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Economies and Diseconomies 9 (1) .12.10
Economies and Diseconomies 9 (1) .12.10
(ABSTRACT)
By
Abstract
The phenomenon called development is a combination of physical and mental changes. Social
development is the part of such a phenomenan or edifice that constitutes economic, political as
well as social well-being of the populace of the land of course. Physical conditions of people in
fact shape the mental kaleidoscope. The Indian living conditions are distinctly different in the
villages from the towns providing thereby distinct environment in villages which sometimes
sine quo non in the present context of our towns or villages, if at all, we mean a change in the
conditions of people in India at large. Within a span of 60 years, Bhubaneswar, the capital city of
Odisha, situated in the eastern coastal belt of India and south- west of Mahanadi River has been
rated as one of the emerging cities of India. With the economic liberalization policy adopted by
the Govt. of India in the 90’s, Bhubaneswar received large investment in the field of
and real estate have also emerged as big players. Recent times we have seen a large scale retail
chains such as Reliance, Vishal Mega Mart, and Big Bazar had open outlets in Bhubaneswar.
Large corporate like DLF, Universal and Reliance industries have entered the real estate market
in the city. The presence of economies of scale has undoubtedly, been exploited considerably by
the corporate giants, transport and communication industries in Bhubaneswar. Thus the socio-
economic conditions of people in and around Bhubaneswar city are showing a positive change
called development. Very recently, the BMC confessed that it had no plan to accommodate a
migrant population of the city in its original plan over 10 years ago. The components of
together indeed catapulted Bhubaneswar from a mere town to a city, rated among the best in
India.
Despite its growth the city of Bhubaneswar has a dark spot that stands out solely. A
common refrain can be heard from all cross- section of the society about the public grievances on
safety of soft gender at night, menace of anti- social elements at different time and location, lack
of control over traffic, air and water, lack of coordination between the civic bodies, and lack of
better understanding and tacit rapport between the people and the government for which the
economies of scale slowly heading towards diseconomies of scale in certain areas of activities.
Yes, attempts are being taken to sustain the economic growth by reaping the economies
of scale in patch in the city. But it is also true that we must stretch our leg as per our blanket
allows. A long rope has also an end. Our policy makers must be awaken up to see the ugly realty
of other metropolitan cities and make necessary arrangements for the betterment of
Bhubaneswar by snatching only the economies of scale and prevent the entry of diseconomies of
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Economies and Diseconomies-with reference to Bhubaneswar city 3
Bhubaneswar City
By
Dr.G.N.Bag, Associate Professor (Economics)
Dreams Business School, Cuttack
Sanjay Kumar Jena, Asst. Prof. (Marketing & Strategy)
Innovation Business School, Bhubaneswar
Seba Mohanty, Asst. Prof. (Economics)
Innovation Business School, Bhubaneswar
INTRODUCTION
Economic development generally spells out a part of development aspects of human life. Overall
change of human life depends upon economic development combined with socio-cultural
development that indeed catapults human being to a height of desired destination, which is called
Gross Domestic Happiness by the Bhutanist Prime Minister Lyonpo Jigme Thinley in the recent
past.
Social Development is the edifice as well as the end product of life where physical
conditions of human life take refuse. The Indian living conditions are different from the living
conditions of other part of the world altogether. The economic development of Indian people has
been influenced by the socio- cultural life of its people who come from different cultures and
traditions and of course from different faiths at large. However, a sustainable economic
development is imperative and thereby finds a commonalities that have to be inferred through
different programmes and activities which generally occur in the life of Indian people. The
presence of economies of scale has undoubtedly, been exploited by the corporate giants, in the
recent past because of the induction of liberalization policy of India, since 1990. The gamut of
new economic policy of India has been aptly felt and moving undulating towards its length and
breadth.
In the recent years Indian cities have continued to liberalize business regulations
and Bhubaneswar, the capital city of Odisha is not an exception to it. In fact,the elements of
Bhubaneswar economy ranges from agriculture, horticulture sericulture, metal and minerals
sector, engineering and agro-based industries to information technology enabled services as well
Economies and Diseconomies-with reference to Bhubaneswar city 5
as handloom and tourism industry. The city is a home of a number of engineering, medical,
management, pharmaceutical, hotel management, fashion designing and other general colleges.
