New Delhi, June 10: To give India a competitive edge and improve its economic infrastructure, Mumbai should be turned into a global financial hub with reforms and pragmatic legislations, says an expert panel headed by a noted economist.

“India is at a turning point in its financial sector,” says the committee headed by former chief economist of the International Monetary Fund (IMF) Raghuram G. Rajan, which discussed its draft report on reforms with the Planning Commission top brass on Tuesday.

“Indeed, the road to making Mumbai an international financial centre runs through every village and slum in India," says the committee, which includes ICICI Bank chief K.V. Kamath and State Bank of India chairman O.P. Bhatt.

The committee members feel that the Indian government should do the needful to enable Mumbai, the epicentre of the fast-growing Indian economy, to be fully equipped to meet the global challenges.

"In the process of gaining the productivity, innovativeness to serve the masses, the financial sector will get the unique edge and scale to be competitive internationally,” the committee's draft report says, giving its rationale for Mumbai's elevation.

The Planning Commission had set-up the expert committee on financial reforms in August 2007. Its draft report was discussed here on Tuesday and the final report is expected to be presented to Prime Minister Manmohan Singh by September.

The report says Mumbai is home to two of the country's largest stock markets -the Bombay Stock Exchange and the National Stock Exchange - as also the central bank and the markets regulator the Securities and Exchange Board of India.

Experts say Mumbai's location is eminently suitable for daylong trading across time zones, with a time difference of three-and-a-half hours with Tokyo, four-and-a-half hours with London and nine-and-a half hours with to New York.

As a hub of financial flows, Mumbai scores on high equity trading volumes and good presence of global banking and financial services firms, but requires upgradation of existing infrastructure, the expert panel says.

“But as we argue in this report, there is no easy path for the government,” it says.

“The old system of attempting to mandate outcomes from the centre does not work any more even if it might have when our private sector institutions were less well developed and the Indian economy was more closed.”

EMAIL THIS NEWS COMMENTS POSTED BY Nikhiel, Bombay on September 3, 2008, 12:55 pm
Bombay needs a new masterplan.

The statistics for Bombay are appauling at the least. Here are few of them:

-55% of the city's population live in slums.
-The cost of real estate is ridiculous given the fact that 300 MM people in India live below the poverty line.
-The quality and capacity of the infrastructure is far from optimal.
-Though certain forms of public transportation work reasonably efficiently, they are far from optimal - traveling on Bombay's suburban train system is a super-human experience - sweat, heat, no place to stand or sit, people hanging out of trains and sitting on top of them.
-80% of Bombay's sewage flows into the ocean untreated - that's roughly 1800 million litres of raw and untreated sewage PER DAY. It brings to mind whether buy an expensive ocean facing apartment in Bombay is actually worth it? Also, it brings to mind whether one should eat fish caught of the coast of Bombay?
-Large parts of Bombay have no sidewalks so people end up walking on the roads.
-Traffic discipline is non-existent. Obtaining a driver's license is a matter of paying a bribe and hence there is no controlled process of learning for new drivers.
-Flooding in Bombay is almost a yearly event.

Bombay is unliveable. Unless one is wealthy enough to pay atleast Rs.10,000 to 15,000 per square foot for an apartment, Bombay is a very tough place to live. The rich in Bombay have seceeded from India - they do not use the public transportation (buses, suburban trains), educate their children in expensive private schools (do not use public schools), and are not dependent on the government and municipal authorities for most things with a few exceptions such as using the police and roads. The rich living in their bubbles do not have to deal with getting clean water on a daily basis, commuting to work like a can of sardines on the suburban trains, having to deal with the floods since they live in expensive homes that insulated from the flooding.

The middle class and the poor who comprise of the majority of Bombay's population are the ones that bear the brunt for the lack of proper infrastructure, the over capacity of the suburban trains, the almost ridiculous prices of real estate, the lack of a proper mechanism to deal with flooding, the lack of property sanitation such sewage and gargbage disposal systems, the lack of proper traffic management systems, etc.

The wealthly are thriving, but one only has to view the way the middle class and the poor live to realize that Bombay is crumbling - the right way to describe Bombay is "decay". Bombay is on a decline - it is decaying. It is probably amongst the worst places to live in India if one is in the middle class or poor.

How do we fix Bombay? For starters, FIX THE MASTERPLAN.

SOLUTION - Go vertical.
-Manageable blocks of three to five acres in Bombay have to grouped together and rebuilt.
-In order to incentivise the redevelopment, the FSIs must increase. It is preposterous that Bombay has an FSI of 1.0 or 1.33 given that the population of the city is closing on 20 MM and will be the second most populous city in the world by 2020.
-In order to avoid complications of utilizing the FSI for any particular 3 or 5 acre block, the entire block must be redeveloped at once in order to utilize its FSI.
-To manage the redevelopment properly, these blocks must have no height limits (must go vertical) and must have large set-backs. These set-backs will enabe the City of Bombay to lay urgently needed new and large sewage lines, new public transportation lines such as metros, sidewalks, etc.
-The 3 to 5 acre blocks, with the additional FSI must have part of the their total development potential allocated to public amenities such as either low-income housing, libraries, multi-level parking facilities, schools, markets, sewage treatment plants, sidewalks, etc.
-In order to deal with flooding, all new development in low-lying areas must be built atleast 1 to 2 meters above sea level. Over time, all roads, public utilties will also be built at 1 or 2 meters above sea level which deal Bombay's flooding problems.
-The proposed solution substantially increases density in Bombay but does so vertically. It increases open spaces by increased set-backs enabling Bombay to deal with its sewage, public transporation and infrastructure problems. Bombay will essentially become a lot like Manhattan where most people, irrespective of income level, use its higly dense public transportation to commute while having almost every possible public amenity in a 3-10 minute horizontal or vertical distance.

Please note that Bangalore and Chennai have new masterplans. The free FSI (without TDR, etc) are in the range of 2.5 to 3.75 depending upon the size of the road that the property abuts. Given its existing population and taking into consideration its future population, FSIs in Bombay must be in the 4.0 to 6.0 range depending on whether the 3 to 5 acre blocks abut large roads, or are a part of a financial district or residential district, etc.

Maybe the proposed solution above is not the most optimal, but one must keep in mind that irrespective of whether one agrees with the proposed solution above, Bombay needs a solution to fix its problems with infrastructure, sewage, cost of real estate, low-income housing, flooding and urban sprawl. If not, Bombay risks DECAYING into a very expesnive, low-density, sprawling city like Mexico city or Los Angeles. As it is, it takes 2 hours to get from Mulund to Nariman point or from Bandra to Navi Mumbai, just image what will happen to Bombay in 2020. People will have to commute large distances in narrow roads in over-capacity disfunctional public transporation while increasing pollution, traffic, etc. Quality of life will be miserable - far worse than what it is now.

Fix Bombay - let's start the discussion now!!