Bangalore's Boomtown Blues

By Steve Schifferes
Economics reporter, BBC News, Bangalore

Nitesh Shetty may be Bangalore's youngest property billionaire.

Aged 30, he has 4,000 apartments under construction in the city, with plans to expand his operations into Calcutta, Mumbai and New Delhi.

And he has just sealed a $100m deal with Citigroup to build Bangalore's latest luxury hotel, the Ritz Carlton.

Having dropped out of university to pursue a career as a tennis pro, he began his career by selling billboard space in Bangalore, after getting a 10,000 rupee ($226, £115) loan from his mother.

At 23, he borrowed 500,000 rupees ($11,000) to turn a house in central Bangalore into an office block.

The home was owned by an old widow, and he gave her a 50% stake in the venture.

He then persuaded the bank to rent the ground floor - which covered his interest payments - and he never looked back.

Mr Shetty told the BBC there was no shortage of foreign investors eager to take a stake in India's real estate boom.

He has named all his luxury apartment complexes after famous US locations, such as Times Square, Key Biscayne, and Forest Hills (the US Wimbledon), and has hired the Australian cricketing legend Shane Warne to promote his properties.

Hi-tech boom

In the 1990s, when the Indian government decided to liberalise the economy and encourage the IT services industry, Bangalore established special zones such as Electronic City - a hub of hi-tech firms.

But its highly educated, literate workforce prompted the government to locate its defence and space research here in the 1960s.

Today the Bangalore boom is based on its attractiveness as the centre of India's IT industry, which is enjoying unprecedented growth as foreign multinationals rush to outsource their back-office functions to India.

The city's population has grown from 1.6m in 1970 to 2.8m in 1990 and 6.5m today, making it India's fastest growing city, and planners expect it to reach 10m by 2015.

India's IT sector employs 1.3 million people directly, and 3 million indirectly - and 40% of the IT sector is concentrated in Bangalore.

Bangalore also has the highest average income in India, and the jobs are plentiful, with Infosys expected to hire thousands this year.

Out on the town

The spirit of affluence pervades Bangalore.

Civil servants... are not good at managing big projects on time and on budget says K Jairaj
City commissioner

There are six new shopping malls, and luxury car showrooms like BMW are springing up everywhere.

The young, well-paid worker likes to go out on the town, and restaurants and bars are doing a roaring trade, with 500 new bars in the city alone and dozens of cafes.

With a new bar opening every week, owners cannot get enough staff.

That's good news for the head barman at the newly opened Le Rock pub, who has been hired at double his previous salary.

And there has been a boom for taxi firms as the IT companies all pay them to transport their workers to and from their offices, given the hopeless inadequacy of the public transport system.

Not that the new-found wealth always filters through.

Raj Singh came from Tamil Nadu 15 years ago to work as a taxi driver.

He still sends half his salary to his mother back home, and visits her two weekends a month, travelling for 15 hours on three buses.

But if his wages are higher, so is his rent. He cannot afford to live in Bangalore, and it costs half his salary even to rent a room in a village 30 miles away.

And many of the thousands of construction workers who have to build the new apartments and offices live in squalor in makeshift roadside tents that sit uneasily among the city's glamour.

Weekend breaks

The hi-tech industry has also introduced a new phenomenon in Indian life for those who are on-the-up - the weekend break.

Affluent IT workers like to get away from the city.

Previously, everyone spent six days a week in the office, but the high-paid IT workers only do five.

With their high-stress jobs, they are increasingly interested in getting away from it all.

And into the breach has stepped Santosh, a trekking guide.

His web-based travel agency, Getoffurass.com, specialises in finding weekend hideaways in the jungle, and is doing a roaring trade.

Santosh told the BBC that the biggest change was that now he was leading Indians, not Westerners, in treks across the Himalayas.

Infrastructure woes

Bangalore's public infrastructure has lagged woefully behind the pace of private sector investment.

Every Bangalore IT company has to have a private generator and uninterruptible power supply to cope with the daily power failures of the grid.

Despite 15 years of lobbying, the 5km stretch of road linking Electronic City to the city centre is still crammed with bullock carts, trucks, cars and two-wheelers despite a private-public partnership to fund a new expressway.

And its international airport has an antiquated terminal far too small for the hordes of international businessmen flooding into the city - and the frenzied search for luggage as people gather five-deep around the single luggage carousel sometimes prompts emotional - and occasionally physical - outbursts.

Bangalore's city commissioner, K Jairaj, told the BBC that untrammelled growth could not go on indefinitely, with five million vehicles already clogging the roads and property prices going through the roof.

The government's policy is to decentralise development - building new towns on green field sites surrounding the city.

Mr Jairaj also said that, in order to generate more jobs, the government wanted to encourage more labour-intensive sectors like car manufacturing to locate in Bangalore, and would not resist plans to disperse IT jobs to more cities in India.

But he said his greatest problem was the weakness of his own civil servants, who were not good at managing big projects "on time and on budget."

Click here for the complete article