Bengaluru: Tend the golden goose

United States President Donald Trump's recent announcement on H1-B visa rules has shattered the American dream for many in India. Amazon, Infosys, Cognizant, and Google are among the top companies that benefit from these visas, and India accounts for nearly 70 per cent of all H1-B holders each year. With Silicon Valley’s doors closing to many Indian professionals, can India’s own Silicon Valley — Bengaluru — step in to fulfil that dream? The answer is yes, provided the city can overcome its pressing urban challenges.

- SHISHIR GUPTA & RISHITA SACHDEVA

With a gross domestic product (GDP) of approximately $100 billion, the economy of Bengaluru is similar in size to that of Luxembourg and Dubai. Between 2000 and 2018, it registered a real GDP compound annual growth rate (CAGR) of 10 per cent, compared to 6 percent growth for the rest of Karnataka. However, the gap in the pace of growth has narrowed in the last five years, with Bengaluru’s growth slowing to 6.6 per cent between 2018 and 2023, and the rest of the state growing at 4.9 per cent. Significant urban infrastructure challenges like water scarcity, traffic congestion, and lack of cleanliness that the city has been experiencing are likely to have played a major role in this deceleration.

The primary driver of Bengaluru’s economic success is the specialisation in the information and communications technology (ICT) sector. Bengaluru’s share in Karnataka’s GDP grew from 25 per cent in 2000 to 38 per cent by 2018. This increase was almost entirely powered by the ICT industry, whose contribution to Bengaluru’s GDP rose from 20 per cent to 53 per cent during the same period. The city has a pronounced national role too. India accounts for 59 per cent of the global outsourcing market, and Bengaluru accounts for a third of India’s outsourced service industry.