INDIA’S DHARAVI THRIVING INFORMAL ECONOMY: A SLUM OF OPPORTUNITIES

INDIA’S DHARAVI THRIVING INFORMAL ECONOMY: A SLUM OF OPPORTUNITIES

Dharavi, one of the world’s biggest slums, lies right in the middle of India’s financial capital. It provides shelter to more than a million people and sprawls over 590 acres. It is home to a large number of thriving micro industries that produce top quality leather goods, wax printed goods, and embroidered garments recycle a large chunk of plastic and has vast aluminum brick and pottery making units. Most of these products are made in manufacturing units spread across the slum and are sold in domestic as well as foreign markets. Dharavi is more entrepreneurial than in many developed countries. According to a survey, among the employed urban, 43 percent were self-employed in India, while in the UK no city has more than 20 percent as the self-employment rate. Dharavi, being more entrepreneurial than other urban areas in India clearly has a higher proportion of self-employed. One of the reasons being that activities in Dharavi are not within the boundaries of the formal economy. It is a slum that has 5,000 different businesses and an informal economy worth 1-billion-dollars.

In a city where house rents can reach even up to Rs.1.2 lakhs per month, Dharavi provides an affordable option. Rents here can be as low as Rs.250 per month. The issue of unaffordable rental housing began with the introduction of the Maharashtra Rent Control Act of 1999. The rent control markedly reduced the incentives for landlords to maintain rental properties as they would receive nominal returns for doing so. Rent control and restrictive land policies also discouraged private investment in housing. Price control has also led to a shortage of flats in Mumbai by decreasing the prospect of profits for developers, thus pushing more people into slums like Dharavi.

What Is The Redevelopment Project?

Dharavi is located at the intersection of two main train lines and just a few kilometers away from the Bandra-Kurla Complex. The Chhatrapati Shivaji International Airport lies less than 5 miles away and famous landmarks namely the Gateway to India and Colaba are also nearby. As a result, the value of the properties has soared and developers and the government have begun looking at ways to redevelop the area to capture the value of the land.  The current plan, which was put forth by Mukesh Mehta, was accepted by the government in 2004 and proposed the idea of increasing the floor-space index of Dharavi from 1.33 to 4, thus concentrating current residents into multi-story buildings.

Under the scheme, which was tweaked many times (the latest amendment was in October 2018), private developers can purchase slum land from the government at a low price and redevelop the land. After purchasing the land and obtaining the consent of 70 percent of the residents of the slum, the developer can clear the land and provide the eligible slum residents with free of cost housing. Those residents who can prove that they have been living in the slum prior to January 1, 2000, will get free tenement, and those who are residing in hutments built before January 1, 2011, will have to pay the construction cost of the tenement. The families will get a redeveloped unit measuring a minimum of 350 square feet. Those above 300 square feet will get 400 square feet, and those over 500 will get an additional area of 35 percent. In return, the developer can construct commercial and residential buildings on the rest of the land and sell them on the market. Through this model, some of Mumbai’s most prominent development projects have been built on former slum land. For instance, Imperial Towers were built on former slum land where the current model of slum redevelopment was first used.

Shortcomings Of The Model

While Mehta’s proposal was accepted in 2004, there has not been much development in the project. The primary obstacle being massive opposition from current residents who feel that the proposed amount of space is not enough.  There is no space allocated for the operation of informal businesses, raising fears that their sources of income would be shut down. Government negligence is also a big impediment responsible for the delay of the project.

The informal nature of Dharavi’s economy has limited the government’s ability to understand its capacity and the positive externality it creates by independently handling municipal waste and encouraging sustainability in Mumbai through recycling. The government has made no offer to compensate residents for the loss of their businesses. The government’s proposals have focused entirely on the strategies for rehousing of slum-dwellers, with little thought of how they will seek meaningful livelihoods once their small businesses are closed down.

These buildings will most definitely resolve the issue of hygiene and sanitation to a great extent but it still encountered resistance from the residents. They feel that a tower structure will destroy the community sentiment that has allowed the proliferation of Dharavi’s micro-industries. The huge population of Dharavi and its proximity to the business district can also pose implementation challenges.

The current model does not provide specific standards on the quality of rehabilitation buildings. The discretion is left to developers. Some of the rehabilitation buildings are designed in a way that compromises the living standards of residents. There is the danger that these buildings will become “vertical slums”.

Due to the eligibility criteria for the provision of free housing, the ineligible population is left with no option but to stay in an unauthorized manner in slums. Many of them will have to settle in a new slum after their previous slum is demolished by the government.

As the current model provides free housing to the slum dwellers, developers have to cover the cost of rehabilitation housing by increasing the prices of the commercial and residential buildings built on the rest of the land which ultimately leads to the increase of housing prices on the formal market.

Past Policy Failures

Policy failure has been a recurring theme in the story of the redevelopment of Dharavi. In 1971, the Maharashtra Government created the Slum Improvement Programme (SIP) which was intended to provide some basic facilities to the area like water, electricity, toilets, and sewage disposal but could not do so due to no comprehensive census of slums of Mumbai.

In 1976, the government attempts to give the slum dwellers with legitimate status. For this purpose, they created photo identities. However, the scheme ended due to a lack of records of residents. Also, part of the slum was not owned by the government and was under de facto control of the slum lords who did not want to give it up by allowing redevelopment.

In 1985, Slum Upgradation Programme (SUP) which was funded by the World Bank came into effect. Slum land was leased out to cooperative groups of slum dwellers at affordable prices and loans were granted for environmental and housing improvements. However, it was unable to overcome a key hurdle which was that a large portion of the slum was on private holdings.

In 1995, the government put in place the Slum Rehabilitation Authority (SRA) to address the issue of slums in the state through a Slum Rehabilitation Scheme (SRS). The scheme took into account many of the shortcomings not addressed by the previous schemes. Though the plan was not successful as it required consent of 75 per cent of the slum population but was unable to do so. Several residents who did receive the redevelopments under the scheme rented them out for an additional source of income and continued to stay in their shanties. Out of 100,000 units, only 3486 units consented for the programme by the year 2000.

Some Amendments

Dharavi has grown into its own ecosystem over the years. Residents rely on the micro-enterprises, some of which make use of the outdoor spaces to operate their businesses. It is imperative to residents that their livelihoods are supported during this change. In order for the upgrade to work for the residents, it’s crucial that the redevelopment also considers the economic and social activities that flourish in slums. The businesses need to be provided with some liberty. By creating an area for industrial and commercial purposes, Dharavi can grow beyond imagination.

The housing stock which is created in the formal market is mostly in the luxury or semi-luxury segment which does not cater to the demand for affordable houses by low and middle-income groups of the population. The government should consciously create housing stock for low and middle-income groups. Under the current laws, 19 percent of the total houses in Maharashtra are lying vacant. The government must create an environment to bolster the rental market.

Somya Garg

Leave a Reply

Your email address will not be published. Required fields are marked *