69942 India Technical Assistance for Mumbai Urban Business Plan Completion Note October 2011 This is primarily intended as the Completion Note of Mumbai Urban Business Plan, Phase II (TA-P107693). As needed for understanding of the Note and its context, however, it briefly covers precedent activities including those under Phase I (TA- P094716). A. Background Mumbai is the largest city in South Asia, with an estimated 13 million residents in the city (Municipal Corporation of Greater Mumbai) and 8 million in the surrounding areas within the metropolitan region. It is the undisputed business capital of India and South Asia, with a dominant share of corporate headquarters, financial transactions, media, and international passenger and goods traffic. It contributes about 40% of revenues for Maharashtra, the wealthiest state of India with about 90 million people. On the other hand, it suffers from notorious urban problems, with crowding, traffic congestion, scarce and expensive properties, and large slums housing about half of the city residents. There was a growing concern in the early 2000s that these problems were leading to an economic decline, as the city was missing out on the information technology boom and the city economy apparently suffered a decline in 1999 and 2001. These have provoked lively and contentious discussions about the city’s ills and would- be cures, which resulted in few sustained or effective actions. Bombay First, an association of mostly private business leaders concerned with civic affairs, was one of the groups actively participating in the discussion, and one of the most influential. In 2004, McKinsey and Company published a tract titled “Vision Mumbai” on behalf of Bombay First. This document presented a concise but compelling diagnosis of the city’s issues, benchmarked against several world cities, and called for a set of policy and investment measures to “transform the city into a world-class city.” Most of these have been endorsed by the state, through a Chief Minister’s Task Force consisting of senior state officials, members of Bombay First, and representatives of NGOs. The Prime Minister of India provided further support, defining Mumbai’s renewal as a high national priority. He requested the Bank’s assistance for Mumbai’s renewal during Mr. Wolfenson’s India visit in December 2004. B. Bank’s Involvement: Chronology In the follow-up, the Department of Economic Affairs (DEA) wrote to the Bank in February 2005, referring to the request of the Government of Maharashtra (GoM) for $2 billion of Bank financing, and requested the Bank to “field a dedicated multi sectoral team to comprehensively look at various issues …… in efforts to draft out a - 1- comprehensive strategy envisaging the Bank’s support …….while demarcating prior reform measures necessary to take the proposal further.” (sic) After a brief missions in March 2005, the Bank secured a Cities Alliance grant to establish the Mumbai Transformation Support Unit (MTSU), to carry out analysis and consultation for the Task Force (TF). The Unit was set up as a project team of the All India Institute of Local Self Goverments (AIILSG), led by a senior official deputed from GoM. An internal World Bank Concept Review for the Mumbai Urban Business Plan Technical Assistance (Phase I) was held in December 2005, where it was confirmed that the Bank would provide non-lending technical assistance without explicit linkage to lending. The Bank team was to work with and advise the TF and MTSU to help develop its Mumbai Transformation proposal into a feasible and credible plan of action for the next 5- and 15- year periods by enhancing the framework, improving the quality of analysis and planning, and building the consensus. After two missions in December 2005 and February 2006, the original Transformation Plan was modified with a shorter action list with modified priorities, a planning scope broadened from the city to the metro region, a skeleton of a capital investment plan for 5- and 15-year periods, and other modifications. The resulting framework, an outline Business Plan, was presented to the Chief Minister in February 2006 with the Country Director and Sector Director from the Bank present. This was endorsed strongly by the Chief Minister, and a slightly augmented version was endorsed by the Prime Minister in September 2006. In October 2006, the Plan was discussed between a high-level GoM team led by the Chief Minister and a high-level Bank team led by the then Managing Director (Mr. Wheeler), the Regional Vice President, and the Acting Country Director. The Bank delegation announced