Monday, September 7, 2015

Mumbai 2015 - Prospects and Challenges

Vision Mumbai - 2013 - McKinsey - Bombay First Report

Was there a problem in Financing for Government?

The report said only Rs. 1,500 crore per year has to spent from taxes.

We estimate that a total public and private sector investment of Rs. 200,000 crore ($40 billion) will be
required over the next ten years.

However, of this, only Rs. 50,000 crore (i.e., around Rs. 5,000 crore per year) will need to be public investment, spent primarily on transport and housing.

The good news is that the Government will need to put in only around Rs. 1,500 crore per year or
Rs. 15,000 crore over the next ten years to finance the Rs. 50,000 crore, the rest coming from longterm
loans that can be financed based on user charges and increased tax collections.

We estimate that this Rs. 1,500 crore per year contributed by the tax-payers will attract private investments in housing, power, telecom and other key economic growth sectors such as manufacturing and services
to the tune of Rs. 150,000 crore over the next ten years, thus giving a 1:10 multiple.

Mumbai is India’s largest city (by population) in India and is the financial and commercial capital of the country. It generates 40% of the state’s GSDP and 6.16% of the national GDP.

The tertiary sector now contributes more than 75% to its economy. It has seen a steady shift upwards from 62.6% about 20 years ago to 73% in 2009. The city contributed nearly one-fourth to the state’s gross domestic product (GDP) of Rs 13,23,768 crore last year.

Mumbai contributes $209 billion (Rs.13.58 lakh crores at 1$ = Rs.65) to India's GDP. This estimate is according to purchasing power parity.

Maharashtra GDP for the year 2013-14 was given as RS. 14,76,233 crores (Wikipedia). If Mumbai contributes 40% of the state's GDP, the estimate of GDP for Mumbai would be    Rs. 5,90,493 crores. This figure also tallies with the estimate Mumbai's GDP in National GDP at 6.16%.

It  is also responsible for 25 percent of industrial output, 70 percent of maritime trade in India and 70 percent of capital transactions to the nation’s economy.

The city has manufacturing facilities in diverse sectors  from textiles to petrochemicals and serves as the  headquarters for many companies.

Mumbai, Thane and Pune continue to be the largest contributors to Maharashtra’s economy; together, they make up 46.8% of the Gross State Domestic Product, with individual contributions of 22.1%, 13.3% and 11.4% per cent respectively.

The major pillars of economic renewal of Mumbai would include Infrastructure, Industry, and Tourism.


Mumbai requires a plan to develop a “Comprehensive Mobility Plan” for entire Mumbai City which will help in the development of transportation network of all modes, and to achieve convenient
and cost effective accessibility to places of employment and education to people and for transport of goods produced to various places in the country and the world. It will also help in optimal utilization of funds and human resources.

The subarban rail network is the principal mode of mass transport in Mumbai. The  the launch of Metros and Mono-rail have improved travelling experience for Mumbaikars to a great extent.
Expenditure of Rs 3,108 crore was incurred in the road network against an outlay of Rs. 4,450 crore during 2013-14. In order to enhance better connectivity, for the first time a Master Plan for 3 years from 2013-16 is prepared.

In order to reduce congestion in Mumbai International Airport, an additional airport has been
proposed in four phases through PPP at Navi Mumbai with estimated cost of about 14,574 crore. The Airports Authority of India (AAI) along with Mumbai International Airport Ltd. has undertaken a
mega project to build new integrated terminal T2 for modernisation of Chhatrapati Shivaji
International Airport (CSIA), Mumbai. The project cost is 12,500 crore out of which expenditure incurred upto 31st December, 2014 was 11,401 crore.

The State has 720 km long coastline with two major ports, operated by Mumbai Port Trust (MbPT) and Jawaharlal Nehru Port Trust (JNPT). During 2014-15 up to December, MbPT and JNPT handled
461.66 lakh MT and 480.73 lakh MT cargo traffic respectively.

