Bangalore: Back at #2

When Bangalore’s software czars speak up on any issue, even local ones, their words echo in the national media. In May this year, many of them openly criticised the plan to shut down the old HAL airport and demanded that it be kept functional till the connectivity issues dogging the new Bangalore International Airport were sorted out. The government stuck to its guns on shutting down HAL (it was obliged to, under the terms of its contract with Bangalore International Airport Limited, promoted by a Siemens-led consortium) but took prompt action on their complaint.

The 33-km stretch from the Vidhana Soudha, the seat of power, to the new airport can now be covered in an hour or even less, compared to 90-120 minutes earlier. This clout can be interpreted in any which way, depending on which side of the ideological divide one stands. Home to an estimated 600,000 techies and about 1,900-big, medium and small IT companies, Bangalore is a dream destination for many young people aspiring for a career in its booming IT industry.

However, many locals, left untouched by the software-fuelled prosperity, are chaffing at the invasion of “outsiders” into this onetime pensioner’s paradise and are struggling to cope with the rising prices they blame them for. But the fact remains that Bangalore is India’s premier software city, famous for its pubs, malls, multiplexes and luxury retail outlets. Says Angshik Chaudhury, Cisco’s Globalisation Director (Operations): “Bangalore is inclusive and non-aggressive with weather to die for.”

Infrastructural bottlenecks

There’s a flip side to Bangalore’s development as India’s window to the world. The city has outgrown its infrastructure. The new residential spaces and commercial hubs, being outside the city, take hours to reach, both due to narrow roads and traffic congestion.

Fact file Area: 740 sq. km Population: 8 million Roads: 1,500 km Main industries: Information Technology, Textiles, Automobiles Per capita income: About Rs 50,000 per annum Rents (commercial): Rs 70-200 per sq. ft/month Peak power demand: 6,700 MW Peak power supply: 5,780 MW Peak deficit: 900 MW Power tariffs domestic: Rs 1.85-2.90 per unit Power tariffs commercial: Rs 5.05-6 per unit Power tariffs industrial: Rs 3.30-4.05 per unit Total water supply: 950 million litres per day Per capita water supply: 147 litres per day Public transport: BMTC buses, 1 lakh autorickshaws

That, however, will, change if the government has its way. A yearand-a-half ago, it notified the creation of Greater Bangalore. At one stroke, that tripled the city’s area from 225 sq. km to 740 sq. km. Eight urban local bodies on the city’s periphery and 111 villages of Bangalore Urban District are now part of Brihat Bangalore Mahanagara Palike (BBMP).

The new Bangalore means new investments for creating and upgrading road and sewage infrastructure, providing piped water supply and augmenting transport services. Says Arvind Shrivastava, Managing Director, Karnataka Urban Infrastructure & Finance Corporation (KUIDFC), which assists urban agencies with planning, financing and expertise to develop infrastructure: “Bangalore requires Rs 24,000 crore for upgrading municipal services and another Rs 42,000 crore to improve its transportation infrastructure.”

A Metro Rail project is already underway and will be in place by the end of 2011. The state government, headed by Chief Minister. B.S. Yeddyurappa, has provided Rs 700 crore for the project this year, and allocated another Rs 1,800 crore for infrastructure development. Industry leaders are, for a change, happy with the government.

“The city’s infrastructure has improved quite noticeably,” says S. ‘Kris’ Gopalakrishnan, CEO& MD, Infosys Technologies, but notes that change has to take place faster to make a bigger impact. “The new airport is an improvement over the previous one, but again, connectivity remains poor and needs to be improved,” he adds.

Others are even more forthright in their praise for the city. “Bangalore is, undoubtedly, India’s best city,” declares Kiran Mazumdar-Shaw, Chairman & Managing Director, Biocon. That claim will be more widely endorsed, however, only after its groaning infrastructure is fixed. “Bangalore’s growth has outpaced its infrastructure development, but we are correcting this gap on a war footing,” she says, adding: “We will have to remain content playing second fiddle (#2 rank) for a while but I am sure Bangalore will regain its premier status before long.’’ Cisco’s Chaudhury comes up with a suggestion: “Multiple, self-sustaining townships will decongest Bangalore and make living convenient and affordable.”

Apart from the road to the new airport, the government is working towards putting in place a high-speed rail link from the city to the airport. Besides, 10 flyovers and underpasses have been planned on the Outer Ring Road at a cost of Rs 350 crore. Multi-storey car parking facilities are also planned at 40 places in Bangalore under the public privatepartnership model.