that the Bank would be willing to lend up to $6 billion over the next 10-15 years, with the understanding that the GoM would take key policy actions identified in the Plan. The Bank delegation also agreed to continue the NLTA. Four additional smaller and shorter missions visited Mumbai between February 2006 and April 2007, working to enhance the analyses and consultation, and develop details of the investment and institutional actions agreed in outline. Phase II. A new Country Director was appointed in early 2007 and it was decided that the activities undertaken needed to be summarized and the continuation proposed as a new Task (Phase II). This was done in July 2007 in the form of an Activity Completion Report for Phase I. The Report, besides summarizing the work and achievements up to that point, proposed that Phase II focus on: (i) broadening and enhancing consultation; (ii) developing investment packages for Bank financing; and (iii) developing details of key institutional and policy actions recommended in the Plan. -2- In November 2007, the President of the Bank visited Mumbai and affirmed the Bank’s earlier commitment to financial and technical assistance. Later in the same month, the Regional VP invited GoM for a meeting in New Delhi to discuss future Bank assistance. This was followed up by a meeting in Mumbai in December 2007 between the GoM team led by the Chief Secretary and including most of the department heads, and the Bank team led by the Country Director and including the IFC Regional Director, the Sustainable Development Sector Director, and some 30 staff members. The meeting agreed on 10 investment proposals and 2 TA packages, which would be submitted to DEA by January 2008, and delivered within six to twelve months. GoM, however, did not submit the proposals to DEA and little progress was made (as elaborated below in Section C). It was decided that this TA would also be scaled down from FY09, limited to providing strategic advice while leaving detailed work to counterparts. Accordingly, seven brief one- or two-person missions have been fielded since FY09. Members of the Task Team who participated in more than one mission included the following: Sonia Hammam, Sector Manager; Songsu Choi, team leader; Robert Buckley, housing advisor; Alain Bertaud and David Dowall, land and planning specialists; Richard Clifford , urban finance specialist; Michael Cohen, institutional specialist; Remy Prud’homme, Somik Lall, Paramita Dasgupta, Peter Ellis, economists; Hubert Nove-Josserand, Kenneth Gwilliam, transportation specialists; Mary Ellen Hammond, junior professional associate; Alain Locussol, Shyamal Sarkar, municipal engineers; Aashish Mishra and Vasudha Sarda, research analysts. C. Output and Outcome Both under Phase I and II, the TA was provided in the form of advisory and analytical notes by the Bank staff and consultants, presentations, verbal or electronic advice and comments, and relevant existing literature. A major report was financed using the loan available under the Mumbai Urban Transportation Project and another is being prepared financed by PPIAF. Main reports, notes, and presentations are listed in the Annex and will be posted on the MTSU website, www.visionmumbai.org. [Are the MUPT and the PPIAF reports listed in the Annex, and are they available online? – they are] In addition, the Bank team has provided advice and comments on a large number of analytical notes, proposals, and consultation notes prepared mainly by the Chief Minister Task Force and MTSU. The Bank team has helped secure the second round of Cities Alliance grant for MTSU. Key enhancements brought to the Transformation Plan by the Phase I TA included the following: -3-  Expansion of the geographical scope of the business plan to include the entire Mumbai Metropolitan Region (MMR), which was not only economically justified but also politically attractive to the Chief Minister.  Clarification and focusing of action agenda, by deferring contentious or unrealistic recommendations but increasing the emphasis on key feasible actions.  Clarification of main concrete costs of major policy impediments such as the Urban Land Ceilings Act, low Floor-Space Index (FSI), rent control, etc.  Emphasis on broad and systematic consultation, which helped bring about a marked increase in citizen optimism as surveyed by the media.  Establishment and maintenance of MTSU, to carry out the secretariat, analysis, and consultation activities for the Task Force.  