REVIEW OF URBAN AFFAIRS

Patterns and Practices of Spatial Transformation

Bhuvaneswari Raman

Urban transformation in Tiruchengode town in Tamil 1 Introduction

R
Nadu has been predominantly driven by processes ecent evidence from the Census of India 2011 shows
that the country’s non-metropolitan urban centres are
internal to it. It has been driven by growth of the town’s
urbanising rapidly in comparison to its metropolitan
economy and the practice of entrepreneurs investing in cities (Mukhopadhyay et al 2012; Kundu 2011a, b). This paper
land for capital accumulation. The process described in explores the dynamics of urban transformation in a non-metro
this paper reinforces the theories of subaltern urban centre named Tiruchengode in the southern state of
Tamil Nadu.
urbanisation and in situ urbanisation. While the role of
Tiruchengode’s origins can be traced to the sixth century,
the town’s entrepreneurs, local landowners, and politics when it is thought to have been a handloom weaving centre. Over
have been significant factors in shaping the evolution the centuries, it has transformed itself into a town with diverse
and development of its economy, the transformation economies around clusters of small firms and a few large
enterprises. Its population increased from about 80,000 in 2001
story has also been shaped by supra-local flows of
to 95,335 in 2011, a growth of 11%, and it is now one of the two
capital and labour from the region. large towns in Namakkal district. A result of this growth has been
the outward expansion of the town into its periphery. Aerial
images indicate that its built-up area increased by 66% between
2001 and 2011 – from 5.38 square kilometres in 1992 to 6.39 sq km
in 2001, and 10.63 sq km in 2011 (Krishna Kumar 2013). Focusing
on spatial transformation, this paper examines the factors
driving urban transformation in Tiruchengode.
Spatial transformation in the context of this paper is the
conversion of land from agriculture to urban use, and the
redevelopment of the town’s urban core to accommodate the
demand from demographic growth, expansion of the economy,
and for speculative investment. A dominant assumption guid-
ing policy is that the urban transformation of non-metro cen-
tres and surrounding rural areas is driven by metropolitan-led
growth or corporate or state-led initiatives (Mukhopadhyay et al
2012). Non-metro urban centres are viewed as sites of stagnation
with limited potential for growth autonomous of metropolitan
cities. In other words, the spatial transformation of non-metro
centres is driven by the demand for land spilling over from
a metropolitan real estate market and the flow of corporate
investments in land and the economy. State interventions to
revitalise non-metro centres have been in the form of improving
their connectivity to metropolises or creating spatial enclaves
such as special economic zones (SEZs) to catalyse growth by
attracting corporate capital (Denis and Marius-Gnanou 2011).
Several scholars have contested such assumptions of metro-
led or state-led transformation of non-metro centres in their
Bhuvaneswari Raman ([email protected]) is with the theory on subaltern urbanisation in India (Mukhopadhyay et al
Jindal Global University, Sonipat, Haryana.
2012; Pradhan 2013; Zhu et al 2009). An analysis of census
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 REVIEW OF URBAN AFFAIRS

data and geographic information system (GIS)-supported aerial islands” (Fujita and Mori 2005). Their growth and dynamism
images of urbanisation patterns in India (Mukhopadhyay et al are related to the characteristics of their neighbouring regions.
2012; Pradhan 2013) and China (Zhu 2000) demonstrate the Economic activities prefer the metropolis where there is an
diversity of urbanisation patterns and the growth of some non- agglomeration of diverse sets of actors and activities. The
metros independent of metropolitan cities (Mukhopadhyay larger the agglomeration, the greater the benefits of scale
et al 2012; Pradhan 2013; Zhu 2000). The concepts of “subaltern economies to businessmen. Even if land prices are high in a
urbanisation” and “in situ urbanisation” (Zhu 2000) underscore metropolis, the benefits of large agglomeration in terms of ac-
the autonomy of non-metro transformation. cess to markets and skills offset the cost. A key concept of the
Tiruchengode’s story supports the urban transformation NEG model is the idea of an “iceberg” to characterise trans-
process theory espoused by Mukhopadhyay et al (2012) and port costs, which implies that they are minimal or almost nil
Zhu et al (2009). It is autonomous of the growth dynamics of a for firms that are in large agglomerations (Fujita, Krugman
metropolitan city and has not required any direct intervention and Venables 1999; Storper 2010). Such positive externalities
by the state or corporate sector. Land transformation in propel the growth of large agglomerations. This has rein-
Tiruchengode town and its periphery is driven by the expan- forced the metro bias and neglect of small towns in urban
sion and diversification of the town’s economy, and by the policies (Bryceson et al 2009).
practices of its entrepreneurs. The town’s entrepreneurs mobi- According to the NEG, disparity between regions or locali-
lise land as a part of their economic strategy to accumulate ties is explained by their proximity to large agglomerations.