Retail and real estate have also emerged as big player. Recent times we have seen large scale
retail chains such as Reliance, Vishal Megamart, Big bazaar, Pantaloons, New leaf, Habib’s,
Barista and a number of both national and international brands of retail outlets in the city. Large
corporations like DLF Universal and Reliance Industries have entered the real estate market in
the city. DLF Limited is developing an Infopark spread over an area of 54 acres (220,000 m) in
the city. Expanding its business portfolio the Kolkata based Saraf group, promoters of Forum
Mart shopping mall is constructing another shopping mall named Forum Lifestyle Mall a
proposal for further progress of Bhubaneswar. After some rounds of discussion, a memorandum
of understanding was signed as per which “The Housing and Urban Development Department”
of Odisha Government handed the job of preparing “Perspective Plan Vision - 2030” and
world class urban center with all major IT and retail outlets. This was done by and large to
of new housing colonies and new integrated townships in the extensive development zones.
Bhubaneswar Development Authority (BDA) has taken steps to develop a satellite township over
an area of about 1200 acres in Jagasara, Jagasarapatna and Madanpur mouza of the Bhubaneswar
Development Plan Area (BDPA). To make ecological balance and to provide a green
Economies and Diseconomies-with reference to Bhubaneswar city 6
environment to the citizens of the capital city, BDA maintains large number of parks in the city
including Biju Patnaik park, Indira Gandhi park, Mahatma Gandhi park and Buddha Jayanti park
to name a few. The budget for the year 2010-1011 of BDA has been substantially enhanced to
Rs. 225 crores from the revised estimates of Rs. 107 crores for the financial year 2009-10.
Indeed, Housing and Urban Development strives to bring about both qualitative
and quantitative changes in the living standard of the urban people by putting emphasis on
strengthening urban infrastructure, viz: roads with drain, watersupply and sewerage, efficient
solid waste management, development of public amenities including public park, urban greenery
conservation of water bodies, urban reforms and e-governance, urban planning, provision of
housing in urban area and especially for the urban poor, skill up-gradation and financial support
to the urban poor etc. through different schemes and practices. Bhubaneswar Municipal
Corporation (BMC) has prepared a Detailed Project Report (DPR) for the management of solid
waste in the corporation area with a total project cost of Rs. 23.68 crores and DPR board for
It is a matter of fact that drive, ambition, determination and the will to succeed are
the prime motivators for people of Bhubaneswar city. However, the dark spot that is looming
over the horizon of Bhubaneswar city is sure to come, if not now, very soon. The economies of
scale have been stretched up to a point of no return as far as the work and programmes of BDA
and BMC are concerned. “The minimum average cost point can be extended only through
resources.” These activities call for massive investment in the field of transport and
communication, education, health and social infrastructure. Lately BMC and BDA are striving
just to maintain decorum only and not to make the necessary arrangement to stretch the average
Economies and Diseconomies-with reference to Bhubaneswar city 7
cost curve to its minimum to get the best outcome possible. Candidly speaking, a number of
people in Bhubaneswar live in slums despite its growth. Unless the issue of slum is addressed in
the right earnest, many development-oriented initiatives may not be successful as expected.
Migration from rural areas, especially from northern districts of Andhra Pradesh has led to the
growth of slums which are a major challenge to the city’s growth. The slum dwellers work as
auto rickshaw drivers or small vendors but this is not true for every one. A lot of them are
unemployed and are being drawn in to crime. A common refrain can be heard from all cross-
section of the society about the public grievances on safety of soft gender at night, menace of
anti-social elements at different time and location, lack of control over traffic, air and water, lack
of coordination between the civic bodies, and the lack of understanding and rapport between the
people and the Government for which the economies of scale slowly heading towards
The main problem of the city is transport as the quality and length of
road have not been increased with respect to the rise in number of vehicles and population.
Recently, the BMC confessed that it had no plan to accommodate a migrant population of the
city in its original plan over 10 years ago. The presence of manipulation by the builders,
harassment to farmers for city expansion, land grabing and false registration of land becomes the
The economies of yesterday become the diseconomies of today. The Bhubaneswar city is not
exception from the economic theory and its practicability. This can be shown in the following
diagram.
