Feb. 18 (Bloomberg) -- After growing weary of five-hour commutes to work in Mumbai, Raghavendra Deshpande took a 20 percent pay cut for a job nearer home. The city’s new metro rail isn’t going to change his mind.
The metro, Mumbai’s first, is due to start ferrying passengers by the end of March after repeated delays. The 12-kilometer (7.5-mile) line, built by a group led by billionaire Anil Ambani’s Reliance Infrastructure Ltd., aims to transport 600,000 people in a city of about 19 million.
“This is a trade-off I made because you don’t feel like a human being during the commute,” said 42-year-old Deshpande, who three years ago used to take taxicabs or trains to cover 30 kilometers one way. “We were already late in deciding to build the metro and the delay is adding to the misery.”
A decade after Prime Minister Manmohan Singh vowed to make Mumbai another Shanghai, creaky infrastructure, real estate that is among the most expensive in the world and urban squalor remain hallmarks of the nation’s financial capital, where more than 3,500 people die annually in accidents involving state-run commuter trains. A newly built monorail and flyovers crisscross the island city, almost touching crumbling buildings and defunct mills that have lingered on from British colonial days.
Mumbai’s stasis is a symbol of the paralysis that is hobbling India’s $1.8 trillion economy as a string of investment projects remain stalled by delays in land acquisition, environmental clearances and graft allegations. Singh’s Congress party-led coalition will face elections by May as voters grapple with an economy growing at a pace that’s close to a decade-low and the worst consumer inflation in Asia.
The Mumbai metropolitan region needs $60 billion of investment in public transportation over the next 20 years and the current plan falls short of needs, according to estimates by Shirish Sankhe, Mumbai-based director at McKinsey & Co. In a 2010 study, the consultant said India must spend $2.2 trillion by 2030 on urban transportation, housing and office space to boost infrastructure ranked below that of Guatemala and Namibia by the World Economic Forum.
Failure to boost infrastructure spending is holding back India’s growth while creating bottlenecks that fan inflation, said D.K. Joshi, an economist at Crisil Ltd., a local unit of Standard & Poor’s.
“In some ways, the pace of infrastructure development is synonymous with the slow economic growth,” Mumbai-based Joshi said. “Considering the importance of the city as a financial center, a smooth transport system is a necessity and not a luxury.”
Mumbai’s slow pace of development contrasts with Shanghai, which today boasts of the world’s longest subway system covering about 560 kilometers, the No. 1 container port and two world class airports.
China’s resolve to turn Shanghai into a global economic, financial and shipping hub by 2020 has led to an office building boom to accommodate companies such as Citigroup Inc. and Nike Inc. Lujiazui, on the east side of the Huangpu river in Pudong and across from the Bund historical waterfront area, has evolved into the city’s main financial district from rice paddies three decades ago.
India’s per capita spending on public works in cities is just 15 percent of China’s and unless that is increased eightfold, it may jeopardize India’s growth prospects, according to McKinsey.
Knight Frank LLP last year ranked Mumbai the 16th most expensive city for residential space, placed just behind Tokyo and Los Angeles. Gleaming new glass and steel constructions where monthly rent costs as much as $6,500 jostle for space with the ubiquitous shanties and slums where an eight-by-eight foot shack with a tin roof is still a luxury for millions.
An offshoot of the first train line started by the British-owned Great Indian Peninsula Railway in 1853 serves the teeming suburbs that have extended to Vashi on the mainland, where Deshpande lives and works, and far beyond.
Passenger traffic has surged sixfold since inception, while capacity has been augmented only 2.3 times, with each train on an average carrying 4,500 passengers versus the 1,750 capacity, according to Municipal Corporation of Greater Mumbai. Many of them hang on to the overstuffed trains from open exits and dart across busy tracks at stations during peak hours, resulting in 3,700 people deaths every year and an equal number getting maimed, according to data obtained by Samir Zhaveri, a rail safety activist, through a Right To Information filing.
The Mumbai Metropolitan Region Development Authority plans to spend 300 billion rupees ($4.8 billion) on transportation in the next five years, a 50 percent increase in allocation from the previous half-decade, according to Commissioner Urvinder Pal Singh Madan.
“Our objective is to help citizens get better facilities with the resources we have,” Madan said in a phone interview on Feb. 10. “There’s little land available and implementing big projects in a densely populated city is a challenge unique to Mumbai.”
The metro, whose construction started in 2007, connects the northwestern suburb of Versova to Ghatkopar in the east and was originally scheduled to commence service at the end of 2011. Reliance Infrastructure owns a 69 percent stake in the venture, while MMRDA holds 26 percent. The elevated line with 12 stations is designed to reduce a 90-minute commute across the breadth of the city to 20 minutes.
The city would need nine to 10 such corridors of metro and about 750 billion rupees in investment for seamless travel, Sankhe said.
Lalit Jalan, chief executive officer of Reliance Infrastructure and spokesman Yuvraj Mehta declined to comment on the project and the delay in execution.
Just like the delayed project, a plan to build a second international airport in Navi Mumbai on the mainland has struggled to take off pending land approvals. The first phase is now due to be completed by the end of 2018, about four years behind schedule, to help cater to 10 million passengers a year initially and up to 60 million by 2030. Work may start by the end of 2014, Sanjay Bhatia, vice chairman and managing director of City and Industrial Development Corp. of Maharashtra Ltd., said in a telephone interview on Feb. 7.
A monorail opened in Mumbai earlier this month. On completion of its second phase, it may ferry at least 150,000 passengers a day -- a fraction of the city’s commuter population -- over a 20-kilometer stretch, according to the MMRDA’s website.
“It is essentially a feeder line that is best suited to congested areas with right of way issues and sharp turns,” said Rajeev Jyoti, who heads the rail business at Larsen & Toubro Ltd., India’s biggest engineering firm that is building the nation’s first monorail. “Passengers shouldn’t have to lose a shirt button or two on their way to work.”
None of the new infrastructure can still match the British-era train system as there’s no coordination between the monorail, metro and the new airport projects, according to Sushi Shyamal, a partner at Ernst & Young in Mumbai.
The city administration hasn’t yet fully tapped the potential of waterways to connect sea-facing neighborhoods and decongest roads and trains, he said. A hovercraft service run by a venture partnering Mahindra & Mahindra Ltd. in the 1990s was forced to shut down.
“We talk of making Mumbai a Shanghai but the cities aren’t even close to being comparable,” Shyamal said. “We are already behind. It is just poor planning.”