Current Public Administration Magazine (August - 2015) - Mumbai in urgent need of reforms to governance and management

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Local Government

Mumbai in urgent need of reforms to governance and management

Mumbai is one of the world’s 10 most populous cities and the most populous, and wealthiest, city in India. Yet over 42 per cent of its people live in slums. The megacity has lost the capacity to deliver public services, because of negligence as well as insufficient financial and physical resources. Almost two-thirds of revenue is spent on staff and less than one third on services. There is now an urgent need to consider other management options and changes to governance.


Mumbai – called Bombay until 1996 - is the state capital of Maharashtra, India’s largest and most populous city and a multi-ethnic “melting pot” with a population of about 12,704,022. The city is administered by the Municipal Corporation of Greater Mumbai (MCGM), the largest municipal corporation in South Asia. Its titular head is a mayor with few executive powers. The municipal corporation and mayor are voted in every five years. The Corporation’s real executive power resides in the Municipal Commissioner, a civil servant appointed by the state government.

Mumbai has several municipal divisions, each overseen by an Assistant Municipal Commissioner for administrative purposes. The corporators(councillors) of the administration are elected by popular vote and most state political parties field candidates. Mumbai has 24 municipal wards with individual councillors elected every five years.

The corporation’s duties, set out in the Bombay Municipal Act, involve:

1. The development and repair of roads, flyovers, and street lighting in Mumbai city proper and all other parts of Greater Mumbai, as well as the enhancement of public parks and beaches.
2. Maintenance of health and sanitary issues; provision and upkeep of public toilets, garbage collection, sewerage system, hospitals and health centres.
3. Public supply of clean drinking water.
4. Registration of births and deaths and upkeep of other statistical records.
5. Implementation of rules for city planning and building construction. The metropolis has two revenue districts in Maharashtra, each under the jurisdiction of a district collector with responsibility for property records and revenue collection for the state government.

Economic structure

Mumbai is the premier economic centre in India and hosts the headquarters of most major industrial houses and financial corporations, as well as institutions like the Mumbai Stock Exchange and the Reserve Bank of India (RBI). It generates more than six per cent of the country’s GDP. As an industrial centre it generates about 10 per cent of India’s factory employment, 25 per cent of industrial output and 33 per cent of income tax. Its per capita annual income is at USD 2,840, three times the national average.

City governance

The issue is whether the existing system of an elected municipal corporation with a mayor and a state-appointed municipal commissioner as chief executive has duly provided leadership at the city level or if options should be explored - for example a directly-elected mayor acting as chief executive. Other models include a mayor-in-council system or an appointed city manager who delivers management services for a contract period. The following options can be considered when reforming MCGM’s administrative system:

  • Status quo, or
  • Mayor-in-council [Kolkata pattern], or
  • Directly-elected mayor with mayor-in-council

If the basic purpose of reform is to make city governance cost-effective, customer friendly, transparent, financially viable and a one-window operation, the above alternatives cannot work. At present MCGM spends between 62 and 68 per cent of revenues (taxes paid by millions of its residents) to pay employees, and has only about 32 per cent of the revenue left for services delivery and development. No amount of tinkering with its structure can remedy this basic difficulty. What is needed is a system incorporating:

a. Important basic services professionalized/corporatized
b. Transparency and accountability
c. Customer-based governance
d. Online system to redress grievances
e. Efficient municipal financial and reporting system and evaluation 
f. A single coordinating authority for the city

Deficiencies in Mumbai’s city governance

In Mumbai the public goods and services delivery system has declined both in quality and quantity. The city has lost the capacity to deliver services either for negligence or lack of financial and physical resources. Owing to the focus on short-term planning to meet imminent requirements by political parties controlling MCGM’s administration, it has ignored possible long-term challenges and neglected the function of deploying resources to improve services. Likewise, resource generation is fraught with inefficiency and corruption, resulting in declining management capacities. This has enhanced the perception that Mumbai is in overall decline, particularly in living standards. Other options need to be considered. The mayor-in-council concept was tried for a year or two, without favorable results.

With the advent of globalisation, international investments flow toward efficient and cost-effective locations. While several developing-country cities offer cost-effective factor inputs like land and labor, provision of quality of living is becoming an important contributory factor. Without this, Mumbai may not achieve its “vision” of a world city. One must understand the role played here by political institutions that control city administration and dominate the delivery of public services.

Democratic political institutions are supposed to ensure services delivery and overall development, as there is an unwritten understanding between the people and elected representatives to act in the public interest.
This representative method of allocating goods and services is considered the better option, but fails to work properly when hampered by bureaucracy and an executive branch that dominate the delivery of services. Delivery is slowed and fails to meet specific needs, especially in basic services. Bureaucracy, it is claimed impedes development to the extent of its subservience to governing political parties rather than the public. This would explain classic government failures in providing goods and services, and in Mumbai’s case a loss of public faith in the present system of city governance.

