Wednesday, December 2, 2015

BOMBAY, DECLARE INDEPENDENCE

A report McKinsey presented to the Prime Minister on Bombay, the city where I lived in my youth and which I love and feel sad for, led to these thoughts on what it should do to revive itself, published in Business World of 17 November 2003.


Bombay dreams


Although I left Bombay almost 40 years ago, it is still my favourite city. As a student I lived on Owen Dunn Road and took the bus to Sydenham College opposite Victoria Terminus. Later, when I worked in the University, in the shadow of Rajabai Tower, I used to walk home, which was on Colaba Causeway. That has all changed now. Bombay has been renamed Mumbai, Victoria Terminus Chhhhhhatrapati Shivaji Terminus, Owen Dunn Road Bhutkurao Ghandupant Jhadphade Marg and Colaba Causeway Khushbujang Laghadmand Phandhiraja Marg. Still, the people of Bombay are reasonable, intelligent, practical, reliable and orderly. They make good friends, and better business partners. So when the McKinsey plan for Bombay was flashed, I had instinctive sympathy for it. I would like to see Bombay become a great city – to recover its glory. The cost of Rs 200,000,00,00,000 may seem astronomical to other Indians. But if the Prime Minister can dream of throwing away Rs 560,000,00,00,000 on linking up rivers, why cannot Ranjit Pandit dream of less than half that much for Bombay?
The difference is that the Prime Minister can make India cough up the obscene amount which neither Sushilkumar Shinde nor Bal Thackeray can. The Prime Minister holds the reins of coercive power. He can tax India more, or he can run up a debt India cannot afford, or he can simply print money and reduce the purchasing power of the money in our pockets. Sushilkumar Shinde can run up more state debt and make Maharashtra even more bankrupt; but that might get him perhaps Rs 2 billion. It cannot get him anywhere near Rs 2 trillion that McKinsey has dreamed up.
But, McKinsey will say, we are not talking of Rs 2 trillion. Only Rs 500 billion of it has to be raised by the government. And only Rs 150 billion of that has to be raised from the central budget; the rest can be borrowed. Certainly, if the Prime Minister can raise Rs 5.6 trillion for useless canals, he can raise half a trillion for Bombay.
But he will not. Just recall the fate of the plan Shishir Sankhe of McKinsey presented to the Prime Minister on September 6, 2001. It envisaged raising India’s growth rate to 10 per cent. And it did not require trillions. All it needed was decontrol, debottlenecking, administrative reform – all costless measures. But the Prime Minister said ‘Dhanyavaad’ and promptly buried the plan. Economic reasoning does not enter the PM’s head; he thinks and lives on a higher plane.
But, you might say, what is economic about McKinsey’s Bombay plan? It too involves the kind of profligacy the PM loves. Whenever he visits Srinagar or Ayzawl or Timbuktoo, he tells the astonished chief minister, “Here! Keep this Rs 10 billion. Pocket money.” So why can he not go to Bombay and give a little pocket money to Shinde?
He can, but he will not. He has his own ideas about whom to oblige and whom not to. The Kashmiris and the Nagas are perched precariously on sensitive borders, and Vajpayee tries to make them fall off on the right – Indian – side. If Bombay falls off the perch, it will only fall into the sea. What does the PM care?
So Bombay should stop dreaming of endless lines of zeros, and use its wonted practical sense. First, it should rename itself. The change of name to Mumbai has destroyed a few trillions’ worth of brand value; Bombay can regain it without spending a penny. 
Next, it should declare independence from Maharashtra, and thus divorce itself from the state’s bankruptcy, impecuniosity and miserliness. If it did that, it would be fiscally strong: it would be able to reduce taxes and borrow money cheaply.
Finally, it should revamp its tax system. It should have only three taxes. One should be a property tax, based on the average property value in an area. The other should be a poll tax – a flat-rate tax on every man, woman and child living in the city. The third should be a tax on vehicles, which should increase with the road space they occupy and go down with their speed.

If it gets that far, the rest is easy – it is only a matter of getting the best experts in the world to make roads, gardens, malls, marinas, mass housing and such material artifacts. With these, it can make itself the fun capital of India, and attract 200 million Indian tourists a year. They will gladly cough up Rs 2 trillion.