Postcard from Mumbai

Will Hodges and James Forsyth don their economist specs to take a tour of India's thriving metropolis

It's our first morning in Mumbai and we are feeling the heat, 35 degrees centigrade of it to be exact. With the rainy season now just a few weeks away the air is thick and feels ready to burst. A smoggy haze hangs over the city, suffocating us as we remain sitting in endless traffic jams or queued behind red lights. With the air conditioning failing to work in out clapped out Tata four-seater, we savour in the rush of cool air as the car begins moving once more.

Much has changed in Mumbai since our last visit five years ago and Aasim, our driver and part-time guide, is quick to point out the new developments which have sprung up in our absence: a new high rise set of apartment buildings; a half-constructed overpass; a new addition to the already cramped skyline.

Unlike us in our taxi, Mumbai is a town on the move. It is one of the fastest growing cities on the planet, having grown from 10 million people in 1991 to 18 million. The McKinsey Global Institute Report forecasts the population to hit a massive 33 million by 2030, approximately four times Greater London today.

Traffic congestion is just one of the problems caused by its over-expansion. The city is clogged with people of all walks of life, many of them flooding in from the countryside all over India as the country undergoes a quick and chaotic process of urbanisation. Aasim is one of these migrants. He is aged 30 with a wife and young child and has come from a village in the state of Orissa (North East India) to Mumbai. He plans to work for a few years, earn good money and then return with "enough for everything we need". Aasim does not want to stay in Mumbai any longer than he has to. Life expectancy of Mumbaites is low, he tells us; just 57 - around seven years lower than that of other Indians. The pollution takes its toll. Ranked among the 10 most polluted cities in the world, a day walking around the city is said to inflict the same damage as smoking two and a half packets of cigarettes. 10 per cent of people in the most polluted areas suffer from asthma.

The sidewalks are just as chaotic as the roads with street hawkers selling juice and cigarettes, families camped out on pavements, people rushing by, others lingering; there seem to be too many people with too little space. One vendor is selling an array of books, magazines and newspapers. A headline in India's main financial daily screams 'Congested Mumbai to choke further' and highlights the city's 'overstretched' water supply and transportation services. That the infrastructure requires development and money has not gone unnoticed or ignored: the Indian government recently promising $500 billion over the next few years. There are opportunities aplenty for developers and construction and engineering firms. Our trip from the airport to our hotel the previous evening took us over a new eight-lane bridge which has reduced time from the town's upmaket Bandra district to Worli from 40 to just seven minutes. A new monorail network is due to open in 2011.

Despite the government's efforts, however, for the moment it is still chaos. And yet, in a strange, haphazard way it works. Everywhere there are signs of industry, entrepreneurship and growth. Aasim drives into the town's sprawling slum, Dharavi, home to one million people and famed for its depiction in Danny Boyle's Slumdog Millionaire. Aasim points out a store front, laden with empty water bottles and spilling with bags of neat strips of plastic. This is a bottle recycling store, he tells us. People take in used containers in exchange for a Rupee (about one and a half pence). Everywhere we step there are clay pots baking in the sun, ready for sale in the city's markets. Down the narrow allies, there are men producing everything from fabrics and clothes to metals and oil. Dharavi is home to an estimated 15,000 single room factories, each no more than a few square feet in size.

This is a billion dollar economy our guide tells us. It's a big sum, though it equates to little over £700 per person a year. For all its charm, Dharavi is desperately poor. Conditions, though improving, are still a million miles from the terraced apartment blocks of the city's richer districts hardly half a mile down the road. There is just one toilet per 15,000 residents, no public hospital, and only a handful of municipal schools. Though clean to the eye, open sewers filled with human and industrial waste leave residents prone to a cocktail of diseases including cholera, typhoid and malaria.

Things are changing. The city's authorities, embarrassed into action by the publicity from the 2008 Oscar winner, have hatched plans to relocate some 57,000 families to a 30 million square foot new development across the city. Out of sight; out of mind. The 40% of Mumbai's residents estimated to be living in unofficial housing highlight the scale of India's urban poverty, interfering with the nation's image as a modern, growing economy: a BRIC nation ready to assert itself on the global stage. The slum's population have been opponents to the scheme, however, preferring to remain in their homes, free from government interference and bureaucracy.

En route home, Aasim takes us via the smart Breach Candy area and Altamount Road where Mukesh Ambani is building his billion dollar skyscraper home. Ambani, one of the richest men in the world having inherited Reliance, India's largest private company, is harnessing the combined flashiness of all of Bollywood in the 27 construction that will boast 400,000 square feet area of living area, six floors of parking and three helicopter pads.

Ambani is one of the winners from India's growth story. With forecast GDP growth of around 8% in 2010, India battled through the economic downturn relatively unscathed. Yet, rapid growth comes at a cost. With inflation at 9.9% in March and food price inflation soaring above 20% after recent droughts, the India Reserve Bank has unleashed a series of money tightening measures since January to cool fears that the economy is overheating. Most recently the Base Rate was raised to 3.75% with banks required to hold more cash in reserve. Further action is expected.

Returning towards South Mumbai, back to the Gateway of India, the landing place for British governors and other distinguished personages in a bygone era, our attention is caught by yet more street vendors. Minded of what we had seen we consider the path India, and Mumbai, have taken since Independence over 60 years ago. Extreme wealth and a wealth of extremes have grown over this period.

From a scruffy man sitting with charcoal burning at his side we buy some roasted peanuts, served in used fax paper. We ask him where it's good to get a drink. He wobbles his head, beams at us and points across the road to the five-star Taj Palace Hotel and says, "it's very good there".

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