wealth, which has fuelled the growth of the town’s real estate Non-metros are places with a high concentration of poverty
market and economy. The role of the local government in the (Lanjouw and Murgai 2010). The growth and dynamism of
land market has been minimal. Land development is organ- small towns is driven by the location factor – connectivity and
ised by landowners, either by themselves or in alliance with a proximity to a metro city. The flow of external capital from the
developer. The central role of the town’s entrepreneurs does metropolitan city into the town and/or a demand spillover is
not mean that Tiruchengode’s economy is driven solely by en- necessary to catalyse the growth of non-metros.
dogenous factors. The flow of external capital and people is Mukhopadhyay et al (2012) argue that Indian urbanisation
facilitated by their ties and relationships to a wider region, ce- comprises diverse trajectories. Their thesis on subaltern
mented by membership in a supra-local political organisation urbanisation suggests that the growth of non-metro centres can
that predates colonial times. Further, patterns of infrastruc- be driven by factors independent of metropolitan urbanisation
ture in the town during colonial times and after Independence or corporate-led or state-led urbanisation (Mukhopadhyay et al
have been driven by political considerations. The availability 2012: 14). The economies of non-metro centres can have
of infrastructure has catalysed the evolution of clusters of autonomous interactions with other settlements at the local or
small firms in the town. It has also enabled the embeddedness global scale. Similarly, Pradhan’s (2013) analysis of the spatial
of the town’s entrepreneurs in regional and national party pol- distribution of the growth of settlements has found that the
itics, through which they negotiate policies related to taxation, spontaneous transformation of non-metro urban settlements
allocation of work contracts, and so on. or, to borrow Zhu’s (2000) term, “in situ urbanisation” is a
The rest of the paper is divided into three sections. Section 2 widespread geographical phenomenon in India.1
briefly reviews the literature related to urbanisation and An oft-mentioned example of metro-led urbanisation is the
small-town capitalism. Section 3 discusses the process of land transformation of Gurgaon from a non-descript rural town to a
transformation in Tiruchengode town and its periphery global economic hub because of its proximity to New Delhi. The
around three themes – (a) patterns of spatial transformation Gurgaon model of land development, driven by large develop-
in the town and its periphery; (b) the growth dynamics of the ers operating at the national level, influenced the framing of
town; and (c) the practices of its entrepreneurs. Section 4, the the new Land Acquisition Act (Chatterji 2013). Even though
conclusion, argues that each town has to be conceptualised as Gurgaon’s earlier stage of development may have been driven
an “ordinary city” (Robinson 2002), whose trajectory is unique by state investment in the car industry and large developers, its
to itself rather than being driven by macro processes. contemporary growth displays various patterns (Mukhopadhyay
et al 2012). In other words, it is difficult to subsume the diverse
2 Patterns and Practices of Spatial Transformation patterns of urban transformation observed in a town under the
rubric of changes brought about by a metropolitan city.
Land Transformation: In Situ or Metro-led Urbanisation? The dynamics of non-metro economies captured in studies
With the publication of the World Development Report 2009, on small-town capitalism suggest that land transformation
the New Economic Geography (NEG) model was adopted as a may be driven by the expansion of existing economies or the
blueprint for urban policy (Mukhopadhyay et al 2012). It evolution of new economic activities. The economic structure
shaped the dominant perspective that non-metro urban trans- of non-metro urban centres in India is based on clusters of
formation is interlinked to the growth of metropolitan cities small firms specialising in automobile and lorry re-engineering,
(Denis and Marius-Gnanou 2011; Mukhopadhyay et al 2012). agro-based processing, and artisanal production (Harris-White
The NEG theory emphasises the positive externalities of large 2004, 2009; Haynes 2013; Chari 2004; Cawthrone 1995).
agglomerations. Localities (cities) are not “freely floating These clusters exhibit four distinctive features – growth,
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diversification, differentiation and informality (Basile 2011; Besides direct intervention in land, state investments in
Cadene and Holmstom 1998). Employing low technology and basic physical infrastructure can catalyse economic growth,
small capital, these enterprises offer entrepreneurs opportuni- though the scale of it may differ. Similarly, the nation’s policy
ties for mobility but also exploit labour. The breaking up of of supporting small-scale industries can affect the growth
existing units to form new ones has driven the spatial expan- dynamics of small-firm clusters in non-metros, as illustrated
sion of Tiruppur in Tamil Nadu (Chari 2004; Cawthorne 1995) by Haynes’ (2013) study on Maharashtra. The alliances of en-
and artisanal towns in Maharashtra (Haynes 2013). Some trepreneurs with local state and elected representatives are a
studies suggest that economic liberalisation and globalisation significant factor in driving physical infrastructure invest-
pose a threat to small-town economies, even if they developed ments to benefit small-firm clusters (Benjamin 1996). In
in the 1970s and 1980s autonomous of metropolitan influence Tiruchengode’s case, the forms of state intervention in land,
(Kundu 1994; Haynes 2013). Land transformation is not a the scale of it, and its effect on the dynamics of transformation
specific focus in the above studies. They suggest that mapping remain to be understood.
the trajectory of Tiruchengode’s economy is useful to draw
inferences about the drivers of spatial transformation there. Role of Non-State Players: The accumulation strategies of
Two themes have been researched by earlier studies on small entrepreneurs are one of the factors driving the growth
Tiruchengode – its economic structure (Kundu 1994; Cadene of the real estate market in Tiruchengode (Benjamin 1996).
