The Hindu Business Line : The other side of Mumbai

High taxation is stifling Mumbai development. While Hyderabad and Bangalore are growing at 10 to 12 per cent annually, Mumbai is inching forward at a snail's pace of 2 per cent.

Mumbai , June 4

THE Finance Minister, Mr P. Chidambaram, may have flown down to Mumbai soon after settling down in Delhi to meet the top honchos of India Inc to outline the new Government's economic stance.

But, of late, many of the visiting dignitaries and Heads of States have been skipping India's financial capital from their itineraries during their visit to the country.

For, while one side of Mumbai is the beckoning, seducing and brightly attractive part that figures prominently in Government's tourism brochures, there is the other part of the city — the decaying part.

Take the case of Korea Trade Centre (KORTA), a Korean Government run trade promotional agency.

It will be opening its third office in Mumbai on June 10, having chosen to operate from Delhi and Chennai first.

"I cannot pinpoint the precise reason (for not choosing Mumbai first). But I feel that that real estate prices could be one of the reasons. The real estate prices here (in the prime business districts) is two times that in Korea," says Dr Dong-il Chung, Consul General, Consulate General of Republic of Korea.

Indeed, high taxation is stifling Mumbai development. While Hyderabad and Bangalore, which have acquired the sobriquet of two leading cyber cities in the country, are growing at 10 to 12 per cent annually, Mumbai is inching forward at a snail's pace of 2 per cent. "The 14 per cent sales tax on telecom products in Maharashtra is mind-boggling. Then you have the Octroi of 5.5 per cent and uncontrolled property tax, which could be as high as 82 per cent to 85 per cent. How can you compete internationally with such high rates?" asks Mr Nanik Rupani, president of Indian Merchants Chamber. This is for the industries, but what about the residents?

If KORTA finds the real estate prices unattractive in Mumbai, one can imagine the plight of residents in the city. Indeed, rates of property taxes in Mumbai are one of the highest in the world — the city has been divided into four zones for the purpose of property tax assessment.

"Unable to pay soaring taxes, developers are keeping thousands of their ready properties vacant, rather then rent them out. This situation is hampering development, employment and income for the city. Approximately a rent income of Rs 1 lakh attracts taxes of over Rs 1.10 lakh," points out a leading property developer in the city.

Not only the high real estate values, Mumbai has also the dark distinction of being the fifth highest polluted city in the world.

More than 52 per cent of the total air pollution in Mumbai is caused by the swirl of vehicular traffic on the city streets — the total incoming and outgoing traffic is estimated at 1.87 lakhs vehicles per day, with a 7 per cent growth every year.

Out of the four major corridors, the Sion-Panvel carries the heaviest load of 63,207 vehicles per day, followed by the Western Express Highway with 48,369 vehicles.

Dr Neela Rane, member of the Smoke Affected Residents Forum, points out that the post-mortem reports of any citizen of Mumbai show that the colour of the lungs is dark black instead of pink.

Overloading of trucks and busses result in higher smoke emission that gnaws at the lungs of the 16.5 million people that reside in the city.

Thus, both the State as well as the Central Governments should take steps to stem this decay. For otherwise, India's financial capital will continue to have a dimming signboard.