The Hindu Business Line : Creating cities within metros

A modified system of City of London-type municipal administration may be the answer for India's metros. Divided into small neighbourhoods, each with its own civic authority looking after the water needs, the poor and the commercial interests, this system will introduce competition to attract more and better employers, who foot the bill for maintaining their part of the city, where citizens pay no taxes. P. V. Indiresan expounds on this model.

IN THE previous article, I argued that while floods are natural disasters that cannot be prevented, their harmful effects (both during and after) can be checked. I postulated two preventives: One, quality housing; and, two, minimal (ideally, no) commuting to work. The need for houses of quality is self-evident but the harm done by commuting is not equally obvious. Long hours of commuting increase the risk of getting caught in floods, and of getting contaminated even if both the workplace and the dwelling are safe. Long-distance commuting requires more roads, and roads obstruct the natural flow of water and increase flooding. A well-protected path between workplace and employee dwellings will remove these risks if the length of the path is short.

Employees drift farther and farther away from place of work because they cannot afford the price of housing closer to the workplace. When the financial price of travelling every day is less than the rent differential, they resort to commuting. All over the world, the cost of commuting is heavily subsidised. That adds an incentive to commute from long distances. Unfortunately, there are several hidden costs of commuting that are overlooked both by the government and by the commuters themselves. The most obvious one is time wasted in commuting. Apart from the time lost, increased absence from home hurts the family's social life. Commuting is stressful too; hence, it imposes psychological costs. In addition, commuting wastes energy, pollutes and destroys neighbourliness if for no other reason because neighbours have little time or scope to get to know one another.

All these costs — financial, social, psychological, environmental and cultural — are borne by commuters. For various reasons, they do not complain; they are easily appeased so long as fares do not increase much. So long as there is tangible financial subsidy, they accept meekly the other, even more harmful costs.

Ostensibly, the financial subsidy goes to the commuter. In truth, the employer is the real beneficiary. Employers concentrate in such places as Nariman Point in Mumbai because that is profitable for business. However, the fact that Nariman Point is expensive for the employee in several ways does not enter into the employers' profit and loss calculations. Employers crowd into Nariman Point only because they have no legal compulsion to compensate the financial and the other less tangible costs borne by employees; if they had to do so, or if they had felt a moral obligation to do so, they would have gone elsewhere.

Hence, the crux of the problem lies in the hidden profits employers make by not compensating for the daily travails of their employees, the suffering those employees would have avoided if their homes had been close by. The true value of time, social, psychological, environmental and cultural costs that Mumbaikars bear is difficult to measure. On the other hand, we can make an estimate of the direct financial costs. We can argue that it would be just and fair to ask employers to bear the financial cost at least of providing transport for commuters. Why should the general taxpayer pay to boost the hidden profits of employers who have little or no concern for the welfare of their own employees?

Small towns can make do with cycle tracks but large cities need Metros, nothing less. A back-of-the-envelope calculation indicates that the Metro costs Rs 30,000 per commuter for each kilometre commuted. It will not be unfair to require employers to meet at least that cost — the cost that would have been unnecessary if only their business had been located in a smaller city, say, Solapur. If employers want to enjoy the benefits of locating in Nariman Point, why should they not pay at least the direct financial costs?

It may be stipulated that this amount should be kept in a special fund for improving mass transport facilities in any city of the employers' choice. That will be an inducement for employers to move away from Mumbai to smaller cities where commuting distances (and capital costs too) will be much lower. If and when they do so, they can take back virtually all of their deposits.

Let us take a closer look at this proposal. One, as the imposition is on employers only, there will be no opposition from ordinary citizens. Two, the collection is a one-time affair and, hence, it is simple to calculate and to collect. Three, the deposit offers substantial fresh capital for the government to improve mass transport. Four, there is an in-built inducement for employers to spread out to smaller cities rather than concentrate in overcrowded metros such as Mumbai and Bangalore.

Employers are forever complaining about the difficulty they have of making ends meet. Politicians are forever shedding tears about the way their hearts are wrenched by the travails of the ordinary citizen. We should take both these sentiments with a pinch, nay bucketful, of salt. Politicians are not interested in citizen's welfare; they are interested only in their votes. Employers may complain about their helplessness but they are experts in bribing politicians to do their bidding. Politicians need black money, and employers have it. The two make a perfect match.

Both politicians and employers could have been disciplined if the citizens, particularly the middle-class, were above board. In my previous article, I had explained why Rent Control has destroyed housing for the poor even as exemption of Rent Control on expensive apartments has led to an abundant supply of housing for the rich.

Will the middle-class Mumbai buy this argument? Unlikely. There are so many middle-class professionals who are living for decades paying a pittance as rent. They have no sympathy for the poor owner (who could be a helpless widow) who has been denied a fair rent. They have no sympathy either for the millions of poor who are suffering but they do complain about the cost of maintaining a house which is not their own.

The trouble with our polity is that our well-to-do — whether they are politicians, employers or middle class professionals — have become insensitive to the responsibilities of good citizenship. They have become selfish; they have no empathy for the poor. They extract from the economy more than what the economy can bear. The sufferings they bear from natural calamities are one punishment for their lapse from good conduct.

It has been said that you can fool some people for all time. Our politicians have demonstrated it as true in the case of Indian democracy. For five decades they have sold empty promises; they have made donkeys of citizens by dangling a carrot in front of them. Our citizens vote for the same politicians, same families of politicians again and again fully knowing that none of them will keep to his promises.

Evidence is staring in the face that the present system of democracy is not working. We need a different system: I suggest the municipal administration the City of London as an alternative model. (The City of London is not the entire metropolis of London but its commercial one square mile only.) In the City, both citizens and employers have votes, but only employers foot the bill of maintaining the city; citizens pay no taxes. The modified system gives employers a sense of ownership; it becomes a matter of pride to install the best possible facilities and maintain them well.

Consider dividing a city into small, intimate neighbourhoods, each with its own civic authority with limited responsibilities and authority. The neighbourhood authority has to fulfil three responsibilities: One, every drop of water that leaves the neighbourhood should be made chemically and biologically safe. (The City of London does not undertake this task, but in India, cleaning waste water locally is important. The technology is known; costs are a small fraction of building prices.)

Second, the neighbourhood authority will take care of the poor by reserving ten per cent of the total residential space for the bottom quarter of the population and another 15 per cent for the second quarter. That much space is more than adequate for the poor. Once this provision is implemented, the poor will have no need to encroach on others' land and build slums.

Third, the neighbourhood will spare about ten per cent of built-up space for commercial purposes so that there is no need for commercial institutions too to encroach on public space.

Apart from these three responsibilities, the neighbourhood civic authority will look after cleanliness and possibly local security. That about sums up all that it has to do to minimise disasters. The entire cost is charged to the employers and not borne by the residents. That is why employers too are given votes in proportion to the numbers they employ.

The basic idea has worked in the City of London for centuries; it can work here too. It will not cost anything extra either for the government or for the citizens; both will actually save a lot.

The system will introduce competition among neighbourhoods to attract more and better employers. It is doable, but it has one drawback: Politicians will have less chances of making money.

(Concluded)

This is 156th in the Vision 2020 series. The previous article was published on August 8.

(The author is a former Director of IIT Madras. Response may be sent to: indresan@vsnl.com)

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