It has been decided to implement an Integrated Slum Development Programme (ISDP) to fill
the infrastructure gap for providing the necessary basic amenities to slum residents
Health care units need a boost in the economy and thus, ‘Dispensary Up gradation Programme’
has been undertaken, under which programme over 100 dispensaries have been given the necessary facelift and have been branded to ensure qualitative primary health care service delivery. Adequate provision for the construction of 15 new dispensaries has been proposed especially in slums.

Other Infrastructure facilities like Energy, Water Supply, Sewerage etc., are maintained
by respective authorities.


Out of India’s total exports, the share of IT products (mainly software) has increased from 1percent in the early 1990s, to 18 percent in last few years.  Despite competition from Bangalore, Mumbai has created a niche in the IT industry scenario of India, with a large number of multinationals as well
as small software units located here. The Santacruz Electronic Export Processing Zone (SEEPZ) and the International Infotech Park in Vashi, Navi Mumbai offer excellent facilities to IT companies.


There is an immense potential for expanding this sector. Mumbai houses leading players in the
financial sector, SEBI, BSE and NSE. It has an overwhelming presence in money market
and foreign exchange market transactions. For promoting the International Finance Centre, however, the State Government needs to work with GoI. Mumbai accounts for a significant share
in deposits mobilization (14 percent of total deposits) and deployment of credit (21percent of total credit) of scheduled commercial banks. Its share in the forex market is as high as
four-fifths of the total turnover. The city is one of the world’s top centers of commerce in terms of financial flow. It is also home to important banks and non bank financial companies.


As on Jan 32, 2013 Mumbai has 15,565 MSME which contributes to 9.5% share of total MSMEs in Maharashtra and employs around 247,000 people.

Mumbai contributes about Rs. 40,000 crore in taxes to Maharashtra and the Centre annually. The
share of Mumbai in total revenue collection from metros is more than 50% in case of income tax and excise duty. Mumbai contributes to 33% of income tax collections, 60% of custom duty collections,
20% of central excise tax collections,

The Indian tourism has emerged as one of the key drivers of growth among the services sector in India. As Mumbai holds so much of diversity into it, people from all over the world come here to visit places like Lonavala, Matheran, Nasik etc. Thus, tourism is an employment generator; which is a significant source of foreign exchange for the Mumbai and an economic activity that helps local and
host communities.The travel and tourism sector directly contributed INR 1920 billion to India’s GDP in 2014 reflecting a growth CAGR of 14 per cent since 2007. This is forecasted to grow at a CAGR (compound annual growth rate) of 12 per cent from the estimated INR 2222 billion in the year 2015
to INR 6818 billion by 2023.

 All future development of Mumbia would result in travel of tourists for work/services. Tourism adds
to the overall economy of Mumbai and this influx of people into Mumbai needs to be tapped for tourism.

Mumbai's population will be more than 21 million by  2030. Its economy will be bigger than that of
Thailand or Hong Kong today. Mumbai has opportunity to transform itself into a world class city.
But presently,  only 47% of the sewage generated is treated, and the number of peak vehicles per lane kilometre is 170 compared to an ideal 112. The policy-makers should be concerned at
the decline in the number of establishments and the number of jobs they create and offer. New industries have to be promoted in Mumbai.  Newer industrial areas have to be developed within city to establish industries under Make in India programme.

With the vibrant economic profile, Mumbai offers several potential advantages and can leverage this existing potential for growth. To evolve as the regional finance center, to capitalize on the entertainment industry exports or the leather and gems & jewellery exports,

Mumbai has to change its course for supporting its economy and businesses and meet the challenges of transforming into a city offering world class infrastructure along with citizen friendly services.
The economic growth therefore needs to be carefully supported with linkages and reforms. It should be such that it encompasses all areas of economic activities which complement economic development. Policies and programmes have to be announced to facilitate investments in manufacturing sector once again and bring about development.

Mumbai must have policy to encourage vertical high rise factories to decrease land use for manufacturing and also has to insist that all residential housing accompanying the manufacturing facility has to be multistoried. Even guest houses etc. have to be in multistoried buildings.

Source for the article
Mumbai's Contribution to Maharshtra's GDP by MEDC Research Team in

Updated on 6 Sep 2015
First published on 17 May 2015

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