Horrid Friday: To save the city, Mumbai must be made a state within Maharashtra

If Mumbai lies prostrate today under knee-deep water unable to move its people towards work or home, it is because the city fathers are simply unable to handle the occasional excess downpour sent down by the rain gods. The problem isn’t money, for there is plenty of it in Mumbai. Mumbai’s middle name is money and, if anything, fixing it water and sewerage problems will bring it more - not less - money. The problems is the city fathers are really step-fathers. The city’s governance structure convert potential fathers into stepfathers. [caption id=“attachment_2304236” align=“alignleft” width=“380”]  Mumbai rains. AFP[/caption] There are many reasons why the city’s managers fail to deliver consistently on basic city needs like infrastructure, law and order or traffic management. It is easy to link all bad outcomes to corruption, but the problems run deeper than that. Remember even corrupt politicians need to face the voter, so they should be capable of delivering something, sometime. But even this five-year threat does not work too well. First, there is a serious misalignment between elected representatives and real power to get things done. The office of Mumbai mayor is a bad joke. You might as well nominate a circus clown for the job, for the people at least get a few laughs. ‪Despite holding elections to the Brihanmumbai Municipal Corporation (BMC), the man who will ultimately run the show – the municipal commissioner – will be a state government appointee. As Ajit Ranade, Chief Economist of the Aditya Birla Group, wrote a few years back, “executive powers are not derived from the city council, but higher-ups in the state government.” What’s the point of a municipal election if the boss is going to be appointed by someone else? The elections are thus a farce. The reason why people still want to get elected is to hop onto the gravy train on corruption. Second, as I noted in an earlier article, Mumbai’s position as state capital of Maharashtra is a distraction. It brings all the politicians here – of the wrong kind. The politicians who rule Mumbai are those who derive their power from rural and non-metro Maharashtra. So, to them, Mumbai is merely the place where they can make money. They are interested in the city for the resources it can help them raise; they don’t want resources going back to the city. Even the current CM, Devendra Fadnavis, is a Nagpur man. He may be clean, but that does not make him the right man to nominate the one to run Mumbai. This is the second misalignment between power and responsibility that screws Mumbai. This is obvious from the unnecessary division of power and responsibility in the vital infrastructure area where the job is split between the BMC and the the state government. The Chief Minister directly runs urban development department, and many key infrastructure players – like the Mumbai Metropolitan Region Development Authority (MMRDA) - dance to the state government’s tune, not the city’s elected representatives. This is why no one takes responsibility for the pot-holed roads or garbage on the streets or the failure of drainage - the cause of much flooding in India’s urbs prima. Three, Mumbai’s politicians have forgotten why the city succeeded in the first place. As a sea port that is open to trading and global opportunities, it needs to have the lowest taxes, an openness to immigrants, good dispute settlement mechanisms, and a strong set of laws to facilitate trade and commerce. Mumbai’s fortunes took off only when the East India Company leased it out from the crown in the 17th century and made it a driver of trade and commerce. Surat lost out because Mumbai succeeded in becoming a city-state with its own commercial vision and an openness to immigration. But today, provincials from the rest of Maharashtra have taken over the politics of the city, and its resources have been debauched – look how the land mafia has made housing unaffordable to one and all. And look how politicians are trying to attack immigrants. Four, great cities need to have great social and physical infrastructure. Mumbai has some of these, but they have all been mortgaged to the all-powerful state government, which should really have minimal powers in the city. With all the wealth in Mumbai, very little of it actually gets invested in the city. City-states need governance, not governments. Five, Mumbai is both over-centralised and inadequately decentralised at the same time. Mumbai needs several municipalities – and not one. In terms of local governance – whether it is garbage or roads or sewerage or street lighting – Mumbai is too big to be governed centrally. It could thus be more easily workable when broken into, say, six or 10 smaller local governing units – each with some element of local taxation powers (for garbage, etc). There must also be a decent devolution of city tax revenues to local wards or micro municipalities. But more centralisation is also needed, because Mumbai is one economic unit. A decision to abolish octroi – for example – is critical to make Mumbai buzz again. This is a city-wide issue, but politicians with their eyes on graft will not allow it. The interests of the state clash with Mumbai’s innate interests. Property taxes, road taxes, and water taxes also need to be centralised to optimise their collection and devolution. So what is the way ahead? First and foremost, the city needs a directly elected mayor who is accountable to the people. Next, Mumbai, and its state-level benefactors need to think of the city as a golden goose that will drive change and generate wealth for the whole state (and country) only if it is left to do its own thing. The world over, growth is often driven by what can be called charter-cities – cities that are run to different rules than their hinterland. Cities like Dubai, Singapore, Hongkong, and even Shanghai. Mumbai can be a charter-city within Maharashtra - a mini-state within a state with its own administrative and governance rules and taxes. The basic idea of a charter-city is explained by Tim Harford in his book. Adapt. Lubeck, a small city on the northern coast of Germany, was converted into one by Henry the Lion after its conquest in 1158. From a sleepy, pirate-infested coast, he turned Lubeck into “the richest town in northern Europe.” How did he do it? Says Harford: “He established a different set of rules which would apply only in Lubeck. Would-be citizens were offered a charter of ‘most honourable civic rights’, feudal rulers were kicked out and replaced with a local council, an independent mint guaranteed sound money, excessive taxes were prohibited and a free-trade area was arranged from which Lubeck’s traders could reach cities like Munster, Magdeburg, Nuremberg, and even Vienna…Henry then put out the word across northern Europe that commercially-savvy immigrants would be welcomed with open arms.” The result: “Lubeck became the Hongkong or Shanghai of its day”. It prompted copycat city-states elsewhere, and the entire Baltic coast soon became a prosperous hub of self-governing city-states that brought prosperity to the hinterland. In India, we have not really tested this idea of the charter city – even though we are now talking about “smart cities” as though a city can become smart just by using the right technology or building architecture or urban planning. What needs to be smart is smart governance architecture. What we have now is dumb cities with self-negating governance structures. Mumbai is the dumbest city one can think of due to bad governance structure. We have smart people ruined by dumb systems of misaligned power and responsibility. (Editor’s Note: Parts of this article have been adapted and republished from an earlier article I wrote in 2012 after the BMC elections.)