2002), the role of a temple trust (Trouillet 2013) and the history Small entrepreneurs mobilise land to raise capital for starting
of one of its dominant communities, the weaver-merchant caste their enterprises and plough back their savings into land
(Mines 1984). Their findings show that local entrepreneurs have (Benjamin 1996; Benjamin and Raman 2011). The practice of
played a central role in the integration of the town’s economy landowners investing their agricultural surpluses in real es-
with regional and national markets, a process that has been in- tate or economic activities is suggested by the findings of stud-
dependent of a metropolitan city (Kundu 1994; Cadene 2002). ies on small-town capitalism. In addition, the development of
Economic transactions are mediated by caste and occupation- agricultural land into separate plots for the urban real estate
based networks (Cadene 2002). While these studies give an idea market is done by private entrepreneurs, including landowners
of the town’s economies, their focus is not on the interplay of and land developers with varying scales of operation (Baken
land transformation and economic dynamics. Since the com- 2003). Not many studies have focused on the practices of local
pletion of the two studies, the town’s periphery has expanded entrepreneurs, landowners, and developers in non-metro
in all directions and agricultural land has been converted to use centres. The findings of this paper seek to fill this gap.
for other purposes. Moreover, the town’s core is being redeve- Further, land transformation in contemporary cities also
loped with high-rise commercial complexes. Tiruchengode’s prox- stems from investment in real estate for speculative purposes
imity to the large urban centres of Erode and Coimbatore raises (Denis 2011). It is important to address the question of who
the question of how far its land transformation has been driven is investing in Tiruchengode’s periphery/real estate. Finally,
by its own growth dynamics and how far by external forces. the economic practices of entrepreneurs in non-metros
are shaped by the articulation of caste, class and gender rela-
Actors, Strategies, and Alliances tions (Harris-White 2004; Basile 2011; Haynes 2013). Caste
A focus on the role of state and non-state actors is important relations influence the opportunities to enter a particular
in understanding the forces driving the transformation of sector, everyday business transactions, and local political alli-
Tiruchengode town. ances, which works to the disadvantage of some caste com-
munities, particularly dalits (Harris-White 2004; Chari 2004).
Role of the State: Land has become a key device in promoting The question is whether caste mediates land transactions and
economic development in both urban and rural areas (Banerjee- how it does so.
Guha 2013). Since 2000, state interventions in land have been
driven by the goal of attracting corporate capital to both land 3 Spatial Transformation in Tiruchengode Town
and economic activities (Benjamin and Raman 2011). It has and Surroundings
taken the forms of creating new parastatal institutions and This section has two parts – Tiruchengode town’s spatiality
laws for the easy acquisition of land, and the formation of new and forms of spatial transformation are described in the first,
towns and SEZs (Chatterji 2013; Benjamin and Raman 2011). while the practices of its entrepreneurs and the state are
Tiruchengode is much closer to the large cities of Erode, Salem mapped in the second.
and Namakkal than the metropolitan city of Chennai. In such
contexts, forming new towns and SEZs are common forms of 3.1 Patterns of Spatial Transformation
state intervention in land. Several studies have shown the ad- Spatial transformation in Tiruchengode town and its sur-
verse impact of this in terms of dispossession (Sampat 2008; roundings has manifested itself in a redevelopment of the core
Banerjee-Guha 2011). Chatterji’s (2013) analysis of state-led town and the development of plots of land along the town’s
transformation in Gurgaon shows the manner in which par- periphery in different directions. There has also been a shift
astatal institutions functioned as real estate brokers for big in the control of the built-up area or land between different
land developers from outside the town. communities.
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Tiruchengode is home to diverse economic activities and The town’s textile and rice mills are on the north-west. This
social groups. Its economy is sustained by trade, and various led to the growth of colonies of mill labourers on subdivisions
types of small-firm clusters engaged in weaving, servicing of private land. The Gounders’ settlement financed the mill
and re-engineering automobiles and trucks, assembling rigs economy and the movement of from handloom to power-loom
for drilling borewells, agro-processing, selling textiles, and production. Several private land subdivisions have emerged
education. The dominant communities in the town and the outside the weavers’ settlement to the west and south-west of
surrounding areas include Hindus from the Mudaliar (weaving), the town. Many of the mills are now defunct and in some cases
Gounder (agricultural landowners), Achari (craftsmen), the land has been used for schools or is planned to be devel-
Chettiar and Vanniyar (business) castes, and scheduled castes oped as residential real estate. The Vanniyar caste’s residential
(SCs), and Muslims. quarters is in the north-east of the town.
