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Though Mumbai is Maharashtra's and India's major economic engine contributing about Rs. 40,000 crore in taxes annually, the city gets a measly Rs. 1000 crore in return from the center and the state (See Annexure Figure 3).
Similarly, even though Mumbai has a large demand base and is hailed as the commercial capital of the country, it makes a poor cousin of cities of similar magnitude and complexity as far as consumption is concerned.

This is due to the extremely high cost burden on the end consumer in the form of more taxes. Further, it is observed that financial institutions are restricting lending for urban infrastructure development because of the higher uncertainties associated with the timely completion of such projects. These institutions are investing in projects with higher cost to benefit ratio, thus following a sub optimal strategy. Also, there is lack on will on the part of the government for sanctioning projects on a large scale.

So in a nutshell, all these factors stated above are tantamount to conveying to the end users the significance of the restricted projects and its relevance to improving the system. On one hand we need massive infusion of technical expertise and capital for urban infrastructure development, whereas on the other hand, we do not want them till the existing system becomes more efficient.

Additionally, the system is subjected to natural subordination or in risk management parlance 'systematic risk'. Examples of systematic risk include fluctuating prices of basic raw materials for infrastructure development like steel, cement, fuel, etc.

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* Contributed by -
R. Rajesh, PGDBA - 1st Year,
Kiron Kumar Varma, PGDBA - 2nd Year,
K. J. Somaiya Institute of Management Studies & Research, Mumbai.