In India, Dynamism Wrestles With Dysfunction

8/6/2019 In India, Dynamism Wrestles With Dysfunction

1/10

June 8, 2011

In India, Dynam ism W restles W ithDysfunctionBy JIM YARDLEY

GURGAON, India In this city that barely existed two decades ago, there are 26 shopping

malls, seven golf courses and luxury shops selling Chanel and Louis Vuitton. Mercedes-Benzes

and BMWs shimmer in automobile showrooms. Apartment towers are sprouting like concreteweeds, and a futuristic commercial hub called Cyber City houses many of the worlds most

respected corporations.

Gurgaon, located about 15 miles south of the national capital, New Delhi, would seem to have

everything, except consider what it does not have: a functioning citywide sewer or drainage

system; reliable electricity or water; and public sidewalks, adequate parking, decent roads or

any citywide system of public transportation. Garbage is still regularly tossed in empty lots by

the side of the road.

With its shiny buildings and galloping economy, Gurgaon is often portrayed as a symbol of a

rising new India, yet it also represents a riddle at the heart of Indias rapid growth: how can a

new city become an international economic engine without basic public services? How can a

huge country flirt with double-digit growth despite widespread corruption, inefficiency and

governmental dysfunction?

In Gurgaon and elsewhere in India, the answer is that growth usually occurs despite the

government rather than because of it. India and China are often considered to be the worlds

rising economic powers, yet if Chinas growth has been led by the state, Indias growth is often

impeded by the state. Chinas authoritarian leaders have built world-class infrastructure;

Indias infrastructure and bureaucracy are both considered woefully outdated.

Reprints

This copy is for your personal, noncommercial use only. You can order presentation-ready

copies for distribution to your colleagues, clients or customers here or use the "Reprints" tool

that appears next to any article. Visit www.nytreprints.com for samples and additional

information. Order a reprint of this article now.

Page 1 of 10In India, Dynamism Meets Dysfunction - NYTimes.com

6/9/2011http://www.nytimes.com/2011/06/09/world/asia/09gurgaon.html?_r=1&hp=&pagewanted= ...


2/10

Yet over the past decade, India has emerged as one of the worlds most important new engines

of growth, despite itself. Even now, with its economy feeling the pressure from global inflation

and higher interest rates, some economists predict that India will become the worlds third

largest economy within 15 years and could much sooner supplant China as the fastest-growing

major economy.

Moreover, Indias unorthodox path illustrates, on a grand scale, the struggles of many smaller

developing countries to deliver growth despite weak, ineffective governments. Many have tried

to emulate Chinas top-down economic model, but most are stuck with the Indian reality. In

India, Gurgaon epitomizes that reality, managing to be both a complete mess and an economic

powerhouse, a microcosm of Indian dynamism and dysfunction.

In Gurgaon, economic growth is often the product of a private sector improvising to overcome

the inadequacies of the government.

To compensate for electricity blackouts, Gurgaons companies and real estate developers

operate massive diesel generators capable of powering small towns. No water? Drill private

borewells. No public transportation? Companies employ hundreds of private buses and taxis.

Worried about crime? Gurgaon has almost four times as many private security guards as police

officers.

You could call it the United States of Gurgaon, said Sanjay Kaul, an activist critical of the

citys lack of planning who argues that Gurgaon is a patchwork of private islands more than an

interconnected city. You are on your own.

Gurgaon is an extreme example, but it is not an exception. In Bangalore, outsourcing

companies like Infosys and Wipro transport workers with fleets of buses and use their own

power generators to compensate for the weak local infrastructure. Many apartment buildings in

Mumbai, the nations financial hub, rely on private water tankers. And more than half of urban

Indian families pay to send their children to private schools rather than the free government

schools, where teachers often do not show up for work.

With 1.2 billion people, India is the largest democracy in the world, a laboratory among

developing countries for testing how well democracy is able to accommodate and improve the

lives of a huge population. India is richer than ever before, with rising global influence. Yet its




3/10

development is divisive at home. It is experiencing a Gilded Age of nouveau billionaires while it

is cleaved by inequality and plagued in some states by poverty and malnutrition levels rivaling

sub-Saharan Africa.

The volatile contradictions of rapid economic growth ricochet daily through Indian life. Middle-

class rage over mounting corruption is visceral. Frustration with the government is widespread.Leftists and other critics blame Indias landmark 1991 market reforms for failing to lift the rural

poor out of poverty; business leaders warn that India risks slower growth or even stagnation

unless those economic changes deepen and governing improves.