An outline capital investment program linked to plausible economic development scenarios. Phase II assistance resulted mainly in enhancement and detailing of analysis and planning including the following:  Better understanding of potential benefits, international norms, and required steps for development control reforms, especially the revision of the Floor-Space Index (FSI);  Demonstration of feasibility and issues through pilot studies which tested, on paper, models of higher density (FSI) development and slum redevelopment in selected actual sites – resulting in implementation (sometimes too literal) of the models.  Better understanding of key elements needed for housing policy, especially market mechanisms; Provision of short analytical and advisory notes and terms of reference on selected topics, which are listed in the Annex.  Identification of issues involved in metropolitan governance and planning, and common international models.  Compiling of specific investment requirements, proposals, and financing options. Outcomes in terms of actual actions and results on the ground were realized mostly after July 2007, i.e. during Phase II, but have to be credited as much or more to Phase I work as well as other external influences. Major outcomes are listed below:  Expansion of the Task Force with the addition of representatives of, for example, the Mumbai city corporation and NGO representatives. -4-  High-level endorsement of the Business Plan, listed in Section B above;  Repeal of the Urban Land Ceiling and Regulation Act in August 2007.  Increase in FSI in parts of Mumbai city in early 2008. Due to inadequate preparation of details, however, implementation has been stayed by public interest law suits.  Adoption of a State Housing Policy in December 2007.  Change of negative public expectation for the city to a positive one.  Conversion of the Chief Minster’s Task Force into a permanent Empowered Committee with authority for formal decisions on behalf of the state government, speeding official reviews and decisions for government actions for the Mumbai Metropolitan Region.  Establishment of the Communications Subcommittee focusing on public communication and consultation.  Establishment of the Unified Metropolitan Transportation Authority.  Establishment of the Metropolitan Planning Committee in April 2008.  Official decision and detailed plans to develop a large number of low-income rental housing, for which bids have been invited.  Consultation in progress on the level and distribution of the Development Charge, a major new instrument to capture property value gains due to urban development and FSI revisions.  Agreement, but not consensus, to review the slum tenure system.  Concrete project plans for regional trunk infrastructure, including water and sanitation facilities.  Preparation of a long-term regional plan, in progress. Investment Proposals. DEA’s initial letter indicated an expectation of about $2 billion in Bank loans after the finalization of the Business Plan, and the Bank’s top management subsequently pledged up to $6 billion. To fulfill these, discussions were held in November and December 2007 and a list of ten projects was tentatively agreed. But these proposals were not submitted to DEA. Only one proposal -- to finance commuter rail equipment upgrading – by the Indian Railways has moved forward and has been approved. -5- -6- Annex Mumbai Business Plan Annotated Bibliography of Major Outputs The following lists selected papers and presentations representative of inputs by the Bank staff and consultants. They are available from the World Bank upon request or can be found on MTSU’s website: www.visionmumbai.org General Topics Title and Description Prepared By Date File Name Vision Mumbai: Transforming Mumbai into a World Class City - A summary of McKinsey and Bombay recommendations - a study that ignited actions toward transformation First Dec-03 visionmumbai.pdf Transforming Mumbai into a World Class City: The First Report of the Chief Chief Minster's Task Minister's Task Force - elaborated, broadened, and formalized the "Vision Force for Mumbai Mumbai" suggestions Development Feb-04 CM Task Force Report1.pdf Mr. R Banerjee, JS, DEA Letter requesting Bank TA DEA Feb-04 DEA letter1.pdf India - Mumbai Urban Renewal Business Plan - Inception Mission - Aide Bank Team Mar-05 memoire Aide Mar05.doc Satellite imagery for Bombay Aug-05 Satellite imagery for Bombay.doc Mumbai Development Business Plan: Draft Concept Note for Technical S Choi Nov-05 Assistance Concept Note.doc Note on Governance of Mumbai M Cohen Nov-05 MC Nov 05 Note on Governance in Mumbai.doc Aide Memoire of November 2005 mission - establishes most core elements of Bank Team Nov-05 the business