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.