Today, Gurgaon is one of Indias fastest-growing districts, having expanded more than 70

percent during the past decade to more than 1.5 million people, larger than most American

cities. It accounts for almost half of all revenues for its state, Haryana, and added 50,000

vehicles to the roads last year alone. Real estate values have risen sharply in a city that has

become a roaring engine of growth, if also a colossal headache as a place to live and work.

The Birth of a Boom

Before it had malls, a theme park and fancy housing compounds, Gurgaon had blue cows. Or so

Kushal Pal Singh was told during the 1970s when he began describing his development vision

for Gurgaon. It was a farming village whose name, derived from the Hindu epic the

Mahabharata, means village of the gurus. It also had wild animals, similar to cows, known for

their strangely bluish tint.

Most people told me I was mad, Mr. Singh recalled. People said: Who is going to go there?

There are blue cows roaming around.Gurgaon was widely regarded as an economic wasteland. In 1979, the state of Haryana created

Gurgaon by dividing a longstanding political district on the outskirts of New Delhi. One half

would revolve around the city of Faridabad, which had an active municipal government, direct

rail access to the capital, fertile farmland and a strong industrial base. The other half, Gurgaon,

had rocky soil, no local government, no railway link and almost no industrial base.

As an economic competition, it seemed an unfair fight. And it has been: Gurgaon has won,easily. Faridabad has struggled to catch Indias modernization wave, while Gurgaons




4/10

disadvantages turned out to be advantages, none more important, initially, than the absence of

a districtwide government, which meant less red tape capable of choking development.

By 1979, Mr. Singh had taken control of his father-in-laws real estate company, now known as

DLF, at a moment when urban development in India was largely overseen by government

agencies. In most states, private developers had little space to operate, but Haryana was anexception. Slowly, Mr. Singh began accumulating 3,500 acres in Gurgaon that he divided into

plots and began selling to people unable to afford prices in New Delhi.

Still, growth was slow until after 1991, when the government barely staved off default on foreign

debts and began introducing market economic reforms. Demand for housing steadily increased,

followed by demand for commercial space as multinational corporations began arriving to take

advantage of Indias emerging outsourcing industry.

Outsourcing required workspaces for thousands of white-collar employees. In New Delhi, rents

were exorbitant and space was limited, and Mr. Singh began pitching Gurgaon as an

alternative. It did have advantages: it was close to the New Delhi airport and a Maruti-Suzuki

automobile plant had opened in the 1980s. But Gurgaon still seemed remote and DLF needed a

major company to take a risk to locate there.

The answer would be General Electric. Mr. Singh had become the companys India

representative after befriending Jack Welch, then the G.E. chairman. When Mr. Welch decided

to outsource some business operations to India, he eventually opened a G.E. office inside a

corporate park in Gurgaon in 1997.

When G.E. came in, Mr. Singh said, others followed.

With other Indian cities also competing for outsourcing business, DLF and other developers

raced to capture the market with a helter-skelter building spree. Today, Gurgaon has 30 million

square feet of commercial space, a tenfold increase from 2001, even surpassing the total in New

Delhi.

If the buildings were not there, Mr. Singh said of multinational companies, they would have

gone somewhere else.

Ordinarily, such a wild building boom would have had to hew to a local government master




5/10

plan. But Gurgaon did not yet have such a plan, nor did it yet have a districtwide municipal

government. Instead, Gurgaon was mostly under state control. Developers built the

infrastructure inside their projects, while a state agency, the Haryana Urban Development

Authority, or HUDA, was supposed to build the infrastructure binding together the city.

And that is where the problems arose. HUDA and other state agencies could not keep up withthe pace of construction. The absence of a local government had helped Gurgaon become a

leader of Indias growth boom. But that absence had also created a dysfunctional city. No one

was planning at a macro level; every developer pursued his own agenda as more islands

sprouted and state agencies struggled to keep pace with growth.

We have to keep up, said Nitin Kumar Yadav, the local HUDA administrator. That is our

pressure.

Gurgaon had been marketed as Millennium City, yet it had become an unmanageable city. For

companies that had come to India in search of business efficiencies, the inefficiencies of

Gurgaon presented a new challenge they would have to overcome on their own.

Self-Contained Islands

It is 8 p.m. on a recent Tuesday, time for the shift change at Genpact, a descendant of G.E. and

one of Gurgaons biggest outsourcing companies. Two long rows of white sport utility vehicles,

vans and cars are waiting in the parking lot, yellow emergency lights flickering in the early

darkness, as employees trickle out of call centers for their ride home. These contracted vehicles

represent Genpacts private fleet, a necessity given the absence of a public transportation

system in Gurgaon.

