The real estate of urban wasteland in India

The financial crash in autumn 2008 and the more recent payment crisis in Dubai sent shockwaves affecting not only the ‘housing market’, but the financial fundaments of many industrial and urban infrastructure projects. In the following we give some snap-shots of the real estate of crisis in and around Gurgaon. Focus is on the planned ‘Delhi-Mumbai Industrial Corridor’ – a major development-axis for capital in India.
* Public-Private Tsunami from Dubai to Gurgaon
The real estate sector is an indicator for the wider economy: house prices have crashed since 2008, but despite the low mortgage interest rates the sales are in no way sufficient to pull the sector back on track, stocks of empty concrete are piling up – what does that mean in a semi-private city like Gurgaon where infrastructure is part of the deal? We have a look at empty spaces and de-railed private metro projects.
* Accumulative Axis of Evil: Delhi-Mumbai Industrial Corridor
The actual necessity for the Indian export plans to build a freight rail connection between the assembly plants of Maruti Suzuki or Hero Honda and the Mumbai sea port turned into a project of wish/harmful megalomaniac thinking: the Delhi-Mumbai Industrial Corridor. We give a short presentation of 1,500 km of “high impact/market driven nodes” and “transparent and investment-friendly facility regimes”.
* Marginal Living, Marginal Deads – Slum demolition and National Highway
Sad news about victims who lose homes or even life on the altar of speed, on the highways towards social impasse.

* Public-Private Tsunami from Dubai to Gurgaon -

Gurgaon is a financial outskirt of Abu Dhabi, its public-private urbanisation was fuelled by international financial flows. The real estate sector plays this double role of being a market for long-term goods and a money channel for large-scale investments or a haven for money to breed itself; and the sector is an indicator for the wider economy: house prices have crashed since 2008, but despite the low interest rates the sales are in no way sufficient to pull the sector back on track – what does that mean in a semi-private city like Gurgaon?
While slums are growing and dozens of homeless freeze to death in Northern Indian winter the main problem of the real estate sector is a growing stock of unsold apartments and office space. In Gurgaon, where on average 330 new ‘middle-class’ houses or apartments were sold each month between August 2009 and October 2009, it would currently take nearly two years to clear the stock – that is if no new flats were built from now on. Prices have come down quite a bit and interest rates for mortgages are low compared to 2008 – but given the current high inflation the days of cheap money are counted.
Not only the local markets are threatening the real estate developers in Gurgaon. The payment crisis in Dubai had a direct impact due to the many alliances between Dubai firms and Indian ones. Emaar Properties has a joint venture with MGF, Limitless UAE and DLF plan to invest thousands of crore outside Gurgaon and Mumbai – turning soil into concrete. In December 2009 offices of Emaar MGF were raided over alleged violation of foreign direct investment (FDI) norms: Emaar is accused of having diverted investments meant for the real estate sector to purchase agricultural land in and around Gurgaon – which is officially forbidden for ‘foreign companies’. But what is the law? In 2007, the income tax department had raided several premises of the company for alleged income tax evasion. But a mysterious fire broke out at the tax department’s Connaught Place office in October 2007, destroying all documents pertaining to Emaar-MGF’s case. Delhi Police had registered a case of sabotage, but have not been able to make a breakthrough.
The real estate crisis goes beyond the housing market, it impacts on infrastructure and the shape of the city, as well. In December 2009 India’s first private metro rail project was announced to be down. The metro would link the DLF township in Gurgaon to Noida, covering a stretch of 5km involving six stations. The land over which the metro rail lines are to be built is owned by DLF, hence even the stations that come up will be managed by IL&FS-DLF. The metro stretch was to be developed by the Haryana government, but it went to the private sector because the state government lacked the funds. Backing such projects are the ministries of roads and aviation. Kamal Nath, Union minister for roads and highways wants to award large stretches of roads and highways to parties who can fund it themselves by earning money from real estate and development on either side of the roads. If there is money to make…

* Accumulative Axis of Evil: Delhi-Mumbai Industrial Corridor -

Like with any Master Plan of capitalist development we have to be careful not to believe the hype. The inner contradictions and crisis tendencies prohibit the existing regime to ‘plan’ development in a long-term sense. Since mid-2008 the major development’ projects, e.g. the huge Reliance SEZ in Gurgaon disappeared from the mainstream horizon. Similarly India’s biggest development project – the Delhi-Mumbai Industrial Corridor (DMIC) and the Ludhiana-Kolkata Freight Line. The latter would connect the eastern ports with the mining and steel-manufacturing areas in Jharkhand and Orissa and the industrial areas around Delhi. Focus of public interest is the DMIC because it is seen as India’s launch pad into the global economy. The main centre of the car and two-wheeler industry in India is situated around Delhi, meaning that this industrial centre of India is about 1,500 km away from the nearest industrial port. With increasing needs to export the DMIC is first of all a necessary rail connection to the world market, passing through the states of Uttar Pradesh, the National Capital Region (NCR) of Delhi, Haryana, Rajasthan, Gujarat and Maharashtra, Jawaharlal Nehru Port near Mumbai. For the construction of this rail-way line the Indian government asked the Japanese state for financial and logistical support – an agreement was signed end of 2006. Since then fantasies of developers and reality of the global system went on separate tracks.
On the drawing boards of the developers the railway line turned into a 1,500 km long Garden Eden of blooming clusters and environmentally friendly industrial zones, a wish-list of development. The rail line is supposed to become the vein of a 150 kilometre wide industrial corridor: manufacturing clusters, IT-hubs, Agro-Food-Processing areas, power-plants, logistic-highways and warehouse zones, integrated town-ships, skill development centres and so on. Currently 17 percent of India’s population live inside the corridor area. Or as the developing agencies put it themselves: “High impact/market driven nodes-integrated Investment Regions (IRs) and Industrial Areas (IAs) have been identified within the corridor to provide transparent and investment-friendly facility regimes”. The whole thing becomes rather pornographic, please feel free to have a look yourself [see PDF]

And of course the landed rural class will be pleased and pampered. On 12th of January 2010 the Haryana planning authority announced a new planning commission for the Kundli-Manesar-Palwal (KMP) global corridor – a ‘market driven node’ of the DMIC. Deputy Commissioner Rajender Kataria, who is also the chairman of the district planning committee: “2 km on both sides of the KMP global corridor is treated as amenity zone in which some theme cities are proposed to be developed by the government. Besides, these cities, any person can set up recreational projects provided he owns 50 acres or more.” The theme cities include World Trade City in 260 hectares, Fashion City (220 hectares), entertainment (140 hectares), Leather City (280 hectares) and Leisure City in 750 hectares. While ‘Leather City’ will probably be a labour intensive export sweat-shop city in the Muslim area of Nuh in Mewat, ‘Leisure City’ will please the decadence: racing track, race course, golf course, Disney land and so on.
According to plan the corridor area would turn into India’s Shenzhen – DMIC becomes a test-case whether India can turn into a true global industrial power. The estimated investment costs are 90 billion USD. Before we have a look at the question whether the starting and finishing point of capitalist development – !money! – is able to fund this great leap forward, let’s focus on the material core of this project. We know about the role of road and track building for the ‘progressive drive’ of industrialisation. In Gurgaon the National Highway 8 connects the Suzuki assembly plants with suppliers in Manesar and the extension of the highway transported industrial units to Rewari and Rajasthan border areas. The planned rail-track would actually connect existing/emerging industrial clusters of various kinds, some of them increasingly focussed on export and therefore increasingly transport dependent:

Uttar Pradesh- Noida/
Greater Noida, Ghaziabad
(General Manufacturing)

Haryana- Gurgaon,
Faridabad, Sonepat
(Automobile, Electronics,
Handloom)

Haryana to Gujarat heartland
(Agro-Business, Horticulture etc.)

Rajasthan: Jaipur, Alwar,
Kota, Bhilwara, Jodhpur
(Marble, Leather, Textile)

Gujarat: Ahmedabad,
Vadodara, Anand, Bharuch,
Surat(Engineering, Gems &
Jewelry, Chemicals)

Maharashtra: Mumbai, Pune,
Nashik (Automobile, Textile, Pharma)

This is a very pragmatic logistical aspect of the DMIC. Furthermore the corridor expresses a capitalist hope: to overcome the dilemma of either ‘industrial core centres’, prone to develop a local working class powerbase, or ‘greenfield solutions’, often lacking infrastructure. The industrial layout of the corridor aims at decentralising industrial cores (using pictures like integrated town-ships, hubs etc.) while connecting them logistically. The ‘de-risking’ by shifting factories away from main clusters of proletarian unrest which companies like Rico and Honda talk about – see article in this newsletter – will see the coming up of smaller industrial areas being attached to the central assembly lines by rail- and highways. In that regard the logistical cooperation between Japanese industrial developers and Indian state is a continuation: Maruti Suzuki’s first industrial set-up in Gurgaon in the 1980s and the planning of Industrial Model Town (IMT) in Manesar down the road in 2000 were based on Japanese industrial planning aid. The ‘Japanese aid’ will be tied to railway technology and engines being sourced from Japan and further planned FDI in the corridor area. Newspapers report, for example, that in the planned Neemrana III industrial unit – situated at 122 km from Delhi on the Delhi-Jaipur highway NH8 – 19 major Japanese companies have committed to start manufacturing operations. These include Mitsubishi Chemicals, Daikin Air Conditioners and Nissin Brakes.
Question will be how helpful the Japanese state can be in terms of financial aid – given the rather precarious situation of the Japanese national economy. Work on the corridor was supposed to start in early 2008, but then investment things went a little pear-shaped. Construction was postponed – things went silent about the corridor for about two years: How to finance 90 billion USD in times of burning Babylon? The initial financial composition of the Delhi – Mumbai Industrial Corridor Development Corporation (DMICDC) was aiming at 49 per cent equity by the Indian and Japanese state in the form of Japan Bank for International Cooperation and the remaining 51 per cent equity by financial institutions and companies, the major share of 41 per cent is by IL&FS Infrastructure Development Corporation Limited.
http://www.ilfsindia.com/

While we might be able to assess the economic situation of the Indian and Japanese state, what about the IL&FS Ltd. being the major ‘private’ sector investor? The IL&FS Ltd. is composed by following shareholders:

* 26 per cent by the UTI Indian Life Insurance which underwent major financial difficulties after 2001 and of which the US based equity trust Rowe Price owns 26 per cent since November 2009.
* 23 per cent by ORIX Cooperation Japan, Japan’s biggest non-bank lender. In April 2009 ORIX had to be bailed out by the government as loans to real estate companies turned bad. The company’s share price fell 77 percent in the financial year 2008 and forecast its lowest profit since 1997. Orix’s booked a 2.1 billion yen loss in the first nine months of the fiscal year 2009 as it increased bad-debt provisions (http://www.orix.co.jp/grp/index_e.htm).
* 12 per cent by Abu Dhabi Investment Authority. The company is said to have lost as much as $125 billion during the global economic crunch in October 2008. The 7 billion investment in Citigroup has lost about 90 per cent of its value as of November 2009, two years after ADIA acquired a major stake in the bank. (http://www.adia.ae/)

So no wonder that things went a little quiet around the DMIC. Early 2010 the Japan Bank of International Cooperation signed a loan agreement of modest 75 million USD to prepare a plan for the DMIC region; and Haryana State Industrial and Infrastructure Development Corporation (HSIIDC) asked for bids to start work on a “Mass Rapid Transportation System between Gurgaon-Manesar-Bawal, exhibition-cum-convention centre, integrated multi-modal logistics hub and new passenger rail link”. “The full-scale development of the DMIC can happen only by 2017 when the dedicated freight corridor is ready, since the industries are dependent on it for raw materials and moving finished goods. But we don’t want to wait till then, so we have identified certain early bird projects which are not full-scale city projects, but more like smaller industrial complexes,” a Delhi – Mumbai Industrial Corridor Development Corporation (DMICDC) spokesperson said in January 2010.
So the material/symbolic front-lines of class war in India for the coming years are re-drawn: the development of the industrial corridor between Delhi and Mumbai, the Operation Green Hunt in the Adivasi belt and the civil war against the rural poor, the development of the queue for NREGA employment scheme as a way to control proletarian rural-urban mobility and the Iran-India pipe-line project as a symbol for national border-conflicts and dependence on cheap energy – and probably the dikes in the Sunderbans and other areas victimised by climate/social-change . Time for abolishing corridors, borders and front-lines from below…

Mariginal Living, Marginal Deads – Slum demolition and National Highway -

Those who live on the hard-shoulder are pushed around. On 7th of January 2010 the demolition squad of the Haryana Urban Development Authority (HUDA) demolished more than 50 slum-houses near Sector 17 in Faridabad. The place where people lived is marked for the widening of the Faridabad bypass road which connects Badarpur border from Delhi side to Ballabgarh area. Bulldozers were protected by riot police.
Those who have to cross the speed-ways to get to the assembly-lines on the other side might lose their lifes. Between January 2008 and July 2009, 107 people died on the 27.7km stretch of the Delhi-Gurgaon Expressway (NH8) in 1,696 accidents. When asked about this the Union transport secretary Brahm Dutt said in a media interview in December 2009 that as it was one of the first such projects undertaken by National Highways Authority of India, the agency “deserves that much of margin”. A daily commuter from Gurgaon, “Had there been enough footbridge-crossings from day one, people would not have risked their lives to cross the expressway. We had made the demand immediately after the IFFCO and Udyog Vihar flyovers were opened, but these came almost two years later”.