Maximum city blues

Maximum city blues

Aug 30th 2007 | MUMBAI
From The Economist print edition
Great plans are in place to resuscitate South Asia's biggest city. As ever, the difficulty lies in implementing them
Eyevine

THERE is only one way to see Mumbai. That is by helicopter: whirring low over the rust-brown slums, godowns and Victorian Gothic monuments of India's city of commerce, its historic gateway; then soaring high over the hazy Arabian Sea beyond. It is exhilarating. Moreover, only by helicopter can one cross log-jammed central Mumbai—a distance of around 20km (12.5 miles)—in under two hours.

Mumbai is South Asia's biggest city. By 2015 the UN says it will be the world's second-biggest after Tokyo, with nearly 25m people. Yet already it is choking. Around half the population—of 14m, at a modest estimate—live in slums. Another 3m commute daily from surrounding suburbs. Most come by rail, though the service would be inadequate even if it were not hobbled by a shortage of trains and a surfeit of vagrants. At peak hours, 5,000 commuters cling to trains designed for 1,700. Hundreds die on the tracks each year.

Higher up the economic food-chain, the damage is commensurate. Airliners circle Mumbai by the hour, awaiting space to land. One of the airport's two runways is semi-retired, because 300,000 squatters have built shacks around it. The roads are even worse: Mumbai is traversed by two north-south highways, with no large axis between them. Yet every day an estimated 500 cars are added to the city's jams.

Mumbaikars have long seen the trouble ahead. In recent years, the state and central governments have recognised it too. There is much at stake, for India as well as Mumbai. Its recent high economic growth is an urban phenomenon. Indeed, the failure of rural India is why so many Indians come to town. Huge improvements in urban infrastructure are needed urgently.

Mumbai, moreover, for all its flaws, is the one Indian city with pretensions as an international financial hub. So state and central governments have made vast promises. The plans envisage overhauling laws and regulations and building Mumbai's infrastructure anew. The government of the state of Maharashtra, of which Mumbai is the capital, says this will cost $60 billion and take a decade.

The central government has earmarked $9 billion for Maharashtra's urban infrastructure. The private sector, it is hoped, will stump up most of the rest. Mukesh Ambani's Reliance Industries (purveyor of the helicopter tour) plans to invest $8 billion in a vast manufacturing development—virtually a new city, in Navi (new) Mumbai (see map). Reliance, India's biggest private-sector company, says it will provide 2m jobs.

But there is a problem. To redevelop Mumbai and its hinterland involves moving people. And since in India third-world conditions are dignified (at least in theory) with first-world rights, this causes blockages. The invaders of Mumbai airport, for example, have at least four representatives in Maharashtra's state assembly.

Scrapping lousy laws in corrupt India is similarly fraught: as a rule, the more economic damage they do, the more powerful are the interests defending them. And so hardly a week passes without the stalling of some critical part of Mumbai's redevelopment. Last month was the turn, not for the first time, of one of the most crucial: a scheme to redevelop Dharavi slum, allegedly Asia's biggest, which would involve resettling around 300,000 people.

At its current pace, the redevelopment of Mumbai is probably not keeping up with the city's worsening decrepitude. Yet progress there has been, in three main areas: administrative reform, legal and regulatory reform, and infrastructure. Optimists—whose ranks include some of the redevelopers—say that, as a result, the way will be less tangled ahead.

The city's rulers have already pared back a few trailing branches. Mumbai is run by 16 separate agencies. To help co-ordinate them, the government has formed a redevelopment committee representing them all. But it will achieve little unless the promised axe is wielded on certain laws and building regulations. Two are most heinous. The Urban Land Ceiling Act, a law restricting urban land holdings, has left 2,000 hectares (5,000 acres) of Mumbai in a legal limbo. For three decades these parcels have been locked in the courts, prey to rent-seeking officials. In addition, rent controls ensure that most of Mumbai's best housing is let for peanuts on renewable leases. In such places, the rental market is dead. Denied control of their assets, landlords let splendid buildings crumble. In downtown Mumbai—one of the world's priciest markets for foreigners—3,000 houses stand vacant. Meanwhile, even middle-class immigrants to the city, having no better option, stay in the slums.

The central government says Maharashtra must repeal the urban-land law before it receives its infrastructure money. In July, for the umpteenth time, the state Parliament passed up an opportunity to do so. More promisingly, a law scrapping rent controls has been submitted to Parliament.

On infrastructure, there is less good news. The first 5.6km stage of a project to build a road over the sea, along Mumbai's western coast, is 60% completed, three years overdue and so far has cost double its $150m budget. The delay follows a costly redesign, after local fishermen protested that the road impeded their boats. Construction of an 11km metro, budgeted at some $500m, has not yet started—a year after Manmohan Singh, the prime minister, inaugurated its site by breaking a coconut over it. The government is in a legal battle to acquire a plot of land to store the metro's trains.

In Dharavi, the government has done all it can to avoid such headaches. Its plan is broadly in line with existing slum redevelopment policy. It would see Dharavi's low-lying shanties bulldozed and replaced by apartment blocks. Each unhoused family would be given title to a flat of 225 square feet (21 square metres). The leftover land would be split between the developer, as his fee, and the government. Previous slum redevelopments needed the approval of 70% of the affected slum-dwellers. Dharavi's, however, have been given no choice.

Worse, anyone who arrived there after 1994 will be ineligible for resettlement. Moreover, Dharavi is a peculiarly commercialised slum. Its cottage industries—including garments and handicrafts—earn millions of dollars in annual exports alone. After the redevelopment, Dharavi's traders would be offered space for rent. But much of the slum's industry will be lost.

It is nonetheless hard to know what the government could do better. The existing slum policy was launched a decade ago, with the aim of redeveloping all of Mumbai's slums by 2007. So far, 500,000 slum-dwellers have been resettled. But 2m new ones have arrived in the city.

Reliance would rejoice at any such progress. Its new city was supposed to extend over nearly 15,000 hectares, comprising two special economic zones (SEZs). These are tax havens for export-driven industries, introduced by the government last year. But the scheme has hit the skids. After skirmishes over a proposed SEZ in West Bengal in January, the government changed the rules. So Reliance will have to lop 5,000 hectares off Navi Mumbai, and will have no government help acquiring land. “Why do they worry about my bloody SEZ?” fumes Anand Jain, Mr Ambani's partner in the project. “Why not have ten SEZs and solve all Mumbai's problems?” As if he didn't know.