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This is the only way to solve Mumbai’s pothole problem

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Kapil Talwar
Chartered Accountant, newspaper enthusiast, current affairs junkie.

Mumbai potholes
Somewhere in Mumbai

Ever wondered why Mumbai has such terrible roads? Surely every Mumbaikar has pondered about this at some point. Every monsoon is a Mumbaikar’s nightmare. The roads simply give way at the slightest provocation of the rain-gods. Some roads are so bad, that reactions can vary from ‘are these lunar craters’ to ‘who nuked this place’.

There is simply no good defense that the administration can plausibly come up with. Think about it. There is no ‘technology problem’ here. While we do not have the technology to build affordable flying cars (yet), road technology in the world is already fairly advanced, and it has been so for decades. Other cities of the world have been able to build roads that don’t develop potholes. In fact, even many Indian cities like Chandigarh, Ahmedabad, Patna, etc. can be credited for the quality of their roads.

Okay then, is there a ‘budget problem’? Can Mumbai not afford good roads? That can’t be the case either. The BMC, as we know is India’s richest municipal corporation, with an annual budget exceeds that of several small states! That makes us turn our attention to the third possibility- the ‘corruption problem’.

One can hypothesize that it is corruption that is preventing Mumbai from having the roads that it deserves. Corruption could exist in the form of collusion between the administration and contractors. A well oiled kick-back system, if it exists, would benefit all stakeholders (except the citizenry, of course). I’ll explain the connection between corruption and bad roads with an example.

Suppose a particular contractor, say Sai Kripa Enterprises Private Limited, has won a certain road contract for Rs. 100/-. There could be an explicit understanding between the parties that the contractor would build the road for a lower amount, say Rs. 40/-, keep Rs. 10/- as its profit and the remaining Rs. 50/- would be paid to the corporators and officials (to fund their election campaigns, buy iPhones, whatever). So what happens here is that the Mumbai taxpayer pays Rs. 100/- for a road that is actually built in Rs. 50/- (contractor’s profit is a part of the cost, for the city). Naturally, a road built in Rs. 50/- will behave like a road built in Rs. 50/-. Ergo, it will cave, and crater, and flood, and break.

Let’s assume this is our problem – corruption. How do we treat it?

My belief is that we cannot treat it.

After all, all our current safeguards have failed us- audits, inspections, online ‘transparent’ tender process, Right To Information (RTI) have all failed miserably; the state of our roads is the proof. While citizen activism, journalist activism and social media activism have certainly helped unify voices and channelize frustration, they have not been able to ensure delivery of good roads.

The good news, however, is that though we cannot ‘treat’ corruption, we can certainly ‘bypass’ it.

All we’ve got to do is ensure that a clean, honest contractor wins the contract each time. Imagine if Ratan Tata, Kumarmangalam Birla, Pallonji Mistry, Anand Mahindra and Adi Godrej (leaders from clean business houses) were to get together and pledge to start subsidiary companies that would only focus on building good, durable city roads. Every time tenders are invited by the BMC for a road contract, these companies would submit a bid. If the system is truly online and transparent, these new companies would even win the contract.

Contracts are usually awarded to the bidder who promises to meet the terms in the lowest price possible. As far as pricing goes, these business houses with their deep pockets would actually be able to win a price war, should it ever arise. Reliance Jio is a prime example of penetrating a new industry using existing financial muscle. Just imagine if these legacy-house companies were to build roads, how good they would be!

There are several reasons why I believe this plan would work. First, the business houses would not risk the good reputation they enjoy for unjust enrichment and short-term profits; they would not cut any corners for a little extra surplus. Second, private companies like Sai Kripa Enterprises Private Limited (mentioned earlier) can get away with a lot of mischief because they are away from media scrutiny (this is somewhat changing), public scrutiny, market scrutiny and regulatory scrutiny. Their promoters take advantage of the fact that they are away from the public eye and their identities are unknown. Legacy business houses would hopefully establish public companies (maybe even listed companies!) which are subject to heavier regulatory scrutiny and audits, to conduct this new business.

Next, we know how small-time builders often incorporate a new company for each new project. This is often done to loosen the grip of the law, escape liability and skirt regulation. Legacy business houses would not resort to such measures. They would conduct their operations under one permanent entity.

A question would arise that why would legacy business houses agree to doing this? For several reasons. From a business standpoint, for diversification. As profits in existing lines of business dry out, corporations are always looking for more pastures. Luckily, Shapoorji Pallonji, Tata Sons and Godrej are already into the construction and infrastructure business and as an obvious consequence, possess the relevant work experience. For the others, it would be a foray into a new line of business.

Profits aside (I mean clean, well-deserved profit), they could also do it for the welfare of the city that has been so kind to them. Imagine all the goodwill they would earn from citizens who, at the moment, can only dream of good roads. The notifications bar on Anand Mahindra’s twitter account, for example, would simply not stop buzzing; people would run to thank the man. Corporate Social Responsibility (CSR) regulations were made applicable to companies recognizing the fact that companies exist and function in a society, not in isolation, and must therefore work to benefit the society they inhabit. I can see no better example of corporate social duty than giving good roads. After all, I took 1.5 hours to cross Elphinstone Bridge yesterday!

Finally, let’s be truthful – Air India, Maruti Udyog of the 1970s, MTNL, BSNL etc. are all failed companies. Nobody would use their services, given a choice. They are (were, in case of Maruti Udyog) all operationally inefficient and poorly run. Government companies and unethical private companies have kept city infrastructure in the dark ages for far too long. It’s time we let serious players take over.

We are already witnessing this paradigm shift elsewhere; most of the new gardens and slum rehabilitation societies that you see are constructed and maintained by big builders (and not by the civic or state administration) in exchange for FSI and building permissions. It is a classic case of public-private partnership. Everybody will win if the aforementioned plan is implemented. The only ones who will lose (financially) are unscrupulous contractors and corporators. Well, they didn’t deserve the ‘extra’ money anyway.

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Kapil Talwar
Chartered Accountant, newspaper enthusiast, current affairs junkie.

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