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How Gurgaon is both a model and dysfunctional city

GURGAON: In this city that barely existed two decades ago, there are 26 shopping malls, seven golf courses and luxury shops selling Chanel and Louis Vuitton. Mercedes-Benzes and BMWs shimmer in automobile showrooms. Apartment towers are sprouting like concrete weeds, and a futuristic commercial hub called Cyber City houses many of the world's most respected corporations.

Gurgaon, located about 15 miles south of the national capital, New Delhi, would seem to have everything, except consider what it does not have: a functioning citywide sewer or drainage system; reliable electricity or water; and public sidewalks, adequate parking, decent roads or any citywide system of public transportation. Garbage is still regularly tossed in empty lots by the side of the road.

With its shiny buildings and galloping economy, Gurgaon is often portrayed as a symbol of a rising "new" India, yet it also represents a riddle at the heart of India's rapid growth: How can a new city become an international economic engine without basic public services? How can a huge country flirt with double-digit growth despite widespread corruption, inefficiency and governmental dysfunction?

In Gurgaon and elsewhere in India, the answer is that growth usually occurs despite the government rather than because of it. In Gurgaon, economic growth is often the product of a private sector improvising to overcome the inadequacies of the government.

To compensate for electricity blackouts, Gurgaon's companies and real estate developers operate massive diesel generators capable of powering small towns. No water? Drill private borewells. No public transportation? Companies employ hundreds of private buses and taxis. Worried about crime? Gurgaon has almost four times as many private security guards as police officers.

"You could call it the United States of Gurgaon," said Sanjay Kaul, a civic activist critical of the city's lack of planning who argues that Gurgaon is a patchwork of private islands more than an interconnected city. "You are on your own."

Gurgaon is one of India's fastest-growing districts, having expanded more than 70 percent during the past decade to more than 1.5 million people, larger than most US cities. It accounts for almost half of all revenues for its state, Haryana, and added 50,000 vehicles to the roads last year alone. Real estate values have risen sharply in a city that has become a roaring engine of growth, if also a colossal headache as a place to live and work.

BIRTH OF A BOOM

Before it had malls, a theme park and fancy housing compounds, Gurgaon had blue cows. Or so Kushal Pal Singh was told during the 1970s when he began describing his development vision for Gurgaon. It was a farming village whose name, derived from the Hindu epic the Mahabharata, means "village of the gurus." It also had wild animals, similar to cows, known for their strangely bluish tint.

"Most people told me I was mad," Singh recalled. "People said: 'Who is going to go there? There are blue cows roaming around."'

By 1979, Singh had taken control of his father-in-law's real estate company, now known as DLF, at a moment when urban development in India was largely overseen by government agencies. In most states, private developers had little space to operate, but Haryana was an exception. Developers built the infrastructure inside their projects, while a state agency, the Haryana Urban Development Authority , or HUDA, was supposed to build the infrastructure binding together the city.

Slowly, Singh began accumulating 3,500 acres in Gurgaon that he divided into plots and began selling to people unable to afford prices in New Delhi. Still, growth was slow until after 1991, when the Indian government barely staved off default on foreign debts and began introducing market economic reforms. Outsourcing required workspaces for thousands of white-collar employees, the type of commercial space seriously lacking in India.

Gurgaon had advantages: It was close to the New Delhi airport and a Maruti-Suzuki automobile plant had opened in the 1980s. But Gurgaon still seemed remote, and DLF needed a major company to take a risk to locate there. The answer would be General Electric. Singh had become the company's India representative after befriending Jack Welch, GE chairman. When Welch decided to outsource some business operations to India, he eventually opened a GE office inside a corporate park in Gurgaon in 1997.

"When GE came in," Singh said, "others followed."

SELF-CONTAINED ISLANDS

It is 8 p.m. on a recent Tuesday, time for the shift change at Genpact, a descendant of GE and one of Gurgaon's biggest outsourcing companies. Two long rows of white sport utility vehicles and cars are waiting in the parking lot, yellow emergency lights flickering in the early darkness, as employees trickle out of call centers for their ride home. These contracted vehicles represent Genpact's private fleet, a necessity given the absence of a public transportation system in Gurgaon.

From computerized control rooms, Genpact employees manage 350 private drivers, who travel roughly 60,000 miles every day transporting 10,000 employees. Employees book daily online reservations and receive email or text message "tickets" for their assigned car. In the parking lot, a large LED screen is posted with rolling lists of cars and their assigned passengers.

Faced with regular power failures, Genpact has backup diesel generators capable of producing enough electricity to run the complex for five days (or enough electricity for about 2,000 Indian homes). It has a sewage treatment plant and a post office, which uses only private couriers, since the local postal service is understaffed and unreliable. It has a medical clinic, with a private ambulance, and more than 200 private security guards and five vehicles patrolling the region. It has ATMs, a cellphone kiosk, a catered cafeteria and a gym.

"It is a fully finished small city," said Naveen Puri, a Genpact administrator.

Actually, it is a private island, one of many inside Gurgaon.

"We pretty much carry the entire weight of what you would expect many states to do," said Pramod Bhasin, who this spring stepped down as Genpact's chief executive. "The problem - a very big problem - is our public services are always lagging a few years behind, but sometimes a decade behind. Our planning processes sometimes exist only on paper."

Not all of the city's islands are affluent, either. Gurgaon has an estimated 200,000 migrant workers, the so-called floating population, who work on construction sites or as domestic help. Even at the fringes of Gurgaon's affluent areas, large pools of black sewage water are easy to spot. The water supply is vastly inadequate, leaving private companies, developers and residents dependent on borewells that are draining the underground aquifer. Local activists say the water table is falling as much as 10 feet every year.

Yet outsourcing is thriving in Gurgaon, anyway. Last year, a leading Indian industrial association determined that outsourcing was directly and indirectly responsible for about 500,000 jobs in Gurgaon. Companies still gravitate to Gurgaon because the city's commercial space is more modern, more abundant and far cheaper than that in New Delhi, and Gurgaon is a magnet for India's best-educated, English-speaking young professionals, the essential raw material in the outsourcing business.

PLAYING CATCH-UP

Sudhir Rajpal, the wiry, mustachioed commissioner of the new Municipal Corp of Gurgaon, has a long to-do list: Fix the roads, the sewers, the electrical grid, the drainage, the lack of public buses, the lack of water and the lack of planning. The Municipal Corp was formed in 2008, and Rajpal, having assumed the city's top administrative position a few months ago, has been conducting a listening tour to convince people that government can solve their problems.

It is not an easy sell.

In Haryana, developers make campaign donations to politicians and exercise enormous power. Critics say graft and corruption are widespread. Many developers have disregarded promises to construct parks and other amenities. Meanwhile, state agencies like HUDA operate with little accountability. Civic leaders say more than $2 billion in infrastructure fees collected from Gurgaon have gone into HUDA's general budget without any benefit to the city.

"They used that money somewhere else," said Sanjeev Ahuja, a veteran journalist in Gurgaon. "The government thinks the private sector will take care of the city: 'People are rich. If they need water, they can buy water."'

Some people hope Gurgaon's new municipal council, which was elected on May 13 to oversee the Municipal Corp, will create a political voice for the city capable of forcing action. Eventually, the Municipal Corp is expected to assume responsibility for providing services in all of Gurgaon, yet some residents are leery of the change.

Santosh Khosla, an information technology consultant whose family moved to Gurgaon in 1993, has services provided by his developer, DLF. He said DLF had broken numerous promises and did only an adequate job of delivering water and power. Still, adequate is tolerable.

"I'm certain that if it goes to the government," he said, "it will be worse."

ACTIVISTS STEP IN

Col. Ratan Singh, his military beret placed neatly atop his head, has arrived at a busy intersection in the midday sun for what he calls "an agitation." He is 82, an Indian army veteran who has decided that private citizens need to incite a little conflict in Gurgaon. Demonstrations are common in Gurgaon, and he is leading a protest against shoddy work by a contractor.

"Every day some agitation is taking place," he said, shouting above the din of traffic. "People are not satisfied."

Faced with so many urban headaches, though, civic activists like Singh are pushing the government for change, or simply making change on their own. Singh leads an umbrella group of residents' associations that have started volunteer vigilance groups as watchdogs against crime.

Across India, Gurgaon is both a model and a cautionary tale. Other cities want to emulate Gurgaon's growth and dynamism but avoid the dysfunction and lack of planning. Meanwhile, Gurgaon is trying to address its infrastructure woes; last year, the city was connected to the New Delhi rapid transit system, while a public-private project is under way to construct a link to Cyber City. Yet the state and local governments are still struggling to keep up, especially since Gurgaon is already building an industrial district and planning to create more commercial space.

"If Gurgaon had not happened, the rest of India's development would not have happened, either," contended Singh, chairman of DLF. "Gurgaon became a pacesetter."

By vayaM CS