Political and Economic Management of Megacities

Managing Mumbai means making difficult choices

A megacity is an urban area with more than 10 million inhabitants. Mumbai, on India’s west coast in Maharashtra, faces the task of providing housing, transport, water and sanitation for a very large and growing population. Managing these needs is not simply a matter of knowing how to build more homes or lay more pipes. Decision-makers must also secure funding, decide which needs take priority and resolve disagreements about who should benefit.

Political challenges concern power, decisions and competing interests. Economic challenges concern costs, resources and livelihoods. They frequently overlap: deciding how to redevelop a settlement is a political choice, but it also affects land values, construction costs and residents’ incomes.

Economic growth does not remove funding pressures

Mumbai is a major centre of finance, trade and industry, contributing approximately 6% of India’s GDP. Nevertheless, a wealthy urban economy does not automatically provide adequate services for everyone. Economic output is not the same thing as the money available to the municipal government to spend on infrastructure.

Large projects require substantial investment, while existing systems need maintenance. Mumbai’s suburban railways carry around 7.5 million passengers a day. Increasing capacity involves spending on trains, stations and signalling, rather than simply encouraging more people to use public transport. Water supply presents another costly task: an estimated 30% of supply is lost through leaking pipes, so replacing ageing mains matters alongside providing new connections.

Rapid population growth adds demand while these improvements are being planned and built. Managers must therefore fund both the repair of existing infrastructure and its expansion. Spending on one urgent need can leave fewer resources available for another.

Limited land makes management more expensive

Mumbai occupies a narrow peninsula, restricting the space available for development and concentrating movement into limited transport corridors. Scarce land contributes to high land prices, making affordable housing difficult to provide.

This creates a management dilemma. Centrally located land is attractive to commercial developers, but it may already contain homes and workplaces. Redevelopment can make more intensive use of that land, yet clearing existing settlements risks displacing people or separating them from their jobs. The challenge is not just to create more buildings, but to keep the city accessible to the people whose labour supports its economy.

Political challenges: whose interests take priority?

Different groups can want different outcomes from the same development. Residents may prioritise secure housing, affordable services and remaining close to work. Developers need a financial return. Public authorities must address overcrowding and inadequate infrastructure while considering the wider city’s needs.

Dharavi illustrates these tensions. Proposals for its redevelopment involve replacing existing buildings with high-rise housing supplied with water, electricity and sanitation. Private developers would help fund construction in exchange for opportunities to develop and sell commercial property on valuable land.

This arrangement could help finance better housing, but it raises political questions about who qualifies for rehousing and whose interests shape the plans. Proof-of-residence requirements can exclude some residents. People with insecure property rights are especially vulnerable because occupying a home does not necessarily give them a recognised legal claim to remain there.

Protecting livelihoods as well as improving housing

Dharavi is also a productive economic area, with recycling, leather goods, textiles, pottery and food-processing businesses. Its informal economy has an estimated annual output of around US$1 billion. Many workshops are closely integrated with homes.

Moving residents into flats may improve basic amenities without providing suitable space for these activities. If redevelopment disrupts workshops, customers or community networks, residents could lose income even while gaining better housing. Managers therefore need to consider employment and working space alongside the number of new homes.

Mumbai’s central management challenge is to reconcile these pressures: finance essential improvements, accommodate continued growth and distribute benefits fairly without destroying existing livelihoods. Political agreement and economic resources are both necessary; having one does not guarantee the other.

Political challenges

• Decide which needs and areas receive priority.
• Reconcile residents’ needs, developers’ financial interests and public authorities’ aims.
• Address insecure property rights and disputes over eligibility for rehousing.
• Dharavi: redevelopment could improve amenities, but exclusion and displacement remain concerns.

Economic challenges

• Fund infrastructure expansion and maintenance as population grows.
• Scarce peninsula land raises development costs and limits space.
• Mumbai generates approximately 6% of India’s GDP, but city wealth is not the same as a public-service budget.
• Around 7.5 million daily rail passengers and estimated 30% water leakage illustrate investment pressures.

The key connection

Dharavi’s informal economy produces an estimated . Redevelopment must consider workplaces and incomes, not housing alone. Commercial development can help fund improvements, but its benefits may not reach all residents.