MC
Diseconomies
Y
S2 AC2
P2
AC1 Economies
P1 S1
AC
P
S
N
E
MR AR
In the given diagram the shaded area P1PS1S shows benefits (economies) accrues to
Bhubaneswar city because of the expenditure on developmental activities undertaken by BMC,
BDA, other civic bodies and government machinery. Here the average cost curve (AC) is
representing the expenditure involved for developmental activity in Bhubaneswar city. AR
(average revenue) curve represents the benefits (economies) to the city. AR and MR (marginal
revenue) curve slope downwards to the right symbolises a monopolistic market structure because
under the present situation we often see the practicability of this market amid our life. When
Economies and Diseconomies-with reference to Bhubaneswar city 9
expenditure is resting on AC, the benefits (economies) is P 1PS1S.If the developmental activities
will continue further to gain or reap more benefits out of the expenditure incurred till the AC
curve reaches its lowest point called “N”, the city in question will gain no doubt but it may not
sustain it for long as the equilibrium (where MC must cut MR from below (E point) and amount
of developmental activities for the time period (OM) is disturbed and ultimately rest on OM1.
This amount of benefits is not at all good for any society as it is not a stable period and also a
coveted amount of developmental works.
If expenditure is further incurred due to the growth of population and social-economic
amenities and other necessity as seen often in Bhubaneswar city, the AC curve becomes AC 1 and
the benefits cease to accrue altogether as the rate of return upon the expenditure has been reached
a point of saturation. Hence Bhubaneswar city will be in a stage of no gain no loss at this period
of time. Once the expenditure goes further and AC 1 becomes AC2 then the amount of benefits
(economies) accrued previously becomes diseconomies in the form of slum dwellers, presence of
anti-social activities (where soft genders are not safe at all and even peace loving people in
general),migration of people from rural to urban, creation of civic disorder like encroachment of
land, false registration of land, forcefully evicting farmers from their land by the builders with
limited compensation, chaos in the system of administration ,corruption, favouritism and
nepotism in the social order, education with no value-oriented teaching, hospitals with no proper
medicine or care and presence of absentees medical personnels, transport and communication
reaching a point of confusion and disorder with traffic disobedience on the part of people,
misunderstanding between police and general public etc. The shaded area P 2S2P1S1 is shown the
presence of diseconomies in Bhubaneswar city.
Objectives of the Study:
1. To understand the required parameters for developmental activities of civic bodies of
Bhubaneswar city beside Government machinery.
2. To give a thrust to general public about the present scenario of Bhubaneswar and it’s
afterwards and make them aware of the task ahead.
3. To know more about the apathy of Government and other organizations towards the
development of the city.
4. To chalk out a tentative and constructive suggestion ahead and to see the outcome of it
for a sustainable development in the next 50 years of Bhubaneswar city.
Economies and Diseconomies-with reference to Bhubaneswar city 10
5. To make public more vigilant and aware of the gravity of the situation at hand and be
available for self-motivation towards cooperation, contribution, and self-reliance in the
present and the germane context.
6. To prepare young people such as students, teachers, builders, engineers, planners to cast a
spell over the future generation towards development and thereby contribution
accordingly.
Constraints:
1. The study is carried out with a good faith, but lack of cooperation from the Bureaucrats,
fluid population and non -availability of house owner/sample people whom our study
based on prevented grossly to arrive at the conclusion.
2. Improper and unorganised transport and communication also plays a role for which
availability of time has been squeezed narrowly.
3. Political affiliation and litigation constrained us to take a limited and available data for
the secondary data in the study.
Economies and Diseconomies-with reference to Bhubaneswar city 12
Data Analysis
East region
Region-1
East-1 West-2 North-3 South-4
Yes No
70% 30%
Economies and Diseconomies-with reference to Bhubaneswar city 13
6 BMC, in fact requires the support of public for its work 80% 20%
7 BMC and BDA must co-operate with each other, do you believe? 90.5% .5%
Yes No
80% 20%
6 BMC, in fact requires the support of public for its work 90% 10%
7 BMC and BDA must co-operate with each other, do you believe? 80% 20%
Yes No
90% 10%
6 BMC, in fact requires the support of public for its work 80% 20%
7 BMC and BDA must co-operate with each other, do you 90% 10%
believe?
Yes No
90% 10%
6 BMC, in fact requires the support of public for its work 70% 30%
7 BMC and BDA must co-operate with each other, do you 80% 20%
believe?
