 The city of Mumbai, once known as Bombay, provides sobering lessons. In the 1960s and 1970s, city planners decided that Bombay’s population should be controlled at about 7 million. Land regulations and infrastructure policies were designed accordingly. But people flooded into the city anyway, and today the city is more than twice the intended size, with the highest population density of any metropolitan area in the world. Estimates indicate that 54 percent of Mumbai’s 16 million people now live in slums, and another quarter in degraded apartments.
The Floor Space Index (FSI) regulations in Mumbai were introduced in 1964, stipulating the maximum building space for every square meter of the plot of land. In Mumbai it was set at 4.5. The standard practice in cities with limited land is to raise the permitted FSI over time to accommodate urban growth, as in Manhattan; Singapore; Hong Kong, China; and Shanghai. Instead, the Municipal Corporation of Greater Mumbai went the other way, lowering the permitted FSI to 1.33 in 1991. Almost all buildings in Mumbai with an FSI exceeding 4.5 were built before 1964. Under the rules that existed until recently, new buildings, including those in the central business district, were subject to the FSI of 1.33. As a consequence, space consumption in Mumbai averages 4 square meters, much less than the 12 square meters in Shanghai and the more than 20 square meters in Moscow. And about half of its residents are huddled within 2 kilometers of the city center (see the figure below). Meanwhile, high housing costs account for as much as 15–20 percent of the income of a low-income family. Rent control regulations freeze 30 percent of Mumbai’s housing stock, leaving it dilapidated because landlords see little point in investing. Weak property rights imply that only 10 percent of the housing stock has legal title, so land redevelopment is curtailed. The government relies on property taxes and on inflated real estate prices for revenue, so it has little incentive to fight the groups that resist relaxation of building height restrictions. The result is a vicious circle of supply shortages and high land prices. Mumbai slipped from 25th place to 40th in the league table of “best cities for business” between 1995 and 1999. It remains India’s premier business city—it topped Chennai and Bangalore in investment in 2007 and was the top destination for domestic migrants. But how quickly it reforms its regulations and builds infrastructure will decide how long it will keep this position. Source: WDR 2009 team; Bertaud 2003.
Note: a. The FSI is the ratio of the total floor space in a building to the area of the plot on which it is built. For example, suppose a building covers half of a plot that is 1,000 square meters in size. If this building has 10 floors, itexhibits an FSI of 5. |
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