Why Mumbai’s Elections Are Irrelevant To This City-State

February 17, 2012 2:08 pm

Why do the rich not vote in Mumbai?

There are several reasons why. And the most important one is that it is a waste of time in a city that is not going to be governed like a city. Till the governance structure is changed, no amount of voter awareness will make a difference.

The problem with Mumbai is that it is a city-state, a coastal business entrepot and a potential global dynamo like Singapore or Hong Kong. But it is unfortunately governed by a mass vote mentality that is entirely rural in character.

Mumbai is a jet engine hitched to a bullock-cart. It cannot fly with the current system of local government mixed with state politics.

Mumbai’s elite—who are India’s most global citizens and movers and shakers—certainly do not believe in this structure. This is why they do not vote. This elitism has been wrongly interpreted as anti-democratic, or that the powerful want the city to be run undemocratically, almost like a corporation.

This, of course, is an oversimplification. But it does capture the idea that a business city has to be run in a business-like fashion without losing out on democratic values.

Some well-meaning people offer a counter-argument: how can you change things if you do not come out and vote? They also believe that citizen groups and do-gooders need to get into politics to change things around.

However, this argument misses the point: the real issue is not garbage or pot-holed roads. It is about defining the governance structure the city needs first. Without this, we are putting the cart before the horse.

If you don’t know where you are headed, does it matter how fast you get there?

I don’t believe the problem is about who gets elected, but what they can do even if they do get elected. Will the Congress-NCP do any better than the Sena-BJP? Or will a clean set of apolitical local candidates do what full-time party politicians cannot? Some locally elected do-gooders can work hard to get the garbage cleaned, or pot-holes repaired, but that is not really the reason why the elite do not vote.

They know—though they haven’t articulated the idea clearly—that the city state has to be run by a different set of rules.

Let’s first understand what is wrong with the way Mumbai is run:

First, the structure is fundamentally not democratic even now. Even as a new set of corporators are being elected to the Brihanmumbai Municipal Corporation (BMC), one does not know what the purpose is. The man who will ultimately run the show—the municipal commissioner—will be a state government appointee. As Ajit Ranade, the chief economist of the Aditya Birla Group, wrote in the Mumbai Mirror recently, the municipal commissioner’s “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, 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.

Three, responsibility for city infrastructure is split—with one half resting with the BMC and the other half with the state government. The Chief Minister directly runs the 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.

Four, 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 seventeenth 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.

Five, city-states 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.

Six, 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 street lighting—Mumbai is too big to govern 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?

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, Hong Kong, and even Shanghai.

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 Hong Kong 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 have thought of creating special economic zones and export processing zones. The real problem with the SEZ and EPZ ideas is that they are mere trade zones—not liveable zones, with their own governance structures and social and physical infrastructure.

Mumbai’s future depends on its rulers agreeing to let it become what it once was: a city-state with its own commercial DNA.

When that happens, and the city opens its doors to talented people and ideas, Mumbaikar’s elite will come out to vote.

When Mumbai is forced to think Maharashtra, it will become like Maharashtra. It will be setting itself up for failure.

This story by R. Jagannathan was originally published on Firstpost.com.