Mumbai’s Economic Paradox: Prosperity Amidst Poor Living Conditions

Amita Bhide

How and why does Mumbai rank better in terms of economics and human capital despite having one of the worst rankings on the quality of life?

Oxford Economics recently released a global cities index in which 1000 cities across the world were ranked along five parameters: economy, human capital, quality of life, environmental quality and governance. Several aspects of the report can be contested: its methodology, the choice of indicators within the parameters, the mode of measurement and so on. And yet, one can use the report to compare cities and to ask new questions of them. One of these concerns Mumbai.

Mumbai is ranked 427th along this index with a ranking of 169 and 126 respectively on economics and human capital, 380 on governance,812 on environmental quality and 915 on quality of life. To put this in perspective, the other global cities in this range of 426-450 rank include Surabaya, Cebu City, Colombo, Muscat, Algiers, Tehran, Cape Town and Accra.

In comparison to other Indian cities included in the index, Delhi is ranked at 350, Bangalore at 411, Chennai at 472 and Kochi at 521.Comparing the Indian cities, Mumbai stands second in terms of economics and human capital after Delhi, fourth in terms of environmental quality and quality of life with Delhi at the last position among Indian cities on these parameters.

The Mumbai ranking thus raises a puzzle: How and why does Mumbai rank better in terms of economics and human capital despite having one of the worst rankings on the quality of life and somewhat worse ranking on environmental quality? In other words, can prosperity sustain itself amidst poor living conditions and rising environmental hazards? What are the vulnerabilities of such a city?

There are perhaps two ways in which this puzzle can be interpreted. The first concerns the question of what kind of economics props up the city. The second concerns inequality. Let us examine each of these in detail.

Mumbai has essentially been experiencing a real-estate led growth for the last two decades. A real estate-led growth can inflate the GDP, its size and its scale can also prop up the per capita GDP. Interestingly, it can also create employment in the construction sector. However, the quality of employment may be suspect; in fact, it can generate high levels of insecurity (non-certainty of jobs), life-risks and given the way the construction sector is structured, it can actually create a highly marginalized and peripheralized class of workers.

The challenge for Mumbai is to diversify its economic bases, enhance the quality of human capital through education and thereby to ensure that the citizens of the city have good employment and entrepreneurial prospects.

Rising inequality should perhaps be recognized as a central concern of the city. Some of the world’s topmost high net-worth individuals and corporates are based in the city but this is matched by extremely intense and distressing levels of poverty. Studies reveal that the proportion of malnourished children in Mumbai equals that of some sub-Saharan African countries. This is certainly a matter of shame for the city. While Mumbai has been characterized by the presence of pavement dwelling, slums all through its history; the city has also been historically known for its ability to give opportunities to thousands and propel many more dreams.

The intensity of inequality in the city is currently on the rise with the poor experiencing an expulsion from basic services, education, health, employment and from their tenuous claims to land as well. The so called ‘free housing’ gives benefits of a formal tenement while shrinking the overall proportion of land in which the poor stayed and creating near slum -like conditions of life in the formal tenements.

We now try to address the puzzle. Despite the rising inequality and the changing structure of the economy with its debilitating impacts on a sizeable chunk of the population, how does Mumbai manage to still do well on the economic front? Is this sustainable? I suggest that the constant rise in real estate economy is a prop up by the state which also has a stake in the same. Moreover, such a growth then blinds the state to pay attention to the vulnerabilities of the city and its people who are not only experiencing disasters more frequently and intensely but where even everyday life has the potential to become a disaster.

The solutions found to issues that are systemic and demanding some foundational changes are in the form of patchy band-aids. Thus, air pollution is countered by spraying of water on the streets (of course in spaces of the privileged); greening is in the form of proposing ocean parks in South Mumbai.

Despite several court admonishments, the city refuses to recycle its waste and places its faith in isolated technological solutions. It is perhaps only in the area of mobility that the city is seeing large scale investment and change, though there are apprehensions about its affordability for the masses. Also, one is unsure of whether the change in transport geography which is ensuring a larger urban region is one which will stimulate a vibrant regional economy.

A city is made by a complex combination of capital, institutions and people. Institutions are the arbitrators that balance the interests of capital with those of people. Mumbai currently seems to be a city where capital and institutions are not aligned with the real interests of people i.e. making the city livable. The higher rank on the economic front may thus be only a short-lasting bubble.

Amita Bhide works at the School of Habitat Studies, Tata Institute of Social Sciences. She studies urban issues with a specific focus on Mumbai.

The article was first published in Hindustan Times as The Mumbai Puzzle: What makes the city tick despite adverse conditions? on June 4, 2024.

Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.

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Acknowledgment: This article was posted by Aasthaba Jadeja, a visiting researcher at IMPRI.