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Tag Archives | Delhi

The sky is the limit

Our cities need skyscrapers to gain benefits from higher density, and to reduce the space crunch in the Central Business Districts. 

Besides making cities more affordable and architecturally interesting, tall buildings are greener than sprawl, and they foster social capital and creativity.”-Edward Glaeser

Central Business Districts (CBD) have always been heavily dense locations as I had mentioned in my previous article. This high density within CBDs helps the citizens reap the benefits of proximity between people and businesses. The proximity between work and residences, serendipitous meetings, and a wide range of options for work and leisure are just few of the reasons why cities attract so many people. However, the space crunch in the city forces people to live farther away from these hubs creating sprawls that extend to far ends.

Sprawls are not the opposite of urban density [1] as it does not reduce the accessibility to the public spaces. However it lacks the essential benefits of a city like easy networking, economies of scale created with business and customers being in close proximity etc. Sprawls also increase the economic cost as citizens have to spend most of their time travelling to the CBD. To add to it, large distances and inefficient public transport infrastructure increases the use of private vehicles that cause congestion and pollution.

One of the ways to reduce the sprawl can be by building skyscrapers in the city. In order to avoid horizontal growth over the land, a good option will be to grow vertically. With the advent of technologies like lifts, decrease in the price of steel, and architects like Daniel Burnham and John Root, cities started having taller buildings by the 19th century. These proto – skyscrapers set the trend for the coming century where the heights were explored with the advancement in the field of architecture.

In this race toward the sky, India was left behind due to its restrictive policies, specially the low Floor Space Index (FSI). FSI refers to the ratio between the number floors that can be built and the size of the land on which the buildings are made. The FSI in Mumbai is 1.33 as oppose to 15 in New York and 13 in Shanghai. Hence, where builders in New York can build 15 floors for 1 sq. km. of land, in Mumbai they can only build one floor with the same amount of land. The ways to measure FSI ranges amongst Indian metros as Delhi measures it in percentages, and Bangalore calculates based on the size of the plot and the road width. Irrespective of whichever method used, India cities are far from being able to expand vertically like other metros. Therefore, unable to move vertically, the builders in Indian cities are forced to expand horizontal leading to sprawls.

In order to cover for their policies restricting the right to build, various city authorities allowed builders to use Transferable Development Rights (TDRs). TDRs are transferable documents that allow builders to transfer the building rights not used by them to another property or sell to a willing buyer. In most of the cities, keeping in mind the infrastructural restraint, the TDRs are allowed to be used in specific regions. For instance in Mumbai, TDRs are allowed only in the north of the original building or in the outskirts of the city. It is because of the TDRs that Mumbai skyline is unequally distributed with a large patch of slums interrupted with tall buildings. Unlike Mumbai, the other Indian cities do not suffer from natural scarcity of land and have instead expanded horizontally in all directions. These expansions are concentric in nature so as to maintain equidistant from the centre to the ends. Even then the sprawls lead to longer travel time and increase the carbon footprint within the cities.

The biggest disadvantage of a low FSI is that it leads to high prices in the land near the CBD. The artifice scarcity of land created by restricting FSI increases the demand for the land near CBD more than the supply. Thereby, these regions become unaffordable and creates incentives for the citizens to crowd out. For instance, the restrictive FSI in Bangalore has led to the development of various business districts across the city. Owing to the crowded central regions, the businesses have moved to other places with higher human resource pools and lower land rates. For example the areas like Koramangala and HSR layout, once parts of the outskirts, have become the magnets for new business and migrants coming into the city.

That said, the argument supporting the low FSI has been that the city infrastructure will not be able to take the pressure of the large number of residents. This argument holds a strong ground in context to Indian cities which lack basic infrastructure like roads, transport etc. The way out, however, is not by restricting people from living closer to the CBD. Primarily because cities grow organically and restricting this growth only creates haphazard expansions in the form of informal housing and narrow streets. Therefore, any city administration should account for the population growth in the coming years and create policies that can help the cities to grow along with the rising population- like increasing the FSI.

India’s urban population is expected to reach 600 million by 2031 as per a UN backed report. With an increasing number of people shifting to the cities in pursuit of better opportunities, it is important to create provisions for affordable housing. It is the absence of such provisions that gives rise to slums and unhygienic living conditions which inevitably affects the general cleanliness and health of the city. By increasing FSI in Indian cities the policy makers will be able to reduce the demand and supply gap existent in the housing sector and thereby reduce the land prices. This will not only help increase the density within CBDs but also help provide affordable housing.

Its easy to see that the skyscrapers will allow cities to accommodate large number of people and explore the heights of the skyline. As Glaeser has mentioned in his book Triumph of the city, “In the most desirable cities, whether they are on Hudson river or the Indian Ocean, height os the best way to keep prices affordable and living standards high.”

Devika Kher is a policy analyst at Takshashila Institution. Her twitter handle is @DevikaKher.

[1]  Edward Glaeser, “Triumph of the city”, (Pan:Croydon) 2011

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The push and pull of Central Business Districts

Central Business Districts need to be decongested using tools like relocation, ICT and incentive based pricing to reduce the congestion in Indian cities. 