The budgeted expenditure of the Municipal Corporation of Greater Mumbai (MCGM) for 2012-13 is Rs. 26,581 crore (US$ 5,316.2 million). If Mumbai were a commercial public limited company, it would for the size of its assets and revenue, be among the top 35 in India. Its budgeted expenditure is 2.1 per cent of India’s total expenditure as per the Union budget 2012-13. Much of the quality of life in Mumbai (or lack of it) has to do with how MCGM manages its resources. Certain basic issues require close attention by the city governments to achieve both high-quality service delivery and prudent financial management. How does MCGM fare in tackling these?

City revenue and expenditure

City governments in India have demonstrated little efficiency in collecting property and other taxes, and been as inefficient in settling contractor payments. Besides playing havoc with cash flows, some of these delays result in losses. Likewise state governments are sometimes late in remitting funds to their city governments. The municipal commissioner of MCGM, in his budget speech (2012), indicated that receivables from the state government amounted to more than Rs. 2,100 crore (US$ 400m), or eight per cent of the budget for 2012-13. MCGM’s capital receipts for 2011-12 were revised downwards by more than 50 per cent and consequently, capital expenditure had to be curtailed by 28 per cent, presumably at the expense of better infrastructure for Mumbai.

Financial management

The financial management of city governments is often simply relegated to annual budgeting and to managing working capital. Financial statements comprising income and expenditure statements and balance sheets or other performance data do not form the mainstay of municipal financial management. MCGM is no exception. As a result, financial decisions like investments in infrastructure and the raising of debt are not taken based on the balance sheet or assessed for their impact on it. The balance sheet reflects the financial health of an entity and needs to be managed closely, especially in the case of MCGM which needs to spend large amounts on civic infrastructure.

Targeted spending for optimal results

City governments spend money to deliver better services to citizens for a reasonable cost, using a sustainable model. Given competing priorities and financial constraints on city governments, efforts are required to ensure that the focus is not on the extent of budgetary spending, but on service outcomes (a basic tenet of any commercial operation). A good start could be to link budget estimates with service-level benchmark targets set for the coming year. This will ensure funds go where they are most needed. Only a standardized and timely performance-reporting framework can properly report and monitor value-for-money spending by a city government.

Improving service delivery: Professionalisation of civic services

Attempts at governance reform in MCGM must thus relate to the delivery of public goods and services (water supply and sanitation where user charges are levied and recovered); improved efficiency and professionalism; developmental service (e.g. health and education services); improvements in municipal services; regulatory services (e.g. licenses, permission and planning); structural changes and use of information technology.

Transparency and accountability and customer-focused governance

To create a world-class city, governing systems must improve services delivery, transparency and accountability. Implementation failures arise however from wrong or misinterpreted rules/guidelines. The city’s complex and massive needs can only be met using cutting-edge technology and progressive management techniques.

But even if the MCGM was remodeled or its governance restructured, it might be unable to deliver the goods due to the multiplicity of authorities operating in the area!

Creating a single coordinating authority

Multiple agencies are concerned with city development, for example the Mumbai Metropolitan Region Development Authority (MMRDA), Municipal Corporation of Greater Mumbai (MCGM), Maharashtra State Road Development Corporation (MSRDC), Maharashtra Industrial Development Corporation (MIDC), Maharashtra Housing and Area Development Authority (MHADA), the Slum Redevelopment Authority (SRA) and the police department; all work independently and often in conflict with one another. This leads to lopsided development and poor services. The need for a single coordinating authority is felt, particularly in situations of crisis or disaster.

Managing Mumbai: A new concept

We need to move away from the current governance model within the Maharashtra Municipal Corporations Act toward City Management through a democratic and user-participatory system. To establish a user-friendly management system the planning ethos and system for the city will have to undergo a sea-change by evolving a development strategy amenable to the city’s privatized management.

This proposed mechanism of preparing a city development plan, by its very approach ensures a total bias toward ‘development through planning’ rather than the present approach of ‘planning restrictions in the hope of development.’ In short, it is necessary to work out the mechanics of ensuring that emerging development plans are action plans rather thanrestriction plans. They must motivate and facilitate development rather than lead to speculation and freeze development. The plans should define a strategy for the hinterland rather than lead to ‘no-man’s land’ situations. It is essential that these plans clearly indicate how resources can be raised to achieve intended actions, rather than merely state pious objectives oblivious of the reality of the city’s ability to raise resources for development objectives.

Unfortunately in the current scenario, the real plan for the city is the standards prescribed by DC (Development Control) regulations. The building and development controls regulating land developments in Mumbai are guided by principles of maximum quantity and minimum quality allowed by DC regulations! Councilor’s primary interest is seemingly to maximize land use by indiscriminately increasing the Floor Space Index (FSI) against public welfare.

A new development plan for Mumbai should ideally become an assemblage of local-level, citizen-oriented projects. Development plans should first be prepared for each ward based on maximum public participation, which could be forthcoming if ward residents can comprehend and visualize the development of the area that is familiar and of interest to them. This would entail scrapping the existing top-down approach.

Represented by ward or area committees, Mumbai’s development plan should be an assemblage of needs felt by the entire populace. The selection and organization of area committees should be a key task of the planning authority. The final plan can thus be far more action-oriented, having emerged from the people’s felt needs, and not a restrictive document of proposals prepared by specialists.

