The report Mumbai: An International Financial Centre is positive that the metro can compete with Singapore and London. A paper in Financing Cities describes how land is a central asset in urban infrastructure. And while an essay in Local Governance in India talks about people-centred development and the Mumbai experience, Voluntary City explores how community initiatives can restore the vitality of city life.

D. Murali

Can Mumbai compete with Singapore and London, Dubai and New York? High Powered Expert Committee of the Ministry of Finance says yes, in its report,

Mumbai: an International Financial Centre


). What can Mumbai, as an IFC (international financial centre) do? Many things. Such as, enabling a South African railway project to issue a rupee-denominate bond here in the primary market, and allowing global investors to `buy these bonds and trade them on the secondary market in Mumbai'.

Fund raising is only one of the eleven activities the report lists as IFS (international financial services) capabilities. Other services which Mumbai, as an IFC, should be able to offer, include: Asset management and global portfolio diversification, PWM or personal wealth management (`overseas Indians are estimated to hold financial wealth of over $500 billion and total wealth of over $1 trillion'), global transfer pricing (`an activity that GOI, like most governments, looks askance at'), and global M&A activity (`a considerable amount of back-office BPO/KPO and due diligence research work is already being outsourced to India').

There are hurdles, though, that Mumbai has to overcome before turning into an IFC. "Crumbling housing in dilapidated buildings pervading the city, poor road/rail mass transit and the absence of water-borne transport in what is essentially an island-city... poor quality of airports, and poor provision of power," are among the `glaring deficiencies' in infrastructure that the Committee takes note of. It is also necessary that all arms of government are `expatriate-friendly', and extend `a gentle, tolerant, open and welcoming culture'.

The Committee foresees that IFS exports could export IT service exports by 2025, if Mumbai transformed itself into an IFC. A big `if', considering where we stand currently. For, `India does not have a low market share in the global IFS market, it has a zero market share'.

Temptingly ambitious.

Land-value gains

Ideas on making Mumbai morph into `a world-class financial centre' aren't new. A strategic report from Bombay First (

) and McKinsey, titled `Vision Mumbai', has said that land sales could be one of the most important elements in the public sector's contribution to infrastructure financing.

George E. Peterson refers to the suggestion in one of the essays included in

Financing Cities

, a World Bank publication from Sage, co-edited with Patricia Clarke Annez. The book studies fiscal responsibility and urban infrastructure in Brazil, China, India, Poland and South Africa.

"Municipally owned urban land is not a static asset. It can be `created' by expanding the urban area into rural zones at the urban fringe," writes Peterson. A recent example is of the second draft master plan for Chennai, which talk about the creation of three satellite townships. Peterson narrates the example of how Shenzhen aggressively expanded its urban boundaries for 15 years, leasing land to raise revenues. "By now, the potential for further expansion or new land leasing has almost been exhausted... "

Among the case studies in the essay is one about MMRDA (the Mumbai Metropolitan Regional Development Authority). "In the early 1990s, the MMRDA developed from marshland a new 553-acre commercial centre called the Bandra-Kurla complex. Proceeds from the development mostly in the form of annual rent payments and development fees provided the MMRDA with a capital fund."

Last year, the Authority sold a few land parcels in the Complex for about Rs 2,300 crore, including a transaction at a whopping $7,330 per square metre.

The realisations, which are to finance infrastructure investment, are more than four times of what Mumbai Municipal Corporation earmarked for infrastructure in 2004-2005. In comparison to what the Complex yielded, the Central Government's funding for infrastructure in 63 major cities under the National Urban Renewal Mission in 2005-06 stood at Rs 5,500 crore.

Rajasthan is emulating the model. In 2006, it announced auction by Jaipur Development Authority of `pieces of land having a minimum auction price of Rs 507 crore'.

The sum vastly exceeds annual infrastructure investment by all levels of government in the capital region of Jaipur, points out Peterson. He cautions that it would be `wildly imprudent' to think that urban land values can continue to increase at the torrid pace that China, India, and parts of Latin America have experienced from 2002 to 2006. "Counting on further land-value gains as a major source of financing may also be unwise."

Wise counsel.

People-centred development

Mumbai, again, is the focus of an essay included in

Local Governance in India

, edited by Niraja Gopal Jayal, Amit Prakash and Pradeep K. Sharma (

). The essay titled `People-centred development and participatory urban governance: The Mumbai experience' by Marina R. Pinto says that PCD is all about development from below. Localities are the `arenas for testing, experimenting, and working out policies', and `new localism' is about fundamental political restructuring, he writes.

"Migration has constituted about 23 per cent of the population growth of Mumbai during the last decade." Sadly, though, "Mumbai houses half of its population in slums because of distorted urban development."

One of the successful PCD examples that Pinto narrates is of the Kanjur Marg experiment at slum resettlement, which pooled in the resources of SPARC (Society for Promotion of Area Resource Centre), MM (Mahila Milan), NSDF (National Slum Dwellers Federation), RSDF (Railways Slum Dwellers Federation), SRA (Slum Rehabilitation Authority), and HUDCO (Housing and Urban Development Corporation). Many schemes have failed too, especially because of not being people-centred, says Pinto.

Useful lessons for urban planners.

Underbelly of urban living

Just the time to visit

The Voluntary City

edited by David T. Beito, Peter Gordon and Alexanderr Tabarrok (


"In a society that is urbanising rapidly... old identities are being wiped clean and being replaced with an aching vacuum, the underlying rules of engagement are increasingly transactional... Alienation is the underbelly of urban living in our country," rues Ramesh Ramanathan in the `overview'.

The book explores how `large-scale, private and voluntary, community-based provision of social services, urban infrastructure and community governance' can restore the vitality of city life. And how local public goods can be provided `through the dynamism of freely competitive, market-based entrepreneurship'.

Ideas that should come as a shock to those familiar with economic literature on public goods and externalities, concedes the concluding chapter.

"The state is and always will be inefficient at doing things. Hence, its activities ought to be confined to those activities that must be done but that cannot be done by the people themselves," insists Paul Johnson's foreword. A thought that can be taken forward, you'd agree.

`City' reads for a busy week.

(This article was published in the Business Line print edition dated April 17, 2007)
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