From computerized control rooms, Genpact employees manage 350 private drivers, who travel

roughly 60,000 miles every day transporting 10,000 employees. Employees book daily online

reservations and receive e-mail or text message tickets for their assigned car. In the parking

lot, a large L.E.D. screen is posted with rolling lists of cars and their assigned passengers.

And the cars are only the beginning. Faced with regular power failures, Genpact has backup

diesel generators capable of producing enough electricity to run the complex for five days (orenough electricity for about 2,000 Indian homes). It has a sewage treatment plant and a post




6/10

office, which uses only private couriers, since the local postal service is understaffed and

unreliable. It has a medical clinic, with a private ambulance, and more than 200 private

security guards and five vehicles patrolling the region. It has A.T.M.s, a cellphone kiosk, a

cafeteria and a gym.

It is a fully finished small city, said Naveen Puri, a Genpact administrator.

Actually, it is a private island, one of many inside Gurgaon. The citys residential compounds,

especially the luxury developments along golf courses, exist as similarly self-contained entities.

Nearly every major outsourcing company in the city depends on private infrastructure, as do

the commercial towers filled with other companies.

We pretty much carry the entire weight of what you would expect many states to do, said

Pramod Bhasin, who this spring stepped down as Genpacts chief executive. The problem a

very big problem is our public services are always lagging a few years behind, but sometimes

a decade behind. Our planning processes sometimes exist only on paper.

For many years, even Gurgaons commercial centerpiece, Cyber City, was off the public grid.

They were not connected to any city service, said Jyoti Sagar, a lawyer and civic activist. They

were like a spaceship. You had these shiny buildings, and underneath you had a huge pit where

everybodys waste was going.

Not all of the citys islands are affluent, either. Gurgaon has an estimated 200,000 migrant

workers, the so-called floating population, who work on construction sites or as domestic help.

Sheikh Hafizuddin, 38, lives in a slum with a few hundred other migrants less than two miles

from Cyber City. No more than half the children in the slum attend school, with the rest

spending their days playing on the hard-packed dirt of the settlement, where pigs wallow in an

open pit of sewage and garbage. Mr. Hafizuddin pays $30 a month for a tiny room. His landlord

runs a power line into the slum for electricity and draws water from a borehole on the property.

Sometimes it works, Mr. Hafizuddin said. Sometimes it doesnt work.

Even at the fringes of Gurgaons affluent areas, large pools of black sewage water are easy to

spot. The water supply is vastly inadequate, leaving private companies, developers andresidents dependent on borewells that are draining the underground aquifer. Local activists say




7/10

the water table is falling as much as 10 feet every year.

Meanwhile, with Gurgaons understaffed police force outmatched by such a rapidly growing

population, some law-and-order responsibilities have been delegated to the private sector.

Nearly 12,000 private security guards work in Gurgaon, and many are pressed into directing

traffic on major streets.

When an outsourcing employee was sexually assaulted after being dropped near her home in

New Delhi, politicians placed the onus on the companies, even though the attack occurred on a

New Delhi street. Outsourcing companies now must install GPS devices inside every private car

and hire more security guards to escort female employees to their home at night.

The politicians are basically telling me that the Delhi roads are my responsibility, which is not

the case, said Vidya Srinivasan, who oversees logistics for Genpact.

Yet outsourcing is thriving in Gurgaon, anyway. Last year, a leading Indian industrial

association determined that outsourcing was directly and indirectly responsible for about

500,000 jobs in Gurgaon. Companies still gravitate to Gurgaon because the citys commercial

space is more modern, more abundant and far cheaper than that in New Delhi, while Gurgaon

is also a magnet for Indias best-educated, English-speaking young professionals, the essential

raw material in the outsourcing business. And there is the benefit of a concentration of

expertise: in the past decade, Coca-Cola, PepsiCo, Motorola, Ericsson, Nestle India and other

foreign and Indian companies have opened offices in Gurgaon.

Still, Ms. Srinivasan said, the lack of government support is frustrating. She recently returned

from a new Genpact operation in the port city of Dalian, China. There, she said, local officials

are doing everything to keep companies like ours. Asked if the government in Gurgaon was

equally responsive, she shook her head.

In India, it is not because of the government, she said, explaining how things get done. It is

in spite of the government.

Playing Catch-Up

Sudhir Rajpal, the wiry, mustachioed commissioner of the new Municipal Corporation of

Gurgaon, has a long to-do list: fix the roads, the sewers, the electrical grid, the drainage, the




8/10

lack of public buses, the lack of water and the lack of planning. The Municipal Corporation was

formed in 2008, and Mr. Rajpal, having assumed the citys top administrative position a few

months ago, has been conducting a listening tour to convince people that government can solve

their problems.