plan Aide Mem December 05.doc - 7- Note on Governance in Mumbai: - [Worl?] Plan Michael Cohen Nov-05 Minutes of Concept Review S Choi Dec-05 Minutes - Mumbai Urban Bus Plan CN Dec 9 2005.doc Transforming Mumbai into a First class city - The Way Forward : Identification MTSU and Bank Team Feb-06 Mumbai Transformation_ of priority issues and actions, and outline of financing plan, presented to and CM.ppt endorsed by the Chief Minister and Prime Minister Terms of Reference for Communication and Consultation MTSU and S Choi Jun-06 TOR Consultation.doc S Choi Activity Completion Report May-07 ACR76f.doc Cities Alliance Grant Proposal: Supporting Transformation of Mumbai – Phase II MTSU and S Choi Jul-07 - summarizes activities from 2005 to 07, and lays out plan for next three years CA_Application_II_July 22.doc Business Plan for Mumbai Metropolitan Region - Draft Final Report LEA International Ltd., Aug-07 LEA Associates South BP DFR vol1.pdf; BP DFR Asia Pvt. Vol2.pdf MUMBAI YOUTH INITIATIVE PHASE 2 REPORT - summary of issues raised by Praja Foundation, with Sep-07 Mumbai_Youth_Initiative_ young people during consultation sessions Phase Five Report_07_Phase_2[1].doc MUMBAI TRANSFORMATION ACTION (BUSINESS) PLAN - one-pager prepared S Choi Oct-07 RBZ Brief -Mumbai for R Zoellick for his visit in November 2007 Business Plan 7x2.doc Presentation made to Robert Zoellick, President, World Bank GoM Nov-07 GOM to Zoellick79.zip Maharashtra Urban Water & Sanitation Activities for WB Assistance O Alvarado and S Dec-07 Maharashtra Urban WSS Misra Activities.ppt Urban Delivery Phase II Program - a TA program agreed in Maharashtra-Bank S Choi Dec-07 Urban Delivery Phase II meeting in December 07 Program.doc Metropolitan Governance Models - analytical review of international examples M Andersson and S Mar-08 Metroplitan Governance of institutional arrangment for metropolitan governance Choi models.doc Bank’s Engagement in Mumbai - 2005-2008 S Choi Mar-09 A. Background and Chronology Brief92r-short.doc Design of a Program Management Contract for the Mumbai Water Castalia Strategic Jun-09 Castalia97WDIP Breifing Distribution Improvement Project Advisors Note.pdf -8- World Bank Support for Urban Development in Secondary Towns of S Choi Maha Secondary Towns Maharashtra - TOR to carry out one of the items identified above TA.doc Economy and Finance Title and Description Prepared By Date Type Growth and Taxes in Mumbai - Estimates fiscal revenues from MMR through R Prud'homme, S Choi Feb-06 Growth & Taxes various instruments 062RPSC.doc Worksheet linking economic growth, real estate market, infrastructure financing S Choi Feb-06 MB finances.xls A FAIR PLAN APPROACH FOR DEVOLUTION UNDER THE TWELFTH CENTRAL A Pethe & M Lalvani Feb-06 Pethe Deliverable FINANCE COMMISSION: SOME SUGGESTIONS - Comparative analysis of fiscal 5.zip\Pethe Fair Plan.pdf devolution in four states Towards Economic Empowerment of ULBs in Maharashtra A Pethe & M Lalvani Feb-06 Pethe Deliverable 5.zip\Pethe Empower ULB.pdf Developing A Quantitative Framework For Determining A Karnik, A Pethe Feb-06 Pethe Deliverable Devolution Of Funds From The State Government To Local Bodies 5.zip\Pethe Fin Devolution.pdf Municipal Finance Data for MMR ULBs, 1990s A Karnik, A Pethe Feb-06 Pethe Deliverable 5.zip\8. Pethe-Karnik.xls Economic Growth of Mumbai Metropolitan Region (MMR) - Analyzes past ICRA Management Apr-06 Godke-Econ review.ppt performance of various sectors of Mumbai economy and identifies prospects Consulting Services and issues for selected sectors Economic Development & Financing in Mumbai - Review of economic growth R Prud'homme Jun-06 Economic Growth and potential and public finance status and requirements Finance.doc Land Use Development in Mumbai: Demand, Costs & Financing - projects land R Prud'homme Nov-06 Land Use Devt Demand, and housing development in MMR and corresponding Development Charge Costs, Financing revenues 06zRP.doc Appropriating Land Value Increments in MMR - making a case for Development R Prud'homme, S Choi Nov-06 Sharing Land Value Charge Increase 06zRP.doc -9- Quantifying Mumbai’s Growth to Explore Financing and Land Use Issues - R Prud'homme, S Choi Dec-06 Growth and Taxes.doc Synthesizes earlier papers on economic growth, housing and infrastructure investments, and argues for adoption of development charge TOR for Study of Employment and Household Incomes in Mumbai - This study R Prud'homme Dec-06 TOR Employment was not completed Study.12.06.doc Mumbai Trans Harbour Link Property Value Capture Feasibility Report S Gokhale Dec-07 Gokhale MTHL land dev and value Dec07[1].pdf Mumbai