At the city level the plan should be perceived not as land use or zonal planning, but as redevelopment of urban pockets to minimize land coverage without increasing FSI, thus maximizing open spaces. The plan can then be coalesced at the city level by experts, keeping in mind the city vision and then broken up again into ward projects. To avoid pitfalls while preparing the development plan for Mumbai, councilors could ensure that the General Development Plan for Mumbai organizes and coordinates the complex relationships between urban land uses at the ward level.

Even after its emergence, development plan proposals must be widely publicized and all sectors encouraged and motivated to discuss its various ramifications. Legal sanction can be sought for the document only after extensive, grassroots involvement is enlisted to determine development options for people’s immediate environment.

The plan should additionally chart a course for growth and change for each ward and express the aims and ambitions of the community at ward level. It must delineate the form and character it seeks to achieve at city level and reflect policies by which these goals may be reached. It is of utmost importance for planners to be responsive to change through continual review rather than in intermittent, obligatory reviews, thus maintaining validity in time and space.

New development proposals cannot be approved without an assessment of potential environmental impacts and mitigation costs. These costs should be calculated and built into the sanction process for development and into long-range plans for infrastructure. The context for a flexible and evolutionary development plan framework for Mumbai at city level could consist of:

A strong transport and communication structure and open space mosaic as the only physical depiction of a master plan: a possible network of regional linkages, main arteries for mass transport routes, pedestrian areas, air-rail-road transport terminals to define the basic structure for the city;  

Proposals to absorb immigrants within the city fabric without economic and social disruption, and easy access to services by all: a well-defined, very high density, low technology residential area reserved for absorbing immigrants in the city, along mass transportation routes and termini to ensure flexibility in planning and development;    

Self-operating building and development codes based on incentives in terms of extra development rights: defining plot packages in terms of the possible building envelope may obviate the need for elaborate building codes and rules, combined with incentives in the form of additional floor space for amenities and services provided for the city;  

Policies with quantifiable parameters for industrial location and creation of jobs: clear policies on location, specific parameters for building space for industries and offices that will result in the creation of jobs;  

Policies for taxation and revenue generation to make city administration financially viable: clear policies on taxation based on performance including, load on services and disturbance to the environment rather than ratable property values, taxation for non-development leading to speculation, taxation of all vacant or built properties on the basis of accessibility to city-level services and amenities etc..

Concern for the environment: protection of the environment through environmental impact assessment of all development works and mitigation costing;

Receptivity to new technologies for infrastructure advances: a continual review of city level services in their technological context to assess quantifiable and visible benefits to society and not a selected minority in the city (e.g. concreting roads);  

Enforceable standards of performance: clear definition and documentation of enforceable standards of performance in all activities undertaken in the city, including area licensing for personal vehicles;

Integration of historic resources: creation of symbols, landmarks and spaces easily identifiable with the city to create a sense of belonging and pride in the city.

This development framework can facilitate city governance/management through decentralized management units for each ward. These units can be incorporated as private companies with a board of directors comprising representatives of the stakeholders from mercantile, commercial, residential, social and other fields of activity in the wards. Under 40(1B) of the Maharashtra Regional and Town Planning Act (MRTP), the state can appoint such a company as a Special Planning Authority (SPA) and delegate to it the functions of a municipal body. This has happened with the Lavasa new town near Pune in Maharashtra where a model exists to manage city infrastructure through a private company, or with the steel city of Jamshedpur in the state of Bihar.

Managing Mumbai as a private enterprise

Assuming a Mumbai Management Corporation could be created, let us examine how it can deal with the ‘mandatory’ functions of the Mumbai Municipal Corporation as prescribed in the state act.

Can we apply the model of Jamshedpur and view Mumbai as a conglomerate of small cities? Each ward can be viewed as a unit for which a private company can be formed to manage infrastructure. Thus 24 companies for 24 wards can be the units of a holding company that decides by consensus and directs the companies’ objectives toward the common goal of Mumbai’s overall development.

Water supply

The corporation can undertake functions relating to the capital works of source, plants and equipment and the distribution system, while its subsidiary in each ward can manage the maintenance of the distribution system at the ward level. Necessary works can be outsourced to private contractors.


This is already managed by private companies, namely Tata Power and Reliance Power, responsible for source, plant and equipment, distribution and billing.

Primary education and health services

Since the state government already pays the expenses of all students from families below the poverty line, this service can be out-sourced to charitable educational institutions. Health services can be out-sourced to private providers.

Roads, sewerage and solid waste management

The construction and maintenance of transport arteries can be out-sourced to state-owned agencies like the Maharashtra road development corporation. Liquid and solid waste management can be out-sourced to private firms.

Revenue collection

Private firms can do this, as is happening with the city entry tax collection system.

Land development

This can be done by private developers on a contract basis.

Managing Mumbai as a Private Enterprise

Thus it may be possible to manage Mumbai as a private enterprise, deliver the services to its citizen at optimum cost and achieve an effective and fruitful citizen participation in its management.

(Source- Prakash M Apte, Urban Development Consultant @

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