City may not have to beg any more

MUMBAI: Mumbai’s status as the financial capital of India is a much cliched one. So is the fact that it pays close to Rs 45,000 crore in taxes to the Centre’s kitty and yet remains poor in terms of infrastructure. Well, the government of Maharashtra wants to reduce greatly, if not end, Mumbai’s dependence on central or state government agencies for funds, Mantralaya officials told ET.

The state chief minister, Vilasrao Deshmukh, in the forthcoming winter session of the state assembly, would introduce a legislation to create a Mumbai development fund (MDF), a dedicated corpus exclusively meant for the megapolis’ infrastructure projects and their maintenance.

If the bill — the draft of which is ready — gets through, Mumbai would add yet another feather to its illustrious financial identity. It will become the only city in India to have an exclusive corpus of its own that does not depend on either the civic or the state government budget, a senior bureaucrat said.

Secretary, Mumbai special projects, Sanjay Ubale, is upbeat about the MDF. “We have designed it in such a way that no new taxes would be levied to generate receipts flow into the Mumbai development fund nor would there be any hike in the existing civic taxes.

The revenue returns for this corpus would be ensured by Mumbai’s growth itself. We have lined up so many infrastructure projects, which over the next five years, would change the profile of not only Mumbai city’s but the entire metropolitan region.

Mumbai’s overhaul would provide a remarkable fillip to the city’s growth rate and a slice of this growth would flow into the Mumbai Development Fund. Mumbai makeover envisages a growth rate of 12% per annum for Mumbai,” Mr Ubale said.

In simple terms, MDF would be a direct beneficiary of Mumbai makeover. For instance, mega infrastructure projects like the Nhava-Sewri trans-harbour link that promises to provide the ultimate answer to Mumbai’s traffic congestion or the modernisation of domestic airport or the second international airport coming up in Navi Mumbai would positively impact sectors like real estate, hospitality, trade, and all those sectors which would exploit the metamorphosis of the entire region around these projects. The developers of these projects may have to contribute for the MDF.

“The real estate market is already buoyant after CIDCO has identified site to build the second international airport. Completion of trans-harbour link would mark a paradigm shift in virtually every sector. Multiple sectors would benefit from Mumbai’s makeover and make more money.

We are eyeing a portion of this economic growth as the basis of Mumbai Development fund. We are thinking like a real estate developer does. He would invest in a region, which has good infrastructure, build swanky apartments, and lure high-income groups into buying them.

Just as the developer would rightly think of exploiting quality infrastructure, the state would put a premium on the infrastructure it has built. The developer would happily return a portion of his income to the state. That’s how Mumbai Development Fund would operate,” a finance department official said.

Creation of an independent city-specific corpus is one of the guidelines for the National Urban Renewal Mission (NURM), so that infrastructure overhaul also makes cities financially self-sufficient. The state government has submitted seven proposals to the Centre under NURM.