MTHL data Lea Associates Feb-08 Lea_MTHL data.zip TOR for Preparation of Business Plan for Maharashtra Urban Infrastructure R Clifford Feb-08 MUIDC Business Plan Development Company TOR_Ver 2.doc Financing Mumbai Infrastructure McKinsey Mar-08 McKinsey Infra Financing 85.ppt Maharashtra’s Fiscal Sustainability-Short Note M Narayan Apr-08 MH fiscal sustainability- mn.doc A Report on the Local Government Finances in MMR Region - A Pethe & M Lalvani May-08 MMR ULB Finances.doc Land Financing Instruments G Peterson May-08 GP Land Financing Instruments.doc Cost of committed works to be completed in the next 4 years in MMR MMRDA May-08 Investments in MMR - MMRDA.doc Selected review of PSP guidelines E Muzzini Jun-08 eM6 PPP Guidelines Note.doc Mumbai Infrastructure Financing - A preliminary but comprehensive R Kesavan, R Clifford Jun-08 Infra Financing overview assessment of key elements of MMR financing plan 086rkrc.doc Mumbai Municipal Assessment Report - Assesses municipal finance and infrastructure investment PriceWaterhouseCoop Finance and plans of Mumbai Municipal Corporation ers Nov-10 Investment.pdf -10- Land and Housing Title and Description Prepared By Date File Name Property Market Issue in the City’s Development - Bombay First A Bertaud and R Buckley May- Bob Alain Talk55.ppt Conference 05 Land and housing issues of Mumbai - Based on the Bank team research in A Bertaud Jul-05 AB_Bombay the preceding years July_05_report_2 Note on Mumbai spatial organization - Comments on the regional plan A Bertaud Nov-05 AB_Mumbai metro followed by a brief outline of what should be done right now to guide spatial.doc metropolitan planning Reforming Mumbai’s Real Estate Raj: a Prelude to a Business Plan - Draft - A Bertaud, R Buckley, Dec-05 Real Estate Raj.doc A summary of analytical work on Mumbai's land regulation and low V.K. Phatak. S Burra, R income housing, carried out over preceding years Green and K Owens Minutes of the Meeting on Housing Policy MTSU Feb-06 minutes_Housing Policy62.doc Statistics on slums and housing and planned housing construction Feb-06 Mumbai Slum Population.xls Urban and Regional Planning and Development Control - Presentation to D Dowall Jul-06 Planning and Development the Mumbai Transformation Support Unit Control lecture 7-25.ppt Land and housing reform process - identifies key issues of land and housing markets, and suggests a process of reforming them, and TOR for land and housing market pilot studies D Dowall, S Choi Nov-06 reform process.doc Comments on Draft State Housing Policy of Government of Maharashtra S Choi Dec-06 HsgPolicy Cmt.doc dated 1 November 2006 Of FSIs, Crowding and Densities - clarifies mathematical relationships R Prudhomme, A Dec-06 FSI, densities, crowding between these variables Bertaud, S Choi 12.14.06.doc Slums of Mumbai - a brief for Mr. Zoellick for his Mumbai visit in Nov S Choi Oct-07 Slums of Mumbai.doc 2007 Policy Note on Housing - Analysis of growth of Mumbai's overall housing A Bertaud Apr-08 Note on Housing stock, and government rental housing -11- Options for new alternatives for development control regulation and A Bertaud, VK Phatak, S Apr-08 DCR Options 08x justification for increasing FSI - Comparative analysis of FSI regimes, and a Choi abscvk.docx; gradualist option for its reform in Mumbai AB84FSI_Presentation3.pdf Establishing a new spatial concept for regulating FSI in MMR - A summary A Bertaud and S Choi Mar-09 FSI resetting_094absc.docx of reasons for FSI reform, and steps to do it. Terms of Reference for a land use reform specialist for Mumbai - A Bertaud Mar-09 AB_TOR for land use Companion to above; TOR to carry out the FSI reform analysis and reform.doc plannign Resetting FSI - A short presentation to policy makers summarizing the A Bertaud and S Choi May- Resetting FSI.ppt above paper and adding a few specific parameters 09 Terms of Reference for the Concept Plan of Mumbai Metropolitan Region MTSU May- TOR concept plan.pdf 09 COLLUSION, CONFLICTS, INFORMAL SYSTEMS, & RENT SEEKING: The A Pethe Aug-10 Political Economy of Great Prototype Indian Story of Urban Land Management in Mumbai Mumbai Land.docx Concept Plan for MMR - overview and sectoral reports - a 40-year vision Surbana International Sep-10 MMR Concept Plan109.zip plan Consultants (Singapore) Governance of Urban Land Management in Mumbai - Working Paper 2 - Centre for Good Dec-10 WP2-land allocation-vkp Allocation of land for uses and its change in Mumbai Governance, Hyderabad rev.docx Land Use Planning and Construction Code and Standards - Legal VK Phatak Dec-10 VKP Land Use planning Framework legal frame.docx -12-