Globalising at any cost By Darshini Mahadevia...

Globalising at any cost By Darshini Mahadevia Indian mega-cities are rushing to provide world-class infrastructure to welcome capital investment. But a close look at the budgets of Mumbai, Ahmedabad and Bangalore reveals that the investment in roads, flyovers and telecommunications for the few is at the cost of essential services like water, sanitation and public health for the many Cities are engines of growth. This commonly-used statement has become a slogan for urban policies in recent times. Added to the slogan is the fact that there is a need to develop a brand image for our cities. Terms like 'brand image' and 'USP' of cities have become common. It is believed that cities attract investment, but our cities do not have adequate infrastructures to invite investment. Cities have entered into competition with each other for investment, tourism, public funds and events such as the Olympic Games. They also compete in assembling a skilled and educated labour force, efficient modern infrastructure, a responsive system of local governance, flexible land and property markets, high environmental standards and a high quality of life. Such competition calls for improvements in transport infrastructure, clean air, good housing (no slums) and so on. All is fair in love and war and competition. But how exactly are our mega-cities doing in terms of urban development? Mumbai, the largest mega-city of India, is in an abysmal state. More than half her population is forced to live in slums and shanties. If dilapidated chawls (one-room tenements) are included, about 75% of the population is living in dilapidated housing. The public transport system, particularly the local trains, is over-crowded. Despite the construction of some 50 flyovers, the roads remain as clogged as ever, resulting in high levels of atmospheric pollution. People spend long hours commuting. But the city wants to become world-class; Shanghai is its model. For this, the Government of Maharashtra (GOM) appointed a taskforce and accepted its recommendations. An officer for special projects has been appointed to implement projects. The early projects are mainly local beautification projects. Bombay First (modelled on London First), a group set up by corporate houses, came up with a 'Vision 2010' document, which has been incorporated almost completely by the GOM taskforce in its 'Vision 2013' document. Bombay First is modelled on the Bangalore Agenda Task Force (BATF), wherein 'respected citizens' are members. Vision 2013 states that in addition to the current level of investment in the city, an additional Rs 20,000 crore per annum are required to construct infrastructure for a world-class city. Rs 1,500 crore per annum will be brought in by the government and the rest is expected to come from the private sector. The State investment is likely to be made by the Mumbai Municipal Corporation (BMC), with support from the GOM. Let's see how feasible this is. The total size of the 2004-05 proposed budget of the BMC is Rs 6,756 crore (of which Rs 1,721 crore is capital investment). This is evidently not sufficient. Of the total proposed budget, 48% is to go towards either wages or debt servicing. Debt servicing is the repayment of borrowed capital along with interest on the borrowing. Of the total revenue expenditure (which excludes investment in capital projects), 64% is to go for wages and debt servicing. There is unlikely to be a surplus on the revenue side to be transferred to the capital account. Then where would the additional Rs 1,500 crore come from? It would probably be borrowed by the BMC. Debt servicing to total revenue income at the moment is just 10%. Another proposal is to shift the slums from Dharavi to the salt-pan lands in the north. With the Bandra-Kurla complex becoming the new business district, the adjacent lands of Dharavi are in demand for the development of world class real estate projects. Besides thousands of residents, Dharavi has many local economic activities that would be displaced. But the panoramic view from the glass towers in the business district would improve. Unlike Delhi, where there has been forced eviction of slums and local economic activities, Mumbai is proceeding with gradual eviction. What does debt financing mean for city budgets? We can draw lessons from other metropolitan cities, say Bangalore and Ahmedabad, both of which opted to raise capital funds from the bond market and borrowings from financial institutions. Let's take Ahmedabad first. Nothing much in terms of physical development has happened in the city in the last few years besides an underpass below the railway line passing through the city, a flyover, and road-widening with municipal finances. Still, the budget of the Ahmedabad Municipal Corporation (AMC) is under stress. This is partly because of poor financial planning and partly because of debt financing. In 1996, AMC chalked out a long-term capital investment plan, based on revenue projections and financial viability...