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Tag Archives | Mumbai

Should autos be allowed surge pricing?

If you don’t restrict the market you don’t need to restrict the price.

The Mumbai auto drivers followed their brethren in Paris and New York and went on a one-day strike against the growing number of cab-aggregator services in the city. The strike itself is a testimony to the popularity of these new and innovative means of urban transportation. It shows that people are interested in trying out new options if it helps them save time and money. The resistance from the entrenched players is obvious but what is not obvious is what the government will do about it. The confusion begins right from the start, is this public transport or private transport?


Source: Flickr

We generally refer to autos and taxis as public transport even if they are privately owned. Perhaps because the government mandates many things that the autos need to do. The color, the fare, the uniform, even the number of autos that can be on the roads is fixed by the government. In fact, the increase in the permit charges from 200 to 10000 is one of the reasons for the strike. But why would a government try to restrict the number of autos (by increasing the price of the permit or not allowing more permits)? If there are more people who want to commute by autos, then shouldn’t there be more autos on the road? The reason generally given is to protect the livelihoods of the auto drivers. Then why are the auto drivers themselves striking against the decision?

The auto drivers in Mumbai are one of the best in the country when it comes to plying by meter. But will they be now tempted to do surge pricing as well? The way to control surge pricing is not by capping it. But by allowing more vehicles and drivers to offer their services. This is beneficial for both drivers as well as passengers. The central government sent out an advisory in July of 2015 and Karnataka State Government has come out with its own policy for regulating the cab-aggregators. Both policies have focused on treating this new phenomenon like traditional auto or a taxi service. Which it is most definitely, not.

Safety should be the chief concern of these regulations. Other operational parameters like prices, hours of service, etc. should not be unnecessarily regulated. Urban public transport is in desperate need of innovation and the government should do all it can to support it. Greater use of such services will result in less vehicles on the road and easing of pressure on the current municipal transport systems. Both would benefit the poor who are dependent on fast and cheap public transport for their everyday needs. Creating a regulatory framework which puts safety and ease of compliance at its heart would be a step in the right direction in this regard.

Siddarth Gore is a Research Scholar at the Takshashila Institution and he tweets @siddhya

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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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