The town has developed around a temple on a hillock and Land transformation on the town’s periphery is character-
two temples at its foothills. Akin to the morphology of other ised by the development of small-firm clusters and residential
temple towns, four streets running through the foothills have layouts to the north and north-east, which has educational in-
turned into the core of the town. This has developed as a cen- stitutions and residential-cum-production sites of weavers. A
tre of retail trade, with shops selling textiles, jewellery and recent phenomenon observed on the periphery of the town is
consumer items. The town’s trade was initially controlled by the development of large educational institutions sprawling
members of the Mudaliar and Chettiar communities.2 But, over five to 50 acres, small-firm clusters, and residences.
over the years, Gounders and Vanniyars have also established Besides land under individual ownership, there is pressure to
businesses, and there are new entrants from north India in the sell land under community control as individual plots.
electronics business. Many traders operate from rented As can be inferred from the above, Tiruchengode’s growth
premises. Land is mainly in the hands of the communities that and land transformation have been driven by the expansion of
were early settlers in the town. Besides land under private existing economies and the rise of new economic activities
ownership, a large part of the core town is owned by a tradi- around educational institutions. We show in the next section
tional landowning family. The expansion of trade and the how it is predominantly driven by the growth dynamics of the
desire of entrepreneurs to diversify have fuelled the redevel- town’s economy, and not by its proximity to a metropolitan city.
opment of the core town into commercial complexes.3
The early settlers, mainly weavers belonging to the Senguntha 3.2 Town’s Economy as a Driver of Spatial Transformation
Mudaliar caste, occupied vacant land to the west of the town. The town’s diverse economic activities are built on the “toil”
Their neighbourhoods can still be distinguished by their (Chari 2004) of its entrepreneurs and their community links in
architecture – large houses with low white halls that could and outside the town. Who are the town’s entrepreneurs?
accommodate at least two to four looms. The houses were Tiruchengode has been built by different groups of migrants
organised around an open space known as the pavadi for prepar- who moved into the town from surrounding villages and
ing the thread. The Mudaliar caste panchayat in Tiruchengode towns. Many of these villages and towns were part of a supra-
town is located in one of the two pavadis under the community’s local territory or the naadu system that predated modern
control. Business communities like the Jagma Chettiars live Indian administrative boundaries (Raman 2013). The town’s
alongside the Mudaliars in the layouts on the west. Early two dominant castes, the Mudaliars and the Gounders, for
Mudaliar settlers largely occupied land on their own and sub- example, each have their distinctive naadus, the Ezhukarai
sequently got it regularised through the local government, naadu and the Kongu naadu, respectively (Mines 1984; see
revenue department, and ministry of small industries.4 With also Beck 1972). The town’s temple binds together 36 villages
demographic growth, Mudaliar households have moved to dominated by the Gounders and 22 villages by the Mudaliars.
private land subdivisions or formed new cooperative societies From this perspective, Tiruchengode town and its villages
to form layouts, which are in the north-west and east of the are to be seen as a node in the network of places in the
town. The community now seeks to redevelop the pavadi naadu system. Definitions of an insider or outsider in the
spaces controlled by it as private property. town are driven by membership in the naadu system, whose
The main road connecting Sangagiri station with Namakkal political and economic resources are what the town’s
town runs through Tiruchengode along its east-west axis. The entrepreneurs drew on.
town’s small economic clusters, referred to as Periyapattarai
and Chinnapattarai, are on either side of this road, and on Rise of Textile Production
some land in the interior. Alongside automobile and lorry The origin of the town as a production centre is traced to
workshops is a cluster of firms trading in engineering spare a group of Mudaliar families in handloom weaving moving
parts. Both operate on private land and a pavadi space. It is into Tiruchengode in the sixth century (Raman 2013). Mines
said that the Mudaliar community initially occupied large (1984) documents the economic history of Mudaliar warrior-
tracts of land abutting the main road and subsequently sold merchants in detail. The community was known for weaving
it to the Gounders. Small-firm clusters from the town have fine cloth on handlooms and selling it as itinerant traders. Few
expanded into the neighbouring town of Sangagiri and to households in the town still continue this practice, with most
villages in the periphery. trading in weekly markets in nearby towns and villages. One
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REVIEW OF URBAN AFFAIRS

such market is in Erode, the big city closest to Tiruchengode. The evolution of lorry workshops is traced to three migrant
In earlier days, some Mudaliars combined weaving with the families of the Kollarasari caste from the neighbouring town
rice trade. With a decline in the rice trade, Tiruchengode’s of Bhavani. Today, these workshops are operated by entrepre-
Mudaliars diversified into weaving coarse cloth and printing.5 neurs from diverse caste backgrounds, including Gounders,
The Mudaliar entrepreneurs interviewed attributed the shift Acharis, Asaris and Mudaliars. The Gounder caste dominates
to the new opportunities created by the colonial state sub- both lorry re-engineering and borewell rig assembly, while
contracting textile production to local producers.6 many Mudaliars have moved into the retail trade of spare
The decades between the 1960s and 1990s, the town’s entre- parts. The third generation of many of these families contin-
preneurs say, was the golden era of weaving in Tiruchengode. ues to run lorry re-engineering workshops and borewell rig
The cooperative movement spearheaded by members of the assembly units.
