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Tag Archives | Central business district

The push and pull of Central Business Districts

Central Business Districts need to be decongested using tools like relocation, ICT and incentive based pricing to reduce the congestion in Indian cities. 

As Delhi tries to solve the problem of congested traffic and pollution using the odd and even scheme, it is time we look at other feasible solutions to decongest the Indian cities. A common reason for congestion in a city is the compact space, usually in the centre, within which most of the commerce and businesses are located. This central region is known as the Central Business District (CBD).

Commonly known as the downtown region, CBDs lie in the middle of the city so that the commercial centres can be central to all external or internal activities in the city. This central location creates opportunities for the businesses to gain from the interaction between people and jobs, and helps to reach maximum number of people living around the city. As for the people, the proximity to work reduces travelling cost and keeps them close to the various opportunities provided by the city.  Owning to these benefits, CBDs tend to be expensive, crowded, and dense. Classic examples of CBD can be Nariman point in Mumbai or MG Road in Bangalore.

Along with being the hub for all the commercial activities, CBDs also attract a significant amount of population either as consumers or for work. Thereby, a large number of people travel across the ends of the city to come to the centre. However, the lack of appropriate infrastructure to take the burden of the incessantly rising population that travels to or lives in the CBD creates congestion and traffic. This high cost of travel and the benefits provided by the CBD makes it more desirable for the businesses to stay close to the CBD. The increase in demand, thereby, leads to an increase in the land value and pushes the middle income population out of the CBD. Hence, the population that remains in the CBD includes the rich who can pay the high prices or the poor who can’t afford the travel cost. Last year, Delhi’s CBD, Connaught Place was ranked fifth most expensive office market in the world, followed by Mumbai’s Bandra-Kurla Complex (BKC) at 15th position.

In order to reduce the stress borne by these CBDs, it is important that appropriate steps are taken to decongest them. One of the essential steps is relocation. When the congestion on the streets becomes intolerable, people tend to move closer to the CBD or the business moves to the clusters where there is market for workers and the products/services. Mumbai is a successful example of how multiple BDs were create to to effectively reduce the stress on the original CBD. Dissipation of BDs across the cities helps in redirecting the traffic and the land values in the original CBDs. Similarly, Delhi require more versions of BDs such as Nehru Place to reduce the pressure and the land value in Connaught place.

Besides decongesting cities, the recent innovation in the Information and Communication Technology (ICT) should also be used to reduce the dependence on a physical business districts.  After 1999 and advent of ICT, the urban experts have been debating the relevance of CBDs altogether. The ICT provides a flexible work-space for various activities and reduces the spatial constraint. It provides amenities that made it easy to coordinate work through Skype (online video calls) and allow online shopping and transactions.

Tai-Chee Wong, specialist in urban studies, tried to check the relevance of CBD in the ICT era in his paper based on the financial district in Singapore. Wong’s paper studied whether an extended CBD is required for future financial district expansion or will it turn out to be superfluous. The paper explains further that ICT makes it possible to bring different categories of labour to places at varied costs and availability, towards the final production of goods and services. Thereby making financial corporate organisations ‘dispersed, interdependent and specialised’. However in the end after reinstating the question about the relevance of allowing a physical region for business and commerce related activities, Tai Chee Wong has concluded that,

“The ICT is an important consideration, but is largely inadequate as a decisive factor to motivate enterprises to select their location. Other factors such as an appropriate workforce, labour supply and access to transport can be more important.”

Wong’s study did not include the services sector that require face to face contact with the customer, examples being domestic services, security services etc. Moreover, the human interaction is an important element of agglomeration economies that refers to the benefits from the proximity between people or businesses. Therefore there the ICT has a limited scope for improving the condition.

The final method to reduce congestion in the CBDs can be by using methods to disincentives inefficient behaviour by the citizens. For instance, charging for parking or charging surge prices for travelling within the CBD will increase the economic cost of the citizens. This would make them reconsider their choices and make economical decisions like relying on public vehicle or car pooling. This solution however will be dependent on the current status of the public transport. As a inefficient public transport will only increase the cost of owning vehicle but would not provide alternate options. A common example for the incentive based pricing is the parking rates in Singapore that vary between the hours of the day, as well as between, weekday and weekends. Bangalore Metropolitan Transport Corporation, similarly, runs a set of AC buses for short distance within city to create a substitute for private vehicle. However, Bangalore falls short in providing high speed networks to connect the CBD and the rest of the city. Thereby restricting the growth of the city and increasing the stress on the CBD.

In addition to applying the three solutions to the problem, we should also ponder upon the question whether we should plan the CBDs or let them grow organically?

Devika Kher is a policy analyst at Takshashila Institution. Her twitter handle is @DevikaKher.

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