The vicious circle of supply shortages and high land prices are taking the sheen out of Mumbai as the metropolis, which houses 1.2 crore people in slums and degraded apartments, has become the world’s most densely populated city, the World Bank said on Thursday.

Despite the attempts to discourage inflow of people, the World Development Report 2009 said, Mumbai’s population has more than doubled to 1.6 crore since 1980s.

Mumbai, the report recalled, has already slipped from 25th place to 40th in the league table of ‘best cities for business’ between 1995 and 1999.

“Estimates indicate that 54 per cent of Mumbai’s 16 million people now live in slums, and another quarter in degraded apartments,” said Indermit S Gill, chief economist of Europe and Central Asia, World Bank while releasing the WDR 2009.

Overly restrictive land and building regulations have put unnecessary upward pressure on land and property prices, hampering the city’s competitiveness, the report said.

“Height regulations hold Mumbai’s buildings to only between a fifth and a tenth of the number of floors allowed in major cities in other countries,” Gill said.

However, the report says Mumbai remains India’s premier business city topping Chennai and Bangalore in terms of investment in 2007 and was the top destination for domestic migrants.

“But how quickly it reforms its regulations and builds infrastructure will decide how long it will keep this position,” the World Bank added in its report.

As regards inflow of migrants into Mumbai, the report said the government should have accommodated the influx by establishing robust and versatile land market institutions and providing basic amenities.

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