Mudaliar caste in neighbouring regions spread to the town Both the economies of lorry re-engineering and rig making
and it led to the establishment of four state-run handloom are linked to different markets outside the town. The lorry
cooperatives. During my field research in Tiruchengode, the re-engineering clientele comes from the three southern states
membership in handloom societies had declined to 400. The of Karnataka, Tamil Nadu and Kerala. In contrast, the rigs
decline of handlooms is attributed to the rise of small power- for drilling borewells are owned by residents of Tiruchengode
loom units in the town, similar to that witnessed in other tex- or surrounding villages but they operate in north Indian
tile production centres in the state (De Neve 2005). Power- states. The industry has grown with linkages in west Asia
loom production in the town still continues in neighbourhoods and South Africa. An example is Paranthaman Rock Drills,
dominated by the Mudaliars, but some of their units have been which is one of the large players in assembling borewell
taken over by Gounder entrepreneurs. Unlike the Mudaliars rigs, run by the fourth generation of the founder’s family.
who relied on loans from financiers or wholesale traders based While the second generation of the family benefited from the
in Erode, the Gounders have invested their surplus from work- expansion of the lorry transport business in the national mar-
shops or the borewell business into power-looms. Their scale ket, the third generation moved into the rock and borewell
of operation is relatively large compared to Mudaliar entrepre- drilling business as well. The company now has an interna-
neurs, and they are able to invest in power generators for run- tional presence in the rock drilling business. It has served as a
ning looms in three shifts. training ground for numerous entrepreneurs who went on to
Power-looms, as De Neve (2005) notes, developed due to set up their own units in the town. It also offers subcontract-
competition among the mills. Rice and textile mills flourished ing jobs to its former employees on the maintenance of its
in the town till the 1990s (Kundu 1994). Some of these were overseas projects.
financed by entrepreneurs from outside the town. The town’s The increase in land rentals in the town and the difficulty of
once-famous Pullicar Mills, which employed a sizeable pro- securing large tracts of land within it have particularly pushed
portion of its population, and Raja Rice Mills, were founded the borewell businesses to move out. One such cluster is in
by businessmen from Salem and Tanjore districts, respectively. “Autonagar”, a village off the Sangagiri main road. Currently,
Their entry was facilitated by the caste and political networks roughly 30-40 workshops have moved into this cluster. An ex-
of the town’s Mudaliar entrepreneurs. For example, the pansion of this rental market into the agricultural land adjoin-
land later occupied by Raja Rice Mills was owned by the ing it seems to be on the cards. The land here is either dry or
town’s biggest landlord, and entrepreneur-politicians from rocky and its owners are absentee landlords. With the rising
the Mudaliar and Gounder communities sympathetic to the demand for workshops over the last five or six years, many
Congress mediated a sale. In contrast, the KSR mill was deve- owners are said to have stopped converting their land to resi-
loped gradually by the town’s entrepreneurs, first as a power- dential plots. Most of these workshops are on rented land and
loom unit and then as a spinning mill. The KSR family today the initial investment is mainly to pay an advance and erect a
owns a large educational institution on the town’s periphery. shed. The move to a new place is often as a group rather than
individually, as the entrepreneurs interviewed said that this
Growth Driven by Small-Firm Clusters was necessary to attract clients, which may accelerate the pace
The expansion of small-firm clusters is one of the factors driv- of land conversion.
ing land transformation in the town and in its periphery.
Kundu (1994) counted around 330 automobile and lorry Evolution and Growth of the College Economy
workshops, which work on about 800 vehicles annually. The growth of educational institutions has encouraged the
According to the membership in various associations linked conversion of agricultural lands into residential plots on the
to lorry re-engineering and our survey count, there are roughly town’s periphery. Though several plots on the periphery have
1,500 workshops on two sites in the town today.7 Another changed hands, they are yet to be developed.
feature is that some people do not invest in setting up a work- The entrepreneurs in the town’s educational business can be
shop, but work on a contract basis in different workshops. grouped into four types – retired teachers; owners of large tex-
Each of these workshops specialise in one of the 17 activities tile or rice mills with access to capital and land; entrepreneurs
linked to re-engineering lorries and equipping them with rigs in the lorry re-engineering and borewell rig assembly and
to drill borewells. drilling businesses; and caste associations. A group of retired
50 may 31, 2014 vol xlIX no 22 EPW Economic & Political Weekly
 REVIEW OF URBAN AFFAIRS

teachers were the first to open a school in the mid-1990s. Their and people from it and outside it. The external flows are
residential school and college complex, Vidya Vikas School mediated via the networks of entrepreneurs in the town.
