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India Edition
Maximum city.
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Bloomberg
by Menaka Doshi

Welcome to India Edition, I’m Menaka Doshi. Join me each week for a ringside view of the billionaires, businesses and policy decisions behind India’s rise as an emerging economic powerhouse.

You can subscribe here, and share feedback with me here.

This week: Mumbai gets a makeover, Hyderabad gets a mega pharma investment and Bihar gets freebies. 

The Bloomberg Forum for Investment Management comes to Mumbai on October 16 where the SEBI chairman and top money managers will talk about Financialization 2.0: Navigating Growth, Governance & Innovation.

Next week this newsletter will reach you on Friday (not Thursday) with top views from the forum and inside stories on India’s capital markets.

What Makes a Great City?

Singapore, where I was visiting last week, is a beautiful, well-ordered city with efficient public transport, though it seems low on energy and hustle.

Mumbai, where I live, has for decades had only energy and hustle. India’s “maximum city,” as author Suketu Mehta once described it, has survived on minimum infrastructure.

As a result, close to half the population in India’s commercial capital lives in slums. Millions risk life and limb on daily commutes. Only the rich seem to escape the drudgery (though even they aren’t spared wasted hours in traffic).

But Mumbai is trying to change. Maybe not in the most planned, cost-efficient and speedy way. Yet, a transport infrastructure and redevelopment boom in the metropolitan area holds out the promise of a more equitable existence.

After years of disembowelment the island city now has an underground metro rail that will cut the north-south commute from hours to minutes. A new scenic coastal road that opened earlier this year will soon have gardens and public spaces running across 130 hectares. The country’s longest bridge, inaugurated last year, has cut travel time to the satellite city of Navi Mumbai on the mainland by over half. Not far is a new suburban airport, built by the Adani Group, that will start operations in December. 

There’s another dozen metro lines, east-west tunnel roads and a northward extension of the coastal road in the making. All put together this expansion will cost the city well over the $30 billion I’d computed last year and will easily take until the end of the decade to complete.

A great city must have robust public transport that enables hassle-free commutes, opens public spaces and liberates residents to undertake whatever economic activity they want to, Ashwini Bhide, the bureaucrat who’s led the coastal road and island city metro line projects, said to me.

An Aqua Line metro station awaiting inauguration this week. Photo: Menaka Doshi/Bloomberg

That’s easier said than done in a city with haphazard growth and raging conflicts of interest.

For example, the metro project successfully tunneled under congested neighborhoods and dilapidated buildings, only to run into last-mile connectivity concerns. Bus, cab and auto services, all managed by different authorities and shielded by unions, will only reroute on evidence of high ridership. And riders are reluctant to hop on to the metro without assurance of a ride home from the station.

It’s a chicken-and-egg situation, admits Bhide, who now serves as additional chief secretary to the Maharashtra chief minister. Yet, she is confident that over time “the city will start growing around the metro line.”

Already, under a transit-oriented development scheme, authorities have approved close to 40 gentrification projects along the metro line, with planned connectivity to the stations in exchange for higher floor space, she said. Meanwhile, a new app finally allows commuters to buy rides across 11 public transport operators and, 17 years after it was first conceptualized, a unified metropolitan transport authority is being instituted to improve transport coordination across agencies.

This build-first-integrate-later approach has angered many, especially given the exorbitant costs and endemic delays. Continuous construction also clouds rate of return assessments.

Cyrus Guzder, a prominent city business leader and environmental activist, points to insufficient metro interconnections, crowded exit points for tunnels, the lack of mass transit access to the new airport, a high-rise boom that strains city services and poor development of the eastern seaboard as a lack of holistic planning. 

“All this new infrastructure gives the city an appearance of more efficiency and functionality, but it hasn’t eased living except from one point to another, not from origin to destination,” he said in phone and email conversations. 

Even the green spaces adjoining the coastal road were won by citizens in a court case against plans for commercial and residential development. City authorities reclaimed more land than required with the aim to monetize it and now it’s not clear how they’ll foot the bill, Guzder said. He fears much of the infrastructure expenditure is driven by political compulsions to cream off profits, resulting in roads and affordable housing of unspeakably poor quality.

For others like Gulam Zia this infrastructure boom still has a long way to go before it calls for celebration. Mumbai commands the highest real estate prices in the country, going up to an average 100,000 rupees per square foot in prime areas.

Zia, senior executive director at property consultant Knight Frank India, describes the city’s property prices as “artificially inflated” and blames them on lagging infrastructure and poor connectivity. People often find Dubai cheaper than Mumbai, which wouldn’t be the case if all this infrastructure had come up 30 years ago, he said to me. “I would love to see a correction in property prices with the right infrastructure in place.”

That’s far from happening, which may comfort homeowners, but is also an indication that Mumbai, after years of political apathy and indecision, is only just catching up to its infrastructure needs. Change is now on auto mode, said Bhide, as administrators acknowledge rapid urbanization and local representatives compete for projects in their constituencies. To take the load off Mumbai, more satellite cities are being worked on, near the Adani airport in the east and near a new port and airport being planned in the north.

 This Mumbai makeover may be far from perfect and nowhere near complete, but I’ve got to admit it’s improved my daily commute to work. The ride is almost as scenic and lovely as in Singapore.

Best of Bloomberg

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By the Numbers: Eli Lilly's Hyderabad Push

$1 billion
The US drugmaker plans to invest more than $1 billion to establish a new manufacturing and quality center in the city, and new contract manufacturing capabilities in India.

Modi Throws Billion-Dollar Freebies at Poorest State

India’s northeastern state of Bihar goes to the polls in a two-phased election in November. The outcome has implications for the country’s economic growth and Modi’s popularity.

Bihar gave India (and the world) Buddhism and one of the country’s fiercest freedom fighters, Jayaprakash Narayan. Today it exports millions of youth to other states and countries in search of jobs.

Voters queue up to cast their ballots in the Bihar state assembly elections in 2020. Photographer: Prakash Singh/AFP

Home to more than 104 million people, more than Vietnam, Bihar is among India’s most populous states,