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BW Businessworld

"I'm Cleaning Up Mumbai"

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Since november last year when he took charge as chief minister of Maharashtra, Prithviraj Chavan has been doing a delicate balancing act between cleaning up corruption in administration and keeping Mumbai and Maharashtra attractive to investors. Over a decade ago, the city was a premium centre for investment. Subsequently, growth slowed, as alternative centres pulled ahead. BW's recent City Competitiveness Report shows that Mumbai, Pune and Nashik have recouped losses and are surging ahead. Chavan talks to Gurbir Singh on how he is meeting the challenges of transportation, corruption and unaffordable housing.

Excerpts:

Mumbai's high score compared to other cities reflects industry and finance still have a high comfort level with the  financial capital. Where are the investments coming from and in which projects?
Our Industrial Policy in 2006 focused on attracting mega units, which in turn, we hoped, would give a push to ancillary and small industries. Mega units — those with a minimum of Rs 500 crore investment and employing 1,000 or more persons — got huge support. Agreements for 170 mega projects were signed. Though we have not given any special incentives to the financial sector, we have a natural advantage — Mumbai being the financial capital of the country,  the Reserve Bank and (stockmarket regulator) Sebi are headquartered here. The stock and commodity exchanges are here.

These have given Mumbai a huge momentum. Meanwhile, industry has left because it is too expensive to operate here, except for some of the older ones such as Godrej who have land.

Transport is a major bottle-neck. Mumbai is a narrow coastal strip so quality of life is governed by how quickly and comfortably people can travel. What are the key projects is this area?
We are posing four transport and one drinking water project to the Centre as key, national projects for central financial participation. These include the metro system and the Alibaug-Virar multi-nodal corridor — which will be 122 km when completed. This will be an eight-lane highway along which we will have manufacturing centres and entertainment hubs.

The third is a coastal, ring road as the most cost-effective alternative for rapid movement. And, finally, we have the trans-harbour link that will connect Sewri with the mainland at Uran. And to add to that there is the new airport at Navi Mumbai and the water transport project.

But water transportation has been tried and failed in the past.
The main flaw was that it was launched as a build-operate-transfer (BOT) project, with private parties being offered a real estate component in the jetty areas to pay for the project. The moment real estate came in, it got distorted. The new approach is that the five jetties that will ring Mumbai will be built by the city. And the BOT operator will provide the transport system — the catamarans. It is like airports are built by a central authority and airlines pay and operate out of these airports.

What is the demand for funds that you are pitching to the Centre for these key projects?
We intend to finance the water transport project ourselves. However, the four key projects will require Rs 50,000 crore and we are asking the Centre to contribute whatever it can. The project cost for the new airport is another Rs 14,000 crore. We are pitching for the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) schemes. Under JNNURM, these key projects can be designated as national projects as they go much beyond the city or the state.

For instance, the Navi Mumbai airport or the trans-harbour link are not just for the city, they are for the whole country. These projects should be considered for substantial funding — maybe for 75 per cent or 90 per cent — so that they can be implemented simultaneously. We are determined to complete all of them. However, without support, we will be constrained to do them one by one.

In an earlier discussion, you had mentioned that corporate executives come to Mumbai, but are forced to relocate to centres such as Hyderabad and Bangalore because of the high cost of real estate. Do you think expensive real estate is possibly the biggest drag on the city?
That is why the population of Mumbai has actually shrunk when other cities have grown by 20 per cent or more. This is not a healthy sign. There is already a surfeit of commercial space, but there is shortage of good, high-quality residences. Why can't we shift focus to building high-quality, high-income housing in close proximity of the city? Instead of building malls and office towers, we should build more homes. The Bandra-Kurla Complex is a new business district, but there are no residential complexes. Why can't we have more homes nearby, so that people can walk to work?

The builders' lobby in Mumbai has been alleging that projects have been deliberately held up, and that the government is sitting on files and holding back permissions. Isn't this worsening the situation?
They are partly correct. Environmental clearances, for instance, take an inordinately long time — over a year, in most cases. This is not good. The other bottleneck is that there are so many rules and clearances. I am trying to work out a system with new development control rules where the discretion of the individual authorities will be much less. Builders will have to pay a premium for concessions. Therefore, the ‘premium' they were paying under the table, will now come to the state. The state will benefit, and people can get concessions as a right, and in a transparent manner.

Initially, there was a slowdown when I was trying to understand the system. But now I do not think it will be a problem.

We are seeing the ‘Anna' effect. People want an end to corruption. You were brought in precisely to deal with the fallout of the Adarsh building scam. What other steps are in the pipeline to clean up the administration?
We face limitations when there is a fractured verdict. For instance, we have five political parties in the assembly, all vying for more space, all indulging in vote-bank politics, instead of considering what is good for the state. So it will take time to reach a consensus.

Again, because of RTI (right to information) activism, people are afraid to take decisions. Earlier, there was a fast-track mechanism: if you approached the right people, you got a fast-track decision. That is not happening now. We are not doing case-to-case or a file-to-file decisions. I am trying to speed it up, but also trying to put a system in place.

But don't mega projects need to be fast-tracked?
Mega projects of an industrial nature are always on the fast track. They are given the red carpet treatment. But mega building projects where land issues get distorted or there are issues of floor space index (FSI) or where a garden plot is being changed, there could be a transgression of rules.

The Adarsh scam did taint Maharashtra substantially. Things were collapsing like a pack of cards when I took charge. The first thing that had to be done was to stabilise the situation — which meant that this cowboy method of decision-making had to be stopped. That process slowed down things a bit. Now that we have achieved stability, we are looking at speeding things up in a rule-based manner.

In the past few years, Maharashtra and Mumbai have been slipping. Though we see Mumbai, Pune and other cities pulling up again, do you see complacency or poor administration as issues of concern?
In recent years, other cities have begun challenging Mumbai. Earlier, for industry and services, you had no other option; you had to come to Mumbai. Then alternatives came up — Hyderabad, Chennai, Bangalore, etc. — and people shifted. As our infrastructure choked, people left. But when we improved, they came back. As many as 40 projects are taking off in Maharashtra; eight have been signed, 32 are in the pipeline. GE is coming, Photon Motors (China) is setting shop up near Pune. Power plants are being set up in Vidarbha.

(This story was published in Businessworld Issue Dated 19-12-2011)