Indian Official Starts Pulling Up Corruption's Roots in Mumbai

Kuni Takahashi for The New York Times

An 11-story building in the upscale Mumbai neighborhood of Juhu, empty pending a legal case, is one of many real estate projects said to be tainted in the Indian financial capital.

MUMBAI, India - The units in an apartment building being built in the upscale Mumbai neighborhood of Juhu promised to be both dazzling and odd: Each of the 33 homes in the 11-story building would come with a private lily pond, a car elevator and parking spaces for three cars next to the living room.

Prithviraj Chavan, second from left, speaking to visitors outside his Mumbai office last month.

The Indian National Congress Party controls the federal and Maharashtra governments.

City officials and neighborhood residents say the parking spaces were a clever sham dreamed up by a developer and corrupt bureaucrats to skirt building rules and avoid paying millions of dollars in fees. The rooms for “parking,” which the developer did not have to account for because they were not considered living spaces, were sold to buyers as a way to add dining areas, extra rooms or whatever else they wanted.

The building, which remains empty awaiting the resolution of a legal case now at the Indian Supreme Court, is just one of scores of tainted real estate projects that analysts say have exposed a deep-rooted culture of corruption here in India's financial capital. In recent years, when construction was booming along with the Indian economy, Mumbai, the nation's most densely populated city, may have lost potential revenue of as much as 200 billion rupees, or $3.6 billion, a year because of such violations, said Subodh Kumar, Mumbai's former city commissioner, the Indian equivalent of an American city manager.

“One thousand square feet became 2,000 or 3,000 depending on how well you could work the system,” said Mr. Kumar, who retired this year. “There was a huge industry of corruption.”

The payoffs and kickbacks would probably have continued for years to come, Mr. Kumar and others say, had it not been for a new chief minister of the state of Maharashtra, of which Mumbai, formerly Bombay, is the capital. This year the minister, Prithviraj Chavan, an appointed official, approved an overhaul of the city's building permit system to make it more transparent. He stripped officials of the power to grant exemptions to favored builders and forced developers to pay fees for additions like balconies and parking spaces next to apartments.

Partly as a result, even as several big-ticket corruption scandals have deeply shaken public confidence in public officials elsewhere in India, many Mumbai residents and corporate executives say they have regained some hope for their city of 14 million, which many of them had despaired was becoming more dysfunctional by the day.

He “is one of the finest chief ministers we have had,” said Ashoke Pandit, a filmmaker whose neighborhood association flagged problems in numerous real estate projects, including the Juhu building. “He is a very honest, straightforward person. He has put a stop to all the nonsense and wrongs that have happened.”

Supporters say that Mr. Chavan, 66, and a handful of other reform-minded chief ministers in states like Bihar and Orissa offer one of the few hopeful signs during a particularly dark moment for India. In the last two years, the economy has slowed sharply, corruption scandals have mushroomed and many government agencies have proved incapable of carrying out basic functions.

These regional leaders, the Indian equivalent of the governor of an American state, face plenty of critics, and their success is far from guaranteed. Political rivals and real estate developers, for example, say that Mr. Chavan's focus on eliminating corruption has come at the expense of greasing the wheels that allow for long-needed improvements.

Still, Mr. Chavan and the other chief ministers have been far more productive than the Parliament in New Delhi, which has been repeatedly paralyzed by recent scandals and political squabbles.

In Mumbai, the change in building rules is bringing in millions of dollar in extra revenue, officials say. That has helped put resources behind Mr. Chavan's push for big public works projects like a 13-mile bridge that would offer another connection to this island city, across a wide bay to the mainland, opening up vast new tracts of land for housing and commercial development.

That project had been delayed numerous times since it was first conceived in the 1960s. But now a contract is expected to be awarded early next year and construction could start by the end of 2013.

“For obvious reasons, Mumbai is really challenged; it's really bursting at the seams,” Mr. Chavan said during an interview at his home office one recent Saturday evening. “I think it's possible to reinvent Mumbai - and we will do that.”

Deepak Parekh, chairman of HDFC, India's biggest mortgage lender, and one of Mumbai's most respected business leaders, said that Mr. Chavan has reset expectations in the city by sending a strong signal that pervasive corruption would no longer be tolerated.

Two years ago when he took over, he invited the city's biggest developers to a meeting and gave them a blunt warning.

“I don't want to meet any builders alone,” Mr. Parekh recalled him saying. “Don't try to meet me or my chief secretary or my municipal commissioner.”

Mr. Chavan was able to take a hard line, analysts say, because of the backlash against his predecessor, Ashok Chavan, who is not related and was forced out after a real estate scandal. That case involved the sale of a prime plot of government land at a low rate to a group of former army officers who built a luxurious condominium tower for themselves and the families of select government officials. Ashok Chavan has denied any wrongdoing.

At the time, Prithviraj Chavan, an aerospace engineer who studied at the University of California, Berkeley, was a national minister in charge of science policy. The Indian National Congress Party, which governs both the federal and the Maharashtra governments, chose him principally because he had a reputation for honesty, even though he had no experience running a large state.

But what made him an appealing candidate, his technocratic credentials and honesty, are also a source of concern. Even his supporters worry that Mr. Chavan will not survive the hurly-burly of Maharashtra and Mumbai politics, where the Congress Party has an uneasy relationship with its main political ally, the Nationalist Congress Party.

Though he was born in Maharashtra, now home to more than 112 million people, and is the son of two leading politicians - important qualities in the dynastic politics of India - Mr. Chavan has spent most of his career in New Delhi. Because he was appointed to run the state, it makes him vulnerable to the criticism that he is a carpetbagger.

His political weakness has already forced Mr. Chavan to defer decisions on some big projects like a coastal freeway to ease congestion, according to a confidant who asked not to be identified because he did not want to lose his access to the minister.

Opposition lawmakers and even some of his allies have attacked him for being a puppet of the Gandhi family, which controls the Congress Party. Many complain that while he may be cleaning up corruption, he is too cautious and makes decisions very slowly. The new building rules, for instance, took a year and a half to enact.

“Corruption-free work doesn't mean no work at all,” Uddhav Thackeray, the leader of the Shiv Sena, an opposition political party that holds the most seats on Mumbai's City Council, said in an e-mail interview this year. “We have seen no bold decision on the government's part after he took over, and no one is happy, neither the hardworking entrepreneurs nor the common man.”

Mr. Chavan readily acknowledged that he does not have a strong political following in the state, and he described his first early days in office as “a baptism by fire.”

But he said his efforts to improve Mumbai and fight corruption would prove his critics wrong and win him a mandate when the state holds an election in 2014.

“Clearances got slowed down a little because we had to change the rules,” he said. “But I think things are happening at a very, very fast pace now.”

His admirers say they would like him to stay, but know that he could be yanked back to New Delhi at any time. In the meantime they are hoping he leaves his imprint on the city by helping usher in a new long-term plan for its development.

“We need to take full advantage of his tenure,” said P. K. Das, a prominent architect in the city, “as long as he is chief minister.”

Neha Thirani contributed reporting.

A version of this article appeared in print on December 5, 2012, on page A6 of the New York edition with the headline: Indian Official Starts Pulling Up Corruption's Roots in Mumbai.