Global Economics

Mumbai Infrastructure Still Lags Shanghai


Why can't India catch up with other financial capitals? Natural disaster, delays, and government are all part of the problem

If one had to sum up Mumbai's infrastructure story, the most succinct way of doing it could well be 'two steps forward, four backward'. The worrying part is that this is often said without too much of forethought. There are a host of reasons working at the same time which quite effortlessly make things difficult.

Apart from just the issue of indecisiveness on the part of the government which makes it impossible to get past the red-tape or inertia, one is getting used to another obstacle. This is about the rivalry between two of Mumbai's biggest industrial groups which is making its presence felt in a seemingly dangerous manner. More about that in just a bit.

For now, let us go back in time to a point when Prime Minister Manmohan Singh spoke passionately and famously in metaphorical terms of the Mumbai makeover to create a Shanghai. That was in 2004 and since then the talk about India's financial capital becoming a London or a much closer Dubai has been pretty unabated. The whole discussion has centred around Mumbai's infrastructure and sometimes in more serious terms, just the lack of it.

Shanghai—A distant dream?

Not too long after Singh made the unforgettable Shanghai statement, nature decided to make its own interpretation of it. The deluge in the July of 2005 saw Mumbai struggling to remain afloat. One day of unprecedented rainfall—a 944 millimetre downpour—washed away, for at least a while, that comparison with China's showcase city. The task at hand was simple and sadly all too familiar—a return to the drawing board and figuring out a way to overhaul the city's infrastructure. Difficult for sure but most certainly, it was the need of the hour.

Those in the government agree with the apprehension on the infrastructure story. "Yes, the Prime Minister's talk of Shanghai has been blown out of proportion. However, there is no getting away from the fact that Mumbai will have to reinvent itself," admitted a state bureaucrat associated with Mumbai makeover plans. Besides, it's not as if time is on the city's side and the need to expedite the infrastructure can hardly be overstated. "Unless we upgrade our drains and the means of transport, Mumbai may not remain what it what it has always been which is being India's only global city," he adds.

From that fateful day of July 26 three years ago, the buzzword for everybody connected with Mumbai has been the same and that is infrastructure. Starting from those seated in the corridors of power who are now discussing it threadbare in addition to experts from various spheres, the verdict is unanimous—improve infrastructure or perish. Corporates too have joined the call and are hoping that the change happens quickly while the citizens are direly in need of quite simply a better way of living in the city. Nobody knows when that change will take place even as time is threatening to play spoilsport.

Delays and its politics

Over time, there have been grandiose plans of putting the city's infrastructure in order. This means getting things like public transport, roads and the drains in order. All this means thousands of crores going in as investment though not too much of that has translated into any tangible change. If all this was not enough, the series of never-ending clashes between the Ambani brothers has hardly helped the cause. Quite simply, it has held up the progress on key projects and there is more than a bit of uncertainty on the fate of some of them.

The latest project which is hanging by the edge is that of the Mumbai Trans Harbour Link (MTHL) project. This is merely another skirmish between the siblings who have fought more than one bitter battle for a slice of the Rs 45,000 crore, as claimed by the state government, for a makeover programme for Mumbai. So far, the infrastructure story has come a cropper and there has hardly been a serious look at what has been achieved against what had been promised. In the backdrop of what has been taking place on the MTHL project, ET takes a close look at the much-promised infrastructure upgrade for the city of Mumbai.

At the ground level, the infrastructure projects can be placed in two categories. Within the first category are projects undertaken by state agencies like Brihanmumbai Municipal Corporation (BMC), Mumbai Metropolitan Regional Development Authority (MMRDA), and Maharashtra State Road Development Corporation (MSRDC). The other category encompasses the ones for which the state has either partnered with private companies or those that are entirely being implemented by private companies on build, operate, and transfer (BOT) basis.

Interestingly, the public sector projects like the Mumbai Urban Transport Project (MUTP), Mumbai Urban Infrastructure Project (MUIP), and the Station Area Traffic Improvement Scheme (SATIS) have been progressing well. This is when compared to some of the mega PPP (Public Private Partnership) projects like the Mumbai Metro, MTHL, and finally, the second international airport that is proposed to be set up near Navi Mumbai. There is probably a valid reason for this. According to a MSRDC official, the state-run projects consist of several components. "The MUTP, for instance, involves road works, introduction of new BEST buses as well as upgradation of trains. However, the mega projects like MTHL or the Mumbai Metro are standalone in nature where the progress will be visible only after the initial hiccups are over."

Now, here's probably the most disconcerting part of the whole thing. The flagship schemes forming the crux of the makeover for the city are way behind schedule making a mockery of their original deadlines. Nitin Gadkari, state BJP president and former PWD-MSRDC minister, credited with a speedy completion of the much-touted Mumbai-Pune Expressway in addition to as many as 55 flyovers in Mumbai over a four year period puts forth his point rather clearly.

He says that the Bandra-Worli Sea Link was proposed by the erstwhile Shiv Sena-BJP government in the mid-nineties (see inset). "Delays defeat the very purpose of mass transport projects in the sense that the number of commuters and passenger vehicles are only on the increase," says Mr Gadkari. Likewise, BJP veteran and former Railway Minister, Ram Naik points out that since 2005, Mumbai's trains have recorded an increase of around 3-5 lakh commuters. "What is the point if the railway projects don't meet their deadlines? A peak hour traffic projection for 2009 is made in 2005 for a project that is expected to be completed in 2009. Now, if that project gets delayed, obviously there will be pressure on the hour traffic load," he says.

Sibling rivalry to the fore

There were issues almost right after this. While REL asked for a 26% rate of return on its investment, the state stuck to a figure of 15%. The REL-led consortium finally came round and the contract was formally awarded in May 2006. A Special Purpose Vehicle (SPV) called Mumbai Metro One Private Limited (MMOPL) was formed between REL and MMRDA. It was projected then that the first metro train would run by December 2009.

Today, that projection looks almost unreal thanks to a variety of problems. Among these were objections raised by the residents of Versova and Ghatkopar, the issue of viability gap funding (VGF) to the extent of Rs 650 crore from an earlier level of Rs 1,250 crore and finally, the question of where land would be obtained for the parking. Not surprisingly, MMOPL maintains the deadline will be adhered to. As things stand, the state and MMOPL have sorted out the land issue and work on that commenced two months ago. The VGF problem, however, remains unresolved. A state bureaucrat points out that the VGF is not really related to the project. "If the VGF does not come from the centre, the MMRDA or the state will have to bear it," he adds.


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