How the city can jumpstart its business leadership promise

Updated - February 28, 2016 10:59 am IST

Published - February 28, 2016 10:55 am IST

Mumbai has to deal with the pressures of Dharavi, increased vulnerability to natural and human threats, and the challenges of an ever-increasing population. As the city moves towards its ambition of matching Singapore or Hong Kong in making business easy, Neel Ratan says it is important to factor in the local context.

Mumbai, the city of dreams, has been a business hub for over six decades. The city contributes to over 6% of India’s gross domestic product and accounts for over 25% of the national industrial output.

With thousands migrating every day to the ever-expanding city, keeping its operations going is nothing short of a miracle. In spite of the strain on its limited resources and ageing infrastructure, Mumbai continues to outperform other established and upcoming cities in terms of economic and business numbers.

But with the way things are, will this elite standing hold for long?

India is ambitious, and the recent announcements made by the government along with a maturing startup ecosystem have brought the nation in the limelight of global businesses. The central government has announced and is branding and marketing attractive programmes such as Make in India, 100 Smart Cities, 500 AMRUT Cities, Digital India, Skill India, among others, which intend to encourage and incentivise any courageous city with spare space willing to commit to transformational changes. Thus, Mumbai has serious competition brewing and it ought to stand up and take notice. As a matter of fact, decision makers responsible for Mumbai’s operations could treat this as an opportunity to ride the change narrative. They could establish a firm lead for Mumbai as the go-to city for foreign and domestic investment and for attracting top global talent to deliver on the city’s promises.

To be fair, Mumbai is taking the right steps in trying to improve its business environment and quality of life by initiating reforms to improve its ‘Ease of Doing Business’ ranking. From introducing public commute measures such as the Metro to establishing a ‘city command and control centre’ aimed at improving safety and security, along with bringing efficiency in its routine operations, piecemeal efforts are being made. Unfortunately, adopting change for the entire expanded city, including its populous suburbs, seems elusive for now.

Over the years, Mumbai has turned into a large urban agglomeration with several planning and administrative departments involved in running the city. While the city’s administrative boundary has changed very little, its economic boundary has expanded substantially, necessitating suburbs such as Thane, Navi Mumbai, Kalyan, Vasai, etc to be considered as its integral parts. Since each area is governed by a separate entity, collaboration and integrated planning becomes challenging. The municipal corporations are traditionally not completely aligned with the other essential government bodies dealing with functions such as regional planning, roadways, trains, metro rail, etc.

Perhaps decision-making and integrated planning can be aided by establishing a unified command where a single democratically elected representative, such as a mayor, is in control. London and New York are two prime competitors of Mumbai that are examples of this style of functioning. While such a drastic reform for a city like Mumbai may take time, a conscious effort is required from the political class to acknowledge the challenge and begin creating a framework to move towards a unified control. It can begin with greater cohesion between the government entities within the economic boundaries of Mumbai, complementing each other to optimally allocate and manage resources. Mumbai can look at London’s Infrastructure Plan 2050 for leads.

And what of improving the economic and business environment?

India’s rank on World Bank’s Ease of Doing Business index has improved over the last one year; however, there is significant room for improvement. The fundamental requirements include: an efficient and competitive tax regime, a healthy labour market, trade policies that attract foreign and domestic investment, efficient judiciary and land acquisition mechanisms. Reforms are required at all three levels of governance, and again the state government and the urban local bodies such as the Municipal Corporation of Greater Mumbai and Thane Municipal Corporation can play a significant role in creating a congenial business environment. Such initiatives may include:

· * Easing the process of obtaining a ‘shops and establishment’ licence; this will impact small business owners who operate mom-and-pop stores across the city

· * Easing the process of obtaining construction permits. Already in progress, this initiative could impact real estate rates in the region with quicker permits while boosting infrastructure development

· * Easing the process of obtaining a licence for hotels and food joints; this will impact the hospitality sector in the city, which attracts a significant number of tourists and migrants

Mumbai can look up to cities such as Hong Kong Special Administrative Region and Singapore, which have significantly simplified their business processes and have developed single-window systems for obtaining permits and renewals of various local government licences.

How best can we further simplify the intersection between business and society?

There is little debate that in order for the city to grow and match global standards, private sector participation in all realms of public life is going to be of utmost importance in the light of ambitious urban development initiatives. Ease of business will catalyse urban development and fuel growth levels, which Mumbai is capable of achieving. To attract private sector skills and financing capabilities, the government will need to focus on creating a positive investment climate that blankets the private sector from risks to the extent possible.

An important area is frequent assessment of utilities tariffs and transportation user charges, and their revision whenever needed, to make public projects attractive for investors. This must be backed with strong political will and ancillary revenue sources, such as those that unlock or capture value (development consents, tax increment financing, land-based value capture, etc). Similarly, building on expertise of academia and non-governmental organisations will help in taking inclusive measures in a local context.

Continuous simplification of municipal processes through rigorous yet thoughtful breakdown of regulations will be a key driver for business development in other aspects of city life such as entertainment, permits and licences, urban taxes, pharma and so on.

Having said that, as the city travels towards its ambition of matching Singapore or Hong Kong in making business easy, it’s important to give cognisance to the local context. Mumbai is a peculiar case in that it has to deal with the pressures of Dharavi (the largest slum dwelling in the world), increased vulnerability to natural and human threats, and the challenges that accompany the fifth most populous urban agglomeration in the world.

As we refer to global standards while striving to simplify the intersection between business and government to impact the society, we must be careful about not creating loopholes that can give undue advantage to a handful. It is imperative that Mumbai preserves its unique character while navigating its journey to become a favoured destination for business; and for doing so it will be important to facilitate local innovation and home- grown solutions that meet the city’s unique challenges.

Such measures, if initiated by the local government in time, will help establish the foundation leveraging which, Mumbaikars can continue to top the charts with the help of the government, instead of despite it.

Neel Ratan is an executive director with PricewaterhouseCoopers, India. He leads the management consulting for India and has 23 years of experience in the design and implementation of e-governance and information technology projects. He has been advising the Government of India in the design and implementation of the National e-Governance Plan

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