'It's smart capitalism, not dangerous fantasy': Zoho's Sridhar Vembu fires back at critics over 'overcrowded' Bengaluru debate

Zoho founder and chief scientist Sridhar Vembu on Wednesday doubled down on his argument for building vibrant rural industries, insisting that it's "smart capitalism, not dangerous fantasy." His comments come in the wake of a debate sparked over Bengaluru's recent flooding and the broader question of whether India should pursue decentralised development or continued urbanisation.

Vembu's remarks came after investor Ritesh Banglani's criticism of his earlier post, where he had highlighted the pressures Bengaluru faces due to unchecked rural migration. Banglani disagreed with the argument, saying Bengaluru is not "overcrowded" and it is not even in the top 20 cities in Asia by either population or population density. 

Banglani argued that as an economy develops, it needs to urbanise. "There are no developed economies that are predominantly rural. If we have to grow, we need to wean our people off the land and into cities. Keeping our population rural is merely a dangerous Gandhian fantasy."

To this, Vembu offered a data-backed comparison between Indian districts and European nations to make his case. "A relatively small district like Tenkasi has 1.4 million people, same as the country of Estonia. Ballia district in UP has 3.2 million people, and the country of Lithuania has about 2.9 million people,” he wrote on X. He pointed out that both Estonia and Lithuania enjoy a GDP per capita of $30,000, with much lower population densities — Estonia at 31/sq km and Lithuania at 45/sq km — compared to Tenkasi (490/sq km) and Ballia (1,100/sq km).

"Tell me again why our districts are called 'rural'?” Vembu asked, arguing that India's rural population density can support industrial development. "In fact, my 'dangerous Gandhian fantasy' is to have electric trains to every panchayat. Very feasible with our density."

"Now can we achieve a modest $10K GDP per capita in Tenkasi and Ballia? Must be very doable. What we need are visionary entrepreneurs willing to live there and pursue the dream. You can create a lot of real wealth. That is not 'dangerous Gandhian fantasy'. It is smart capitalism. I am sorry that we have VCs who don't get capitalism," Vembu said while responding to Bhanglani. 

In response to Banglani's claim that urbanisation is inevitable for economic growth, Vembu cited global and Indian examples: "Have you studied Switzerland? Or Southern Germany? Have you been to the Coimbatore/Tirupur region? All of them have quite vibrant rural industry that is globally competitive."

The whole debate began after former Infosys CFO Mohandas Pai slammed the Karnataka government for recurring floods in Bengaluru. "After 2 years, ₹100,000 crore spent on freebies...what did we get? Total collapse of our city,” Pai posted. 

However, Vembu said: "We cannot build great cities when we have a vast rural population desperate to migrate to overcrowded cities with broken and heavily overloaded infrastructure." He argued that Bengaluru's quality of life depends on "how many people we succeed in not sending to Bengaluru from rural India."