It is not an easy sell.

One recent morning, his audience was a few dozen farmers in Badshahpur, one of the villages

absorbed into the sprawling new territory of the Municipal Corporation. Most are actually

former farmers, having sold their land to the developers constructing the office parks and

apartment towers now ringing the village. Many of them had bought new cars or new plots of

land or invested in the new developments. They were now richer. Their frustration was their

village. It was becoming an urban slum.

The drains are broken and accidents are happening, shouted one man. Yet no one is

answerable! There are problems and problems. Whatever water we get is dirty, but we have

nowhere to complain.

When Indias public and private sectors are compared, the contrast is usually stark: the private

sector is praised for its efficiency, linear command structure and task-oriented ethos; the public

sector is condemned for its opacity, lack of accountability and the fact that often no single

agency seems in charge. Even as many Gurgaon residents hope that the Municipal Corporation

can improve services, others worry that its authority is too limited, given that state agencies will

maintain authority over licenses and infrastructure.

In Haryana, developers make campaign donations to politicians and exercise enormous power.

Critics say graft and corruption are widespread. Many developers have disregarded promises to

construct parks and other amenities. Meanwhile, state agencies like HUDA operate with little

accountability. Civic leaders say more than $2 billion in infrastructure fees collected from

Gurgaon have gone into HUDAs general budget without any benefit to the city.

They used that money somewhere else, said Sanjeev Ahuja, a veteran journalist in Gurgaon.

The government thinks the private sector will take care of the city: People are rich. If they

need water, they can buy water.




9/10

Some people hope Gurgaons new municipal council, which was elected on May 13 to oversee

the Municipal Corporation, will create a political voice for the city capable of forcing action.

Eventually, the Municipal Corporation is expected to assume responsibility for providing

services in all of Gurgaon, yet some residents are leery of the change.

Santosh Khosla, an information technology consultant whose family moved to Gurgaon in 1993,has services provided by his developer, DLF. He said DLF had broken numerous promises and

did only an adequate job of delivering water and power. Still, adequate is tolerable.

Im certain that if it goes to the government, he said, it will be worse.

Citizens Speak Up

Col. Ratan Singh, his military beret placed neatly atop his head, has arrived at a busy

intersection in the midday sun for what he calls an agitation. He is 82, an Indian Army

veteran who has decided that private citizens need to incite a little conflict in Gurgaon.

Demonstrations are common in Gurgaon, and he is leading a protest against shoddy work by a

contractor.

Every day some agitation is taking place, he said, shouting above the din of traffic. People are

not satisfied.

If people should be satisfied anywhere in India, Gurgaon should be the place. Average incomes

rank among the highest in the country. Property values have jumped sharply since the 1990s.

Gurgaons malls offer many of the countrys best shops and restaurants, while the citys mostexclusive housing enclaves are among the finest in India.

Yet the economic power that growth has delivered to Gurgaon has not been matched by

political power. The celebrated middle class created by Indias boom has far less clout at the

ballot box than the hundreds of millions of rural peasants struggling to live on $2 a day, given

the far larger rural vote, and thus are courted far less by Indian politicians. This has made it

harder to accrue the political power needed to correct Gurgaons problems. When middle-class

civic groups in Gurgaon pushed state leaders to create a single government authority overseeing

the city, they were flicked away.

Faced with so many urban headaches, though, civic activists like Colonel Singh are pushing the




10/10

government for change, or simply making change on their own. Colonel Singh leads an

umbrella group of residents associations that have started volunteer vigilance groups as

watchdogs against crime.

Another civic activist, Latika Thukral, a former Citigroup employee, is involved in creating a

biodiversity park. Ms. Thukral led efforts to clean up an illegal garbage dump and is organizinga campaign to plant a million trees this summer.

If people like us dont stand up for our rights, our country will not change, she said. The

tipping point has come in India.

Across India, Gurgaon is both a model and a cautionary tale. Other cities want to emulate

Gurgaons growth and dynamism but avoid the dysfunction and lack of planning. Meanwhile,

Gurgaon is trying to address its infrastructure woes; last year, the city was connected to the

New Delhi rapid transit system, while a public-private project is under way to construct a link

to Cyber City. Yet the state and local governments are still struggling to keep up, especially

since Gurgaon is already building a industrial district and planning to create more commercial

space.

If Gurgaon had not happened, the rest of Indias development would not have happened,

either, contended Mr. Singh, the chairman of DLF. Gurgaon became a pacesetter.


Documents

In India, Dynamism Wrestles With Dysfunction