--> Gill Blog: Financial Impact of Monsoon in Mumbai, India

Gill Blog

Tuesday, August 02, 2005

Financial Impact of Monsoon in Mumbai, India

On the surface, last week's monsoon rains in Mumbai were positioned as just another one of those human interest stories describing how Mother Nature can wreak havoc anywhere in the world - even in its most remote corners. From an editorial standpoint this strategy called for a description of death, dislocation and the effects on animals? From
“Flooding and landslides have killed 924 people in western Maharashtra state in six days. As many as 421 people were killed in Bombay alone, officials said. A record 37 inches fell Tuesday, cutting off the state from the rest of the country...Electricity was gradually being restored to many neighborhoods after angry residents demonstrated on Saturday demanding the restoration of tap water, power and the cleanup of garbage and decomposing animal carcasses. Some 25,000 sheep and goats and 2,500 buffaloes drowned in Bombay, officials said.

Had I not spent a substantial amount of time during my last trip to India in Mumbai, where I saw firsthand the size, scope and the influence of this city, such a description would have been adequate for me. However, given the fact that my vocation predisposes me to continually consider risk, my natural instincts when walking through the financial district, or in the residences and vistas of Malabar Hills, was to wonder how a city on this scale would react to and plan for a massively disruptive event. The monsoon rains of this week have provided me with my answer, and with it, a first hand view on how the city is coping, and testing the resiliency of emergency planners. From the Times of India:
Tuesday's rainfall had literally left Mumbaikars in the dark with large scale enforced power cuts (as a cautionary measure against short circuits and electrocution). While city power utility Reliance Energy started restoring electricty supply to several parts of the metropolis on Wednesday, efforts were still on to rectify power situation in the remaining areas...In the worst-ever scenario in 31 years, Mumbaikars were faced with life in the raw with no trains, jammed cellphones, and to top it all no power...Flights into and out of Mumbai remained suspended due to heavy water logging of the runway and non-availability of landing aids. Many international flight have been diverted to other destinations.

Now, when I come to terms with the fact that India is no longer a place just associated with elephants and eastern mysticism, but emerging global economic power, the impact of the event increases and the equation changes. All of a sudden now, issues such the disruption to the gears of its economic engine (i.e. its increasingly sophisticated, technologically reliant financial system) begin warranting comparison to the financial vulnerabilities experienced in places like New York and London when disruptive events brought those markets to a standstill. Effectively, the story begins taking on a dimension that simply wouldn't have been considered ten years ago and is now even covered by big media outlets like Bloomberg:
Mumbai's trains carry more than 6 million passengers a day. New York's subway, train and bus system carries about 2.4 billion passengers each year, according to the Metropolitan Transportation Authority's Web site.

Hotel lobbies in downtown Mumbai were crowded last night as stranded commuters searched for a place to stay.

Vishal Goyal, an analyst at Alchemy Share and Stock Brokers, spent eight hours in a traffic jam before abandoning his car 10 kilometers from his office in Mumbai's south. He spent the rest of the night at a friend's house, and this morning waded through waist-deep water to Bandra station north of the city center.

"It could easily be 24 hours from the time we left the office," he said. `"The bigger concern now is catching an infection or an illness walking through all this water."

Despite the comparisons to financial hubs like New York and London, it is becoming apparent that as India's prominence on the international stage grows, more people are openly questioning Mumbai's ability to handle this responsibility. From the Economic Times:
"The overwhelming downpour that Mumbai has faced over the last 48 hours has plunged the fiscal hub into a financial black hole. The grim state of affairs coupled with the several problems that plague the city only adds to the contention that Mumbai should probably not be the financial capital of the country...Financial experts have written several book on the prerequisites for a successful financial capital. Sadly, Mumbai simply doesn’t measure up.

As the impact of the monsoon rains is magnified by the growing profile of India's economic engine, it becomes apparent that this story moves from the realm of backpage human interest filler, to front page business news that can potentially have rippling effects globally.