(VVS), in Tiruchengode attracts students from different parts Historically, the town’s precolonial, supra-local, political-
of India. Another example is the Vivekananda College of Arts economic territorial organisation has had an influence on its
and Sciences for Women, founded by a college teacher, which contemporary economy.
caters to 22,000 students. The second group comprises large
capitalists from Tiruchengode and the neighbouring districts 3.3 Practices of Transformation
of Erode and Coimbatore. The KSR college complex, which
occupies more than 25 acres and comprises an engineering 3.3.1 Role of Entrepreneurs
college, a medical college, and several polytechnics, is a good Another factor driving the real estate market is the manner in
example of what they have achieved. The third group has a which entrepreneurs mobilise land in the process of capital
diverse range of entrepreneurs, including owners of lorry re- accumulation. We focus on two features of economic organisa-
engineering workshops, borewell rig assembly workshops, fin- tion that fuel the circulation of capital between land and pro-
anciers, small business owners, and retail traders. Established ductive activities.
small entrepreneurs of the town are invited by the boards of
colleges to join as partners and allotted preferential shares. Partnerships and Land for Capital Accumulation
Many small entrepreneurs have recently entered the educa- The practice of entering into partnerships is common among
tional business, seeing it as a logical path to diversifying their entrepreneurs, irrespective of the size of their business operation.
business. Their investment in the shares of various colleges is A dominant trend among owners of small lorry re-engineering
influenced by their status and caste networks. The fourth workshops in the town has been to begin as workers and pool
group is the result of each caste association investing in a col- money to open partnership businesses after about three years.
lege or a polytechnic. In their view, having a college or poly- Most workshops employ four to five workers from Tiruchengode,
technic in their control is necessary for the caste’s economic or and migrants, predominantly from Tamil Nadu, and are man-
social mobility. Besides being a revenue generator, each col- aged by at least two partners. It is usually workers from similar
lege has a certain percentage of seats for its community mem- regional backgrounds but with different sets of skills who enter
bers, who may also avail themselves of a fee relaxation. into such partnerships. The choice of partners is influenced by
The educational economy of Tiruchengode is intermeshed perceptions of trust and a belief in each other’s network of cli-
with local and transnational flows of people and finance. The ents. With the mushrooming of new firms, established work-
schools are in high demand and have students from other shop owners subcontract part of their work to former employ-
parts of Tamil Nadu and north India. A few institutions have ees. The initial investment ranges from Rs 50,000 to Rs 1 lakh,
branches outside the country, in Malaysia and Singapore. The which is sourced largely through chit funds, savings, or loans
technical colleges have students not only from across India, for which agricultural land is used as collateral. This has
but also from South Korea and Zimbabwe, around whom opened a limited space for people from relatively weaker
rental markets have developed in the town and villages in the economic groups to become entrepreneurs.
vicinity. Housing clusters for foreign students have emerged Partnership arrangements and land investments among
not only in Tiruchengode, but also in villages and towns those in the borewell drilling business are driven by a combi-
within a 20 km radius. The town’s medical college hospitals nation of factors – the need to raise large capital without
cater to people in villages and towns within a 60 km radius. A involving financial institutions, the high level of risk involved
private transport network has been established by the college in the business, and the necessity to manage business opera-
entrepreneurs to transport students, staff, and patients. tions both in the town and outside it. Borewell drilling vehicles
Interviews with real estate agents, land brokers, and a sub- require a large investment. As per costs in 2010, a first-time
registrar of the town revealed that the high real estate prices entrepreneur needed an investment of more than Rs 1 crore for
in the town and its periphery are linked to the demand from purchasing a new vehicle and around Rs 75 lakh for a used
borewell businesses and educational enterprises. In the early vehicle, for which they relied on private financiers or chit funds.
2000s, many school and college entrepreneurs assembled Each borewell drilling enterprise has a minimum of two or
their land incrementally. Until 2005, land developers trans- three partners. There are various types of partnership among
acted only in relatively small amounts of land. Over the years, borewell entrepreneurs based on their share of investment,
a hierarchy of developers has emerged with large developers which defines the role of each partner. A distinction is made
assembling land in large parcels in the expectation of demand between the majority partner and minority partners. The ma-
from educational enterprises.8 jority shareholder often takes care of field-level operations and
In sum, the expansion and diversification of the town’s stays away from the town for a period of six to eight months.
economic activities has contributed to the transformation of The main partner invests more than 50%, usually between
its territory from that of a temple town and a small handloom 60% and 70%, and the others vary between 10% and 30%.9
production centre to a one housing a variety of economic acti- Many borewell entrepreneurs invest in re-engineered vehicles
vities. These economic activities have operated autonomous for which institutional loans are not available. Interviews
of metro dynamics. The town’s economy is shaped by capital suggested that even with a new vehicle, an institutional loan
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REVIEW OF URBAN AFFAIRS

could be raised only up to a maximum of 50% of the vehicle’s north-western peripheries of the town have been driven by
value. Consequently, they too rely on private financiers. Both the demand from small entrepreneurs.
