) – one of Godrej Foundation’s partner organisations – is working closely with Niti Aayog on a large-scale, long-term project: building "growth hubs" across India to boost urban economic development and generate millions of jobs.

In the pilot stage, the project aims to transform the Mumbai Metropolitan Region into a $1.5 trillion growth hub (learn more about it here). ISEG has been involved in drafting an economic master plan for this transformation. A similar blueprint is also in the works for Varanasi, with Surat and Visakhapatnam to follow.

But what exactly is an economic master plan? And how is it different from the periodic development plans created by the town-planning authorities of many Indian cities?

Let’s begin with the most basic difference: the timeline. A city’s development plan is a blueprint for five years of internal growth – a plan for land use, infrastructure development and social improvement. An economic master plan, on the other hand, operates at the macro level, chalking out broad goals for regional development over 20-25 years. Its aim is to prepare an urban region for long-term, sustainable economic growth by laying the foundations for its future commercial, residential, infrastructural and recreational needs.

Globally, most countries are seeing their populations increasingly shift from rural to urban areas. Since 2007, when the world’s urban population surpassed its rural population, cities have been growing at an exponential rate. Further growth is inevitable, and cities need to be equipped to provide for rising demands for housing, transport, and infrastructure along with decent standards of living and sustainability.

Master plans can help to equip urban regions in an organised, forward-looking manner, with plans in place for dealing with economic crises and contingencies, rather than leaving cities to haphazardly react to market demands and shocks. The Italian city of Naples, for instance, is known for its large, informal, unregulated economy that is easily susceptible to economic shocks – something that could have been avoided with comprehensive master planning for infrastructure and industry.

Typically, master plans are created by a multi-stakeholder governance group comprising representatives from the public and private sectors as well as the local community. The planning process involves identifying areas of growth and then strategically allocating resources towards those areas.

This includes setting up large-scale infrastructure to boost specific industries, designing skills training programmes aligned to those sectors, anticipating the transport and housing needs in and around those zones, and building them accordingly.

Take Singapore, for example. Once a resource-poor island, the city transformed itself into a global hub for industries like electronics manufacturing and biomedical sciences by creating a long-term vision for its development, building world-class infrastructure ahead of demand and planning responses to crisis situations. Such proactive planning is vital for a city to attract more investment and, of course, generate more jobs.