As Delhi tries to solve the problem of congested traffic and pollution using the odd and even scheme, it is time we look at other feasible solutions to decongest the Indian cities. A common reason for congestion in a city is the compact space, usually in the centre, within which most of the commerce and businesses are located. This central region is known as the Central Business District (CBD).

Commonly known as the downtown region, CBDs lie in the middle of the city so that the commercial centres can be central to all external or internal activities in the city. This central location creates opportunities for the businesses to gain from the interaction between people and jobs, and helps to reach maximum number of people living around the city. As for the people, the proximity to work reduces travelling cost and keeps them close to the various opportunities provided by the city.  Owning to these benefits, CBDs tend to be expensive, crowded, and dense. Classic examples of CBD can be Nariman point in Mumbai or MG Road in Bangalore.

Along with being the hub for all the commercial activities, CBDs also attract a significant amount of population either as consumers or for work. Thereby, a large number of people travel across the ends of the city to come to the centre. However, the lack of appropriate infrastructure to take the burden of the incessantly rising population that travels to or lives in the CBD creates congestion and traffic. This high cost of travel and the benefits provided by the CBD makes it more desirable for the businesses to stay close to the CBD. The increase in demand, thereby, leads to an increase in the land value and pushes the middle income population out of the CBD. Hence, the population that remains in the CBD includes the rich who can pay the high prices or the poor who can’t afford the travel cost. Last year, Delhi’s CBD, Connaught Place was ranked fifth most expensive office market in the world, followed by Mumbai’s Bandra-Kurla Complex (BKC) at 15th position.

In order to reduce the stress borne by these CBDs, it is important that appropriate steps are taken to decongest them. One of the essential steps is relocation. When the congestion on the streets becomes intolerable, people tend to move closer to the CBD or the business moves to the clusters where there is market for workers and the products/services. Mumbai is a successful example of how multiple BDs were create to to effectively reduce the stress on the original CBD. Dissipation of BDs across the cities helps in redirecting the traffic and the land values in the original CBDs. Similarly, Delhi require more versions of BDs such as Nehru Place to reduce the pressure and the land value in Connaught place.

Besides decongesting cities, the recent innovation in the Information and Communication Technology (ICT) should also be used to reduce the dependence on a physical business districts.  After 1999 and advent of ICT, the urban experts have been debating the relevance of CBDs altogether. The ICT provides a flexible work-space for various activities and reduces the spatial constraint. It provides amenities that made it easy to coordinate work through Skype (online video calls) and allow online shopping and transactions.

Tai-Chee Wong, specialist in urban studies, tried to check the relevance of CBD in the ICT era in his paper based on the financial district in Singapore. Wong’s paper studied whether an extended CBD is required for future financial district expansion or will it turn out to be superfluous. The paper explains further that ICT makes it possible to bring different categories of labour to places at varied costs and availability, towards the final production of goods and services. Thereby making financial corporate organisations ‘dispersed, interdependent and specialised’. However in the end after reinstating the question about the relevance of allowing a physical region for business and commerce related activities, Tai Chee Wong has concluded that,

“The ICT is an important consideration, but is largely inadequate as a decisive factor to motivate enterprises to select their location. Other factors such as an appropriate workforce, labour supply and access to transport can be more important.”

Wong’s study did not include the services sector that require face to face contact with the customer, examples being domestic services, security services etc. Moreover, the human interaction is an important element of agglomeration economies that refers to the benefits from the proximity between people or businesses. Therefore there the ICT has a limited scope for improving the condition.

The final method to reduce congestion in the CBDs can be by using methods to disincentives inefficient behaviour by the citizens. For instance, charging for parking or charging surge prices for travelling within the CBD will increase the economic cost of the citizens. This would make them reconsider their choices and make economical decisions like relying on public vehicle or car pooling. This solution however will be dependent on the current status of the public transport. As a inefficient public transport will only increase the cost of owning vehicle but would not provide alternate options. A common example for the incentive based pricing is the parking rates in Singapore that vary between the hours of the day, as well as between, weekday and weekends. Bangalore Metropolitan Transport Corporation, similarly, runs a set of AC buses for short distance within city to create a substitute for private vehicle. However, Bangalore falls short in providing high speed networks to connect the CBD and the rest of the city. Thereby restricting the growth of the city and increasing the stress on the CBD.

In addition to applying the three solutions to the problem, we should also ponder upon the question whether we should plan the CBDs or let them grow organically?

Devika Kher is a policy analyst at Takshashila Institution. Her twitter handle is @DevikaKher.

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How India made its mark in Sudan and South Sudan

The breakout of ethnic violence in South Sudan over the past month has seen hundreds of civilians killed. Yesterday, two Indian soldiers serving in in the country as part of the United Nation’s peacekeeping force died after their base was ambushed by rebels. New Delhi has close relations with Juba, and much before its independence, had impeccable and historic relations with Khartoum. Sudan was India’s first oil and gas homerun abroad.

In the mid-1990s, India seriously started mooting investing in the energy sector abroad as its newly liberalised economy and its new designers realised that for successful and uninterrupted economic growth for a country of this size, it was vital to organise uninterrupted supply of fuel.