private financiers and institutional financiers demand collateral Partnerships in educational institutions are based on invita-
other than the vehicle in the form of land or gold jewellery. tions to hold shares with dividends linked to income and/or a
The vehicle is often registered in the name of the main part- share in the land or building. Shares in educational institu-
ner, and all the partners pitch in with their land or gold jewel- tions are sold mainly for expansion and valued according to
lery as collateral for securing loans. land assets, student strength, and their performance in public
Established owners take on trusted employees as working examinations. The first generation of educational entrepre-
partners if they invest 10%. This practice has allowed for the neurs invited the town’s established small entrepreneurs in
mobility of a few workers, often drivers, in borewell drilling other businesses to join school boards. Often, investors plough
enterprises. As such alliances are shaped by caste relations, back their profits into expanding the institution in the first
workers from the Gounder and Mudaliar castes have relatively three years. With high land prices and a slowdown in land
more opportunities to move up compared to SCs. market transactions, college or school investments have
emerged as an attractive option, especially for small entrepre-
Land Investments to Hedge Risks neurs. Investing in a college is attractive from their perspec-
The level of investment and risk varies among different busi- tive because of the relatively lower demand it makes on their
nesses. Some businesses such as borewell drilling or private time (Raman 2013). These institutions now attract capital
finance and chit funds have a relatively high level of risk. There from investors outside the town as well.
are risks arising from the politics of the place they operate in,
fluctuating opportunities, and losses incurred due to the fail- Invisibility of Transactions
ure of machinery. The demand for the town’s borewell drilling As many entrepreneurs hold diverse portfolios and business
services is mainly from the most backward districts in Maha- transactions are patterned by networks extending across
rashtra, Chhattisgarh and Bihar, all places where there are Kongu naadu and outside, land transactions in the town are
ongoing conflicts between the local population and the state. easily visible.
According to Tiruchengode’s entrepreneurs, they as outsiders One of my key informants in the initial phase of the research
face the threat of being kidnapped or their vehicles being cap- identified himself as a private financier. Like most Tiruchen-
tured for ransom. Their weak ties to local politicians heighten gode entrepreneurs, he had several businesses, the visible part
their vulnerability. Further, the physical terrain matters be- of which was finance. He also ran a business repairing electri-
cause it poses the risk of the vehicle suffering damage. These cal appliances and had invested in his relative’s borewell drill-
conditions influence the decisions of many of the town’s entre- ing unit as a minority partner. He began his career as an assis-
preneurs to travel to their field of operation. While away, they tant in his uncle’s electronics shop, where he began organising
source spare parts from Tiruchengode and mobilise money a chit fund with a few partners. His finance agency has 20
from the town to pay wages. An office is maintained at partners in different jobs linked to trade, weaving, and lorry
Tiruchengode for this, which is one of the features of partner- workshops. Loans are extended on the basis of gold jewellery
ships in the borewell business. and land as collateral. His investment in real estate is driven
A common practice among entrepreneurs is to maintain a by perceptions of assured return from land and built-up prop-
diverse portfolio of enterprises and land as a way of hedging erty. Another example is the unlisted share markets that have
against risk. The reliance on land has fuelled investment in emerged around educational enterprises, where membership
real estate and built-up property. The demand of educational of town entrepreneurs is by invitation (Raman 2013).
institutions for large tracts of land has reinforced the real
estate market in the town, and shifted the scale of land assem- 3.3.2 Role of the State
bly on the periphery. Interventions by the local government and other arms of the
Investment in land is also driven by the high profits from state in land have been in the form of providing infrastructure,
some of the businesses, in particular borewell drilling, negotiations for it on behalf of small firms, and regulation of
finance, and education. Entrepreneurs run their vehicles for land use.
three years after which it is sold in the second-hand market, The rail and road infrastructure during colonial times was
re-engineered, or broken up to sell spare parts. In three driven by concerns of security because adjoining Namakkal
good years, an investor is able to recover his investment in was under the control of Tipu Sultan (Raman 2013). Another
the first year, and the incomes from the following years factor driving such investments was the collection of land
are profits. As partners are often in several businesses, the revenue as much of the land along the southern periphery of
income from minority partnerships often becomes savings, the town and in the town was under the zamindari system.
which is invested in land. According to the town’s real estate Though these investments were not directly aimed at the
brokers, borewell drilling business operators circulate their town’s economy or land development, they were critical fac-
profits partly by expanding their business, and partly by tors in the evolution of small firms specialising in lorry repairs
investing in land and built-up property inside and outside and re-engineering, which have developed over time into a
the town. The private land subdivisions in the west and dominant economic activity of the town.
52 may 31, 2014 vol xlIX no 22 EPW Economic & Political Weekly
 REVIEW OF URBAN AFFAIRS

The intervention of the “local state” has had a mixed effect on largely driven by growth of the town’s economy and the
the town’s economy. It has not intervened directly by forming practice of entrepreneurs investing in land for capital accu-
spatial enclaves for small firms, but elected representatives at mulation. The process described in this paper reinforces
the local and the state level were involved in mediating between Mukhopadhyay et al’s (2012) theory of non-metro urbanisa-
entrepreneurs and the Mudaliar caste panchayat for the allocation tion and Yu-Zhu’s theory of in situ urbanisation. While the
of pavadi land for lorry workshops. Similarly, the embeddedness role of the town’s entrepreneurs, local landowners, and the
of entrepreneurs in regional party politics enables them to town’s politics have been significant factors in shaping the
lobby for favourable policies related to taxation and interstate evolution and development of its economy, the transforma-
transport. Following this, basic infrastructure in the form of tion story has also been shaped by supra-local flows of capital
roads and waste management has been extended. Another inter- and labour from the region.