Cost of living an issue

There’s another problem. Says Shrivastava: “About 40 per cent of the city’s residents are poor, and about half this number (18 per cent) live in slums. Thus, housing for the poor at an affordable price has to be our mandate.”

Growth has outpaced infrastructure development, a gap that is being corrected on a war footing - Kiran Mazumdar-Shaw, CMD, Biocon The new airport is an improvement, but again, connectivity remains poor and needs to be improved - ‘Kris’ Gopalakrishnan, MD & CEO, Infosys Technologies Multiple, self-sustaining townships will make living in Bangalore convenient - Angshik Chaudhury Globalisation Director (Operations), Cisco

But it isn’t just the poor who face a problem. Several white-collar employees also find the cost of living in the city prohibitive. Petrol prices, at Rs 57.15 per litre, are the highest in the country. Real estate prices, which had zoomed 50-60 per cent between 2002 and 2007, have moderated somewhat—prices have fallen 15-25 off their peak— but areas such as Koramangala, Bellary Road, Malleshwaram, preferred by mid- to senior-level executives, are still considered out of reach by most.

Not surprisingly, the demand for houses is down; and some projects have even reported “negative sales”—cancellations are higher than sales. But millions of Bangaloreans live in rented accommodation and nurse hopes of owning home one day. Amit Bagaria, CEO of Asipac Group, a property marketing company, explains the contradiction. “The flats have no takers because they are priced above the budgets of prospective buyers,” he says.

Still a favourite

In spite of complaints about creaking infrastructure, Bangalore’s sheen has not waned. Every week, two or three new companies announce plans of setting up shop in the city. When, for instance, US networking giant Cisco was scouting for a location for its second global headquarters, Bangalore emerged as the obvious choice. Cisco’s Globalisation Center East in the city is its largest outside the US. As many as 140 IT companies function out of the International Tech Park, Bangalore (ITPB), developed by Ascendas, an arm of the Singapore government.

ITPB is expanding further to meet the rising demand for space from both new and existing firms. That’s hardly surprising. At Rs 56,000 crore, software exports from Bangalore account for 37 per cent of India’s total software exports and its share is more than twice that of Hyderabad, the secondlargest IT export centre in the country.

“We have taken several initiatives that require minimum incubation before they yield results,” says Ashok Kumar C. Manoli, Principal Secre-tary, IT & Biotechnology, Karnataka. In three months from now, the first phase of the 106-acre Biotechnology Park will open. Nevertheless, it may appear strange that the tech hub lacks a Wi-Fi network, though many individual campuses already have it. Manoli assures that that Bangalore will have a technology more advanced than Wi-Fi soon.

It’s nanotechnology next

Bangalore is now looking to replicate its success in IT in the nanotechnology space. The first step in this direction is the setting up of the Indian Institute of Nanotechnology, which is expected to come in about two years “We have taken a number of measures to accelerate the growth of the nanotechnology sector on the lines of IT and biotech,” says Manoli.But before that happens, the authorities still need to fix the city’s infrastructure. Here, the pessimism that pervaded through the corridors of India Inc. even a few months ago has been replaced with an optimism that Bangalore is once again a city on the move. That can only be good news for all the existing and new companies that have made, or want to call, Bangalore their home.

'CM will review city’s progress’ S. Suresh Kumar Karnataka’s Urban Development Minister S. Suresh Kumar has been in office for two-and-half months now. In this time, he has initiated consultations with civic heads to understand critical urban issues and find solutions. Kumar spoke to Business Today’s K. R. Balasubramanyam on the government’s plans for Bangalore. Excerpts: Investors regularly complain about the problems they face in Bangalore. What is the government doing about them? Investors complain mainly about two issues—delays in government approvals and poor infrastructure. We are taking steps to make the approval process simple. As for infrastructure, the Chief Minister (B.S. Yeddyurappa) will shortly set up and personally head a committee that will review all ongoing infrastructure projects every quarter and publish an action taken report. This will ensure that complaints regarding poor infrastructure are addressed properly in a time-bound manner. Where do you want to see Bangalore at the end of five years? In the last 10-15 years, Bangalore has grown exponentially. Our goal is to upgrade its infrastructure and make it the best city in India. We want to restore its old charm and make it liveable. What is the scope of fresh investments in Bangalore? It’s massive. Apart from IT and biotechnology, investments are still coming into the garments and manufacturing sectors. How will the government fix the power shortage? We have planned projects within and outside Karnataka and will soon move towards becoming a power-surplus state. Does the government have resources to execute infrastructure projects? These days, funds are not a problem. The will to perform is. And we have the will in ample measure. Your comments on Bangalore’s rise in the BT rankings... It has come as a shot in the arm and increased our responsibility towards the city.