Maharashtra govt presents its case on Mumbai before Centre

Maharashtra chief minister Vilasrao Deshmukh feels the political will for redeveloping Mumbai city into a world class financial hub is finally pushing the state and Centre to meeting its objective.

Speaking to Business Standard at his official residence 'Varsha' on Tuesday, Deshmukh said that the state had launched headlong into Mumbai's recast plan following his personal discussions with Prime Minister Manmohan Singh in January where the latter expressed keenness to give back something to the city where he spent five years posted as governor of the Reserve Bank of India.

The state government, through a power point presentation, explained to Singh that Rs 55,000 crore was generated annually from Mumbai city, Rs 42,000 crore of which accrues to the Union government while the state government raises Rs 13,000 crore in revenues.

Of this Rs 55,000 crore, Rs 8,000 crore is through customs duties, Rs 9,000 crore through excise duties and Rs 25,000 crore through income tax collections. "Less than one per cent of the revenue generated in Mumbai is ploughed back into the city," Deshmukh said.

This notwithstanding the fact that Mumbai residents pay the highest taxes as well as user charges in the country.

Singh was informed that Mumbai city and its hinterland has the potential to attract annual foreign direct investment to the tune of $five billion per annum in the next decade compared with Shanghai ($8-11 billion), Dubai ($4-5 billion) and Bangkok ($5-7 billion).

This is possible provided much needed infrastructural investments are made (to the tune of Rs 40,000 crore) to transform the city into a world class megapolis.

Of this, the Union government would have to annually contribute financial assistance of Rs 2,151 crore for the next five years for civic, housing and transportation projects. Similarly, tax and duty concessions from the Union government would be needed for projects in the city that need to be treated as essential infrastructure projects.

An income tax holiday for projects on build, operate and transfer (BOT) basis during the entire concessional term as well as a relaxation of coastal regulation zone (CRZ) norms in Mumbai is being sought from the Centre.

The prime minister was told that the city, which has been the engine of economic growth of the country is losing out to other cities on several fronts.

"The transportation system is overburdened, there is a proliferation of slums especially on the sites reserved for essential infrastructure, a sharp decline in industrial and economic activities and encroachments surrounding its airport facilities leading to safety and security concerns," the presentation made to Singh in January pointed out.

It was also pointed out that by 2015 Mumbai would become the second largest city in the world after Tokyo, ahead of Dhaka, Sao Paulo, Delhi and Mexico City and have a population close to 35 lakh in the island city and 115 lakh in its suburbs by 2011.

This will place additional pressure on the existing infrastructure. With 16 lakh registered vehicles plying on the city roads, an urgent need was to declog the choked road corridors, the presentation noted.

Even on economic growth, the city at 2.4 per cent growth rate is behind the state average of 4 per cent, national average of 5.6 per cent and way behind Shanghai that boasts of an economic growth of 8.2 per cent.