vention prohibiting the parking of vehicles on the road near the The patterns of transformation traced in Section 3 showed
two clusters in town was a factor that drove some of the borewell the role of the town’s diverse economies in driving spatial ex-
businesses to the town’s periphery. That said, the local govern- pansion and the process of land conversion and development.
ment has limited powers to regulate land development in the The history of the town’s economy is a story of growth and
town. The municipality has a town planner now but the town had diversification and fluctuating fortunes for entrepreneurs
assumed a certain shape before any plan could be formulated. from different caste and religious backgrounds. Rather than
Similarly, land on the periphery is with village panchayats that declining, the town’s entrepreneurs have adopted new ways
have little power to regulate land conversion or high-density and diversified into new forms of investment. Their practice
development, such as colleges in places with no infrastructure. of mobilising land and hedging risks by circulating their sur-
The connection of the town’s entrepreneurs to party politics plus in land and diversification has expanded the economy. In
and the state at different times was shaped by the history of understanding the interplay of local and extra-local factors,
the Independence struggle and post-Independence regional the paper highlights the significance of the town’s historical
party politics, which have been detailed elsewhere (Raman relationships. Its position as a node in the supra-local terri-
2013). The town was a hotbed of mobilisation by the Congress tory of the naadu system, the importance it had for colonial
Party during the struggle for independence and the birthplace rulers, and its embeddedness in the country’s freedom strug-
of C Rajagopalachari and of P Subbarayan of the Kumaraman- gle are important factors that have shaped the contemporary
galam family, both Congress members and freedom fighters. economic and political relationships of the town’s entrepre-
Subsequently, regional mobilisation by the Dravida Munnetra neurs. It has enabled them to forge ties with party politics,
Kazhagam (DMK) also thrived. These political mobilisations which has given them the ability to negotiate with the state
facilitated the coalescing of the town’s caste networks with for land and favourable policies. This paper thus shows that
regional and national political parties. the transformation of Tiruchengode has been driven by a
combination of the town’s history shaping the interplay of
4 Conclusions local and extra-local forces with the entrepreneurial skills of
This paper has illustrated that land transformation in its settlers. It is for this reason that each town, as Robinson
Tiruchengode town has been predominantly driven by proc- (2002) says, has to be understood as an “ordinary city” with a
esses internal to it, autonomous of a metropolitan city. It is unique trajectory.

Notes
1 In situ urbanisation is defined as a process of
urban transformation driven by demographic
growth or diversification of the economy to
non-agricultural forms without any significant
EPW 5-Year CD-ROM 2004-08 on a Single Disk
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2 The textile trade was initially dominated by on a single disk. The CD-ROM contains the complete text of 261 issues published from 2004 to 2008 and comes
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Gounders. sections in each issue.
3 Interviews with the sub-registrar, Tiruchen-
gode, and Murugesan, a land developer and With its easy-to-use features, the CD-ROM will be a convenient resource for social scientists, researchers and
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4 For example, the community has secured titles and public sector executives and journalists.
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are issued in the names of individuals, the ti-
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5 Interview with the secretary of the Mudaliar Any queries please email: [email protected]
pavadi panchayat and the owner of a printing
press in Tiruchengode, dated 9 September 2010. Circulation Manager,
6 Haynes’ (2013) research on artisanal towns in Economic and Political Weekly
Maharashtra reports a similar trend in the 320-321, A to Z Industrial Estate, Ganpatrao Kadam Marg,
growth of handloom centres that were driven Lower Parel, Mumbai 400 013, India
by the demand created by the colonial state.

Economic & Political Weekly EPW may 31, 2014 vol xlIX no 22 53
REVIEW OF URBAN AFFAIRS
7 Our count of the workshop units in two clusters available at http://cybergeo.revues.org/24798;
showed 482 sheds in one of the two Patta- DOI: 10.4000/cybergeo.24798.
raimedus, and at least two or three entrepre- Fujita, M and T Mori (2005): “New Frontiers of
neurs were using space in each shed, paying a Economic Geography”, IDE Discussion Paper
rent or sharing profits. No 27, Institute of Developing Economies,
8 Interview with a large real estate developer Japan External Trade Organisation (JETRO),
and an agro processing entrepreneur, Tiruchen- available at http://hdl.handle.net/2344/179
gode, June 2011. Fujita, M, P Krugman and A J Venables (1999): The
9 Interviews with a private financier and minority Spatial Economy: Cities, Regions, and Inter-
partner in a borewell business; and a town national Trade (Cambridge, MA: MIT Press).
financier and a majority partner in a borewell Haynes, Douglas E (2013): Small Town Capitalism
rig assembly unit, held on 7 June 2011, 18 Sep- in Western India Artisans, Merchants and the
tember 2011 and 6 March 2012. Making of the Informal Economy, 1870-1960
(Cambridge: Cambridge University Press).
Harris-White, B (2004): India Working: Essays on
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