Prior to this India, which has always been a net importer of crude, had invested in Russia which provided more than favourable conditions.  Now, things were changing and decision making on the issue at the Prime Minister’s Office was changing. One of the earliest signs of India’s intensions for overseas investments in oil and gas came with the then much publicised idea of the Central Asia Gas Pipeline Project (CAGPP), an idea first put forward by the company Bridas from Argentina. Indian diplomats at the time in Baku, the capital of Azerbaijan, had started pressurising the Indian government to seriously look into the prospects of bringing natural gas from central Asia into India, but avoiding Afghanistan and Pakistan. Alternates included building pipelines through parts of China.

As politics over the central Asian pipeline continues even today, in 2013, India’s plans to invest in energy assets abroad took it elsewhere. Africa is a continent rich in natural resources and while not much of Western interest prevailed there in the 1990s, due to various reasons, the developing world started to look at the continent as a viable and comparatively economical region to invest in.

However, there was considerable dissent within the multi-layered political circles on Delhi whether India should invest in assets such as these abroad or not, specifically in Africa. Such an investment was unprecedented in a post-90s India and possibility of this happening, while challenging, was eventually unavoidable.

When BJP’s Atal Bihari Vajpayee became Prime Minister in 1998, Indian oil and gas sector started to work towards applying (previously failed) pressure on the Prime Minister’s Office to start investing in energy assets abroad. During lobbying for this, many involved from the industry realised that some of Prime Minister Vajpayee’s Cabinet ministers were dead against investing in a project in Sudan. ONGC Videsh (OVL) had already managed to win the country’s first big foreign energy project in Russia’s Sakhalin-1 field in 2001. However, Sudan was a different, challenging, risky and unconventional bid.

One of the main reasons why powerful people such as Arun Shourie and the late Pramod Mahajan were advising Vajpayee against this “adventure” was the fact the stake India was looking to buy also involved China. This was looked upon as against India’s national interest within the cabinet and the trust factor with Beijing was not the strongest, making it a risky venture.

Ram Naik, who was the Oil Minister at the time, was spearheading these acquisitions knowing that Vajpayee was interested in this direction. Bureaucrats, oilmen and others including ministers had managed to correctly guide Naik in accepting that these bids are necessities and not luxuries. The dissent, nonetheless, continued within the cabinet. It is known that Mahajan had said: “hum gareeb desh hain. Sudan mein itna paisa lagane ki kya zaroorat hai? (we are a poor country, why do we need to put so much money in Sudan?). Arun Shourie reportedly added weight to Mahajan’s views.

However, Vajpayee and now L K Advani, who had gotten involved, were not convinced by Mahajan’s apprehensions. A meeting was organised where bureaucrats and oil industry leaders were called in to offer further convince the cabinet. By this time, the people gunning for the Sudan deal had managed to get some newspapers to back the bid, with articles favouring the deal. However, not many made it into print since time was limited. Multiple copies were printed of these few articles which were then taken into the meeting and presented as though many articles backing the bid had been published across the spectrum of the print media.

The oil industry also highlighted the fact that India had invested over $1 billion in the Sakhalin-1 project in Russia successfully. This was presented as another feather in the cap of Oil Minister Ram Naik’s accomplishments. After listening to all the details including both Mahajan and Shourie making their concerns known assertively, Vajpayee decided to overrule all opposing viewpoints after L K Advani convinced him that the deal should go ahead along with risk insurance, which was organised by a British bank. He (Vajpayee) gave ONGC Videsh a historic unconditional nod for the deal.

India went ahead and bought 25% stake in the Greater Nile Petroleum Operating Company (GNPOC) from Canadian major Talisman Energy for a staggering sum of $750 million in 2003. The China National Petroleum Company (CNPC) owns 40 per cent in GNPOC, Petronas of Malaysia has 30 per cent and the Sudanese national oil company 5 per cent.

This successful deal, passed thanks to political foresight and smart and intense lobbying by both diplomats and oil industry leaders, opened in a way many doors for other Indian businesses to grow in Africa. Even after the carving out of South Sudan from Sudan, New Delhi has managed to keep close relations with both Juba and Khartoum, even though the near war conditions between the two states do keep India’s Foreign Ministry on its toes. Last year, India had invited high level delegations from both countries to try and ease the tensions.

A lot of the troubles between Sudan and South Sudan have occurred due to the new international border separating them. Most of the rich oil and gas regions are around the border and the basins in the region are now shared by both countries. For many months Sudan had blocked routes for South Sudan, a land-locked country, to export its oil as the pipeline required for this runs via Sudan. Juba, as a response, asked India to come and build a new pipeline via Kenya, hence bypassing its problem in dealing with Khartoum and restoring its crucial funds received from oil and gas. However, India till now has not accepted due to concerns on both political (angering Khartoum which could have then got closer to China) and economic (cost of the project and the transit fees due to Kenya would have been too high).

Both Sudan and South Sudan are great examples of governance with vision, which managed to get both in the bigger business of owning energy assets abroad and getting a good foot hold in Africa, a continent on the cusp of an economic boom.

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