2 9 8 2 .8 4 .64 1.6
E=35/5=7
W =36/5=7.2
r ew = ∑e.w/ √ ∑ e 2 ∑ w 2
Here we find that the responses of both the east and west region citizens are positively
correlated.
t-test:
t= r x √n-2/√1-r2
5% 1.960 16.340
East and north region
Economies and Diseconomies-with reference to Bhubaneswar city 22
1 8 7 1 .2 1 .04 .2
E=35/5=7
W =34/5=6.8
r en = ∑e.n/ √ ∑ e 2 ∑ n 2
=52.75/√
√ 54.5×52.3=52.75/√2850.35
√2850.35 =52.75/53.38=0.98
Here we find that the responses of both the east and north region citizens are
positively correlated.
t-test:
t= r x √n-2/√1-r2
5% 1.960 19.320
E=35/5=7
S =31.5/5=6.3
r es = ∑e.s/ √ ∑ e 2 ∑ s 2
=45/√
√ 54.5×39.8=45/√2169.1
√2169.1 =45/46.57=0.96
Here we find that the responses of both the east and south region citizens are
positively correlated.
t-test:
t= r x √n-2/√1-r2
=.96 x√200-2/√1-(.96) 2=18.240
Here degree of freedom is n-2.,n is the sample size.
5% 1.960 18.240
W=36/5=7.2
N =34/5=6.8
R wn = ∑wn/ √ ∑ w 2 ∑ n 2
=43.7/√
√ 42.3×52.3=43.7/√2212.29
√2212.29 =43.7/47.03=0.92
Here we find that the responses of both the east and west region citizens are
positively correlated.
t-test:
t= r x √n-2/√1-r2
5% 1.960 13.020
Economies and Diseconomies-with reference to Bhubaneswar city 25
W=36/5=7.2
S =31.5/5=6.3
r ws = ∑ws/ √ ∑ w 2 ∑ s 2
=35.95/√
√ 42.3×39.8=35.95/√1683.54
√1683.54 =35.95/41.03=0.87
Here we find that the responses of both the west and south region citizens are
positively correlated.
t-test:
t= r x √n-2/√1-r2
5% 1.960 24.820
N=34/5=6.8
S =31.5/5=6.3
r ns = ∑ns/ √ ∑ n 2 ∑ s 2
=44.51/√
√ 52.3×39.8=44.51/√2081.54
√2081.54 =44.51/45.62=0.97
Here, we find that the responses of both the north and south region citizens are
positively correlated.
t-test:
t= r x √n-2/√1-r2
5% 1.960 16.140
Findings:
Economies and Diseconomies-with reference to Bhubaneswar city 27
1. The given null hypotheses have been rejected as the calculated t- value in each region
(sample area) is greater than tabulated t- value. Hence the conclusion is drawn that the
economic benefits are became diseconomies in the city because of lack of the application
of innovative technologies.
2. The study infact given necessary impetus that enables to understand the modus operandi
of the civil body of Bhubaneswar towards economic and social development of the city.
3. Question no1-3 reveals that BMC is over burden with work because of growing
population, litigation and population pressure. However a few people from different
clusters of the city have different ideas which comprise 8%of the sample.
4. Question no 4-8, reveals that most of the people vouch for the cooperation of BMC and
activities.
5. However, the internal corruption and lack of public support in the form of cooperation
6. Lastly, the study reveals that to meet the growing need and grievances of public the
relevant and reasponsible authorities must cultivate the habit of patience and initiate with
Suggestions:
1. Bhubaneswar deserves to be beautiful and a major tourist attraction. With this belief, BMC
and BDA and with the help of Govt machinery must work with people because any type of
developmental work in and around the city needs people participation.
2. To mitigate the impending problem caused by people of lower income group and even some
extend high income group the govt should devise public private partnership plan in different
areas of developmental activities.
3. To strengthen infrastructure development like public amenities must be carried out with
people only .If development is meant for people let people be motivated to execute.
4. Imposing certain rules and regulations related to displacement and resettlement must be
carried out with proper understanding and proper time gap.
5. Employment opportunities must be created with due respect to the potentialities and
capabilities of people at large.
6. Education, health and other social amenities must be far away from politics and corruption.
Economies and Diseconomies-with reference to Bhubaneswar city 29
Bibliography
aamarodisha.blogspot.com
VISION 2030 and Comprehensive development Plan for Bhubaneswar – Cuttack Urban
3. Comparative crime figures under 10 major heads (as on 07. 01. 2010),
www.bhubaneswarcuttackpolice.gov.in
4. www.orissa.gov.in
5. www.bdabbsr.in
6. www.bmc.gov.in
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