Headline Jan 30, 2015/ ''' O'' MUMBAI : O'' CORRUPTION - O''TWISTS : '''

''' O'' MUMBAI : 

O'' CORRUPTION - O''TWISTS : '''

GREAT CITIES  are not built by prudes-  -New York, London, Hong Kong, Islamabad,  had its share of crooks and fat cats once. And they have many even now!

But Mumbai is already four times more populous than New York in 1900, and is in a hurry, but rules inhibit the new construction near the coast.

Because of the  of red tape and litigation,  only  3%  of  15,000 rent-controlled buildings have been redeveloped, says Subodh Kumar, who retired as Mumbai's top official.

Bits of idle land, including the old port, lie stranded because of vested interests. Rare free plots can command staggering prices. 

Finance also plays a role. Mortgages are common but banks cannot fund land purchases.

Developers finance construction by forcing customers to pay upfront, often without redress if the project stalls. The industry says it has cleaned up its act and attracted institutional investors.

Still, it is not unusual to make an  under- the -table   cash payment of at least 20% in addition to the stated price. The limited role of banks protects financial stability, but has other costs.

If builders are nervous about demand or short of cash, they can halt construction, having already got customers' cash. And non-bank finance is not always kosher.

*One fraud expert reckons that 80% of money-laundering in India uses property*.

In Navi  or  ''New''  Mumbai, across the bay from the city, lots of newish flats have empty balconies and no air-conditioning units  -clues they are vacant.

Local agents say they are held as  investments. Without banks breathing down their necks, developers and owners sit on on empty flats, rather than cut prices; this is a housing market where more borrowing might be helpful.

And if illicit money is involved, there is little  impulse to sell since the only thing it can easily be re-cycled into is more real estate.

Corruption adds a final twist. Many firms say times have changed and things are above board. But it is clear that some builders still bribe officials and politicians.

The prizes range from being allowed  bigger balconies  to the support of politicians with  ''vote banks''  in slums being redeveloped. Mr Kumar tried to clean things up after finding that  ''builders and architects worked the system''.

Another official says,  ''politicians and all kinds of manipulators  are made sleeping partners''   in projects.

**One boss says the height rules are  ''the biggest mafia scam in India''  and are a vital source of funding for political parties**.  

The only way is up. 

The textbook solutions for Mumbai is better transport and more high-rises, to increase the supply of flats and lower prices. It might help if the city had more autonomy, as Delhi does.

At the moment Mumbai is part of Maharashtra, a giant, partly rural state. That is some way off.  Still, there are rays of hope. 

The first overhead  metro line, in the north of the city, and a short stretch of monorail running  north-to-south, should open in the years ahead.

Ajay Pirarmal, who began the redevelopment of mill land decades ago and who is re-entering the industry, says graft has fallen since Mr Kumar's crack-down. 

Officials say they are trying to spur pockets of redevelopment. And a new national property regulator is in the works.

Yet, says P.K.Das, an urban planner, the system is just too rotten to allow Hong Kong-style building frenzy. The industry is   ''feudal'', has  ''subverted''  the law and may need to be nationalised.

While the city needs more skyscrapers, an unregulated building spree would be counterproductive unless the state gets cleaner, and better at planning and providing infrastructure such as roads, sewage and water.

Already many feel the city is falling behind Delhi and Bangalore.

The conspiracy theory, held by the man on the street and captains of industry, is that transport projects are delayed and arcane rules survive because a small elite finds the status quo lucrative, even while the city's developments is strangled.

If Mumbai is to become a global hub and offer more people a decent life, its politicians, officials and builders must prove the conspiracy theory wrong.

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