Altar of populism

As Mumbai waits for the biggest ever transformation of its embedded slum township of Dharavi to begin, crucial questions about the pattern of urban development have begun to be raised. Questions about the viability and necessity of the project have been raised by members of an expert committee set up by the government to help plan the project.

At stake are differing views of how Mumbai and other Indian cities ought to develop. The government, backed by the builders who profit from such schemes, has pursued a slum rehabilitation policy that involves building free housing for residents of city slums by builders, who then get free land to build  premium flats for sale to the upper middle class. Slum dwellers exchange their occupation of the land for a free 225 sq ft flat.

For the builder the cost of land is the cost of building the free flats for the slum people. This is much less than the cost of such land in most parts of the city. Such a policy can only work where land prices are high enough. By pampering slum dwellers with a free house and builders with a low land cost, the city is deprived of more affordable housing, and a pattern has been set which is difficult to break.

It is also about time that slum dwellers began to pay for the construction of new homes and that banks are induced to give them loans at lower rates of interest. They cannot be pampered with freebies any more but at the same time should be given the chance to live with the dignity of having a legal title to their homes.

A 225 sq ft flat would possibly  cost around Rs2.5 lakh to build. According to estimates, some 80 per cent of slum families earn over Rs7,500 a month and can therefore afford a bank loan to pay for the construction of their flat. Because a builder does not have to pay for reconstruction of such slums, since the slum dwellers will be paