In India, a boom that's bursting at the seams

Times Staff Writer

An honest day's work took a good deal of subterfuge for Maneesh Mansingka.

Every morning for a month, he crept surreptitiously into the basement of a gated modern building, trying to dodge the authorities. He stayed holed up underground all day, calling clients and typing on his computer. At night, he slipped out the way he came in: through the back door, like a thief, not a successful professional.

If anyone asked, the ground floor where he normally worked was somebody's apartment. A helper even slept in his former office to keep up the ruse.

It was an embarrassing charade for Mansingka, the India director of a global commodities brokerage. But it was necessary to evade a recent government drive to shut down businesses operating in areas not officially zoned for commercial use. Mansingka's office is in a residential building he picked three years ago, after a futile search for decent commercial space in this teeming capital.

The zoning crackdown has landed thousands of people like Mansingka on the horns of a dilemma. Even as government inspectors scuttle around New Delhi handing eviction orders to shopkeepers and other business owners, the city is suffering from a dire lack of commercial space that leaves those affected with nowhere to go.

The shortage has become all the more glaring in light of India's booming economy, which grew 9.2% last quarter compared with a year earlier. Multinational companies are flocking to India for a piece of the action. But many arrive to find harsh realities masked by the dazzling statistics, such as crumbling infrastructure and a bureaucracy that has failed to address such problems.

The dearth of legal commercial space in Delhi -- for offices, retail outlets, banks and restaurants -- is a prime example of the impediments to efficient economic activity and growth in India.

Fewer than a dozen major commercial centers in the capital serve a population of 15 million. Unlike Chinese boomtowns such as Shanghai, where gleaming new high-rises and malls seem to adorn every street corner, Delhi has so few state-of-the-art office and shopping complexes that businesspeople say nabbing such space is about as elusive as finding a pot of gold.

"Today if I want a 5,000-square-foot office, one nice single floor, open, looks like an office, you can see from one side to the other -- there's no building like that in Delhi," said Mansingka, director of Noble Grain India, part of Hong Kong-based Noble Group.

He is not shy about assigning blame for the shortage, calling it "a complete failure" by the government.

Many critics agree, alleging years of inaction and incompetence by the Delhi Development Authority, the main body charged with planning and developing the capital.

The agency did not want for good intentions or grand ambition. Master plans from as long ago as 1961 called for the construction of large marketplaces across the city -- 21 of them, according to the most recent version -- providing millions of square feet of office and retail space.

But only nine such hubs have been developed, the rest bogged down by bureaucratic bickering, regulatory issues and alleged corruption. Of the commercial space envisioned by planners 45 years ago, a mere 16% has actually been built, critics say.

At the same time, the population has exploded far beyond the numbers predicted. Half a million people migrate to Delhi every year, desperate for a better life away from India's poverty-stricken towns and countryside.

"The plans originally made were done with very good intentions, but like all plans they had their shortcomings," said Ranjit Sabikhi, an urban planner and architect. Unfortunately, officials made no effort to review and modify the plans on a regular basis to keep up with demographic changes, "even when you could actually see that the conditions on the ground were very different," Sabikhi said.

Officials with the development authority defend their record. They acknowledge delays but blame them on protracted legal disputes over land acquisition or on other agencies involved in development issues.

"The land has not come into our hands," said Neemo Dhar, the agency's chief spokeswoman. "Had it come, we would have done it."

The crunch is compounded by complaints of poor quality and maintenance of the little commercial space that has made it off the drawing board. One of the city's most prestigious addresses, a commercial center called Nehru Place, would be an eyesore by American standards. This concrete jungle features narrow storefronts, dirty pavement, exposed wiring, unsightly facades and inadequate parking.

Businesspeople lament the dearth of "plug-in" office quarters where they can move in desks, hook up computers and be ready to go. Entrepreneurs often end up spending their own time and money to install flooring and roofing, lighting, high-speed Internet connections and backup power systems to cope with Delhi's frequent blackouts.

As a consequence, many companies have fled to two satellite communities, Gurgaon and Noida, where modern high-rises are rapidly going up. Both lie just outside Delhi's borders, depriving the city's tax base.

For those who stay, the alternative often has been to set up operations in unauthorized, often residential areas. Illegal markets have sprouted up all over. Among Delhi's half-million store owners, from mom-and-pop vegetable stands to high-end boutiques, an estimated 80% work out of premises not zoned for commercial use.

Many government critics say authorities have generally turned a blind eye to such violations or demanded bribes to overlook them, But a series of recent court rulings forced the city to crack down.

The sudden zeal to shut shops and offices, after years of unofficial tolerance, prompted a huge outcry, including a wave of strikes and protests. Three people were killed during a demonstration in September after scuffling with police. Newspapers tell stories of company computers filled with vital information trapped behind sealed doors and client passports locked inside closed travel agencies.

The clampdown has spared neither big nor small operations, hitting corner grocers as well as major retail outlets and bank branches. One of America's latest arrivals, the newly opened Metropolitan Museum of Art gift store, had to close its doors temporarily just weeks after its grand opening on the edge of a fashionable shopping district.

To stave off a similar fate, Mansingka, the commodities broker, quickly took down his company's sign to avoid unwanted attention. He moved files down to the basement of the apartment building where his office is housed and replaced his ground-floor desk with a bed to fool inspectors.

He also started scouting legal commercial properties just in case. But because of the severe shortage and the extra surge in demand from other worried business owners, landlords pushed already high rents still higher.

One place Mansingka checked out shot up from $2 a square foot to nearly $2.80 in little more than a month. "It's blackmail," he said disgustedly. "Prices don't go up 35% in six weeks."

For now, another court decision has granted a reprieve to some merchants who filed for relief. Mansingka's staffers are trickling back into their old quarters.

Development officials say that several projects are underway and that new space will come on line over the next few years.

Whether companies can afford to wait that long is another matter. Real estate agent Sanjjive Leekha has watched prices for commercial space triple and even quadruple since 2002. Now he warns his clients not to dally.

"If you want a space and you don't take a decision fast," he said, "you'll be the loser."

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