Residents pay for unholy nexus

The unrest among Mumbai’s unlicenced vegetable sellers, who finally took to the streets yesterday, is a telling comment on the economics of scarcity created by the BMC. The city, with its nearly 20 million population, needs hundreds of tons of vegetables and fruit daily. Yet, shockingly, there are only 13,787 licenced hawkers, of which a significant portion does not even sell daily needs goods.

According to figures available to the BMC, there are nearly three lakh unlicensed hawkers. Given that these people have no hope of getting a licence any time soon and therefore invite action from the both the police and the BMC the economics of scarcity works perfectly for everyone, except you, the consumer.

Here is how it works. The BMC severely restricts the number of licences to hawkers, thereby creating an artificial scarcity. When there is demand, entrepreneurs will rush to fill the gap. Which is what the hawkers do, but in doing so, they have to pay off the land mafia, the BMC, the police, and just about every other department that controls these aspects of the city. Who pays for it? You. For every increase in the hafta collection, you, the consumer are dishing out more money.

We might as well ask a few questions to the BMC: Why does the BMC, India’s richest civic body, have no money to create market zones, something that is part of the city’s Development Plan? Why has it sold such land to builders who have reneged on their promise to build market zones? Why does not the BMC give more licences to vendors?.

The answers are not too difficult to find. The hawkers' situation is the perfect example of how rent-seeking officialdom breaks the spine of a city. Unless this vicious circle is broken, Mumbai will continue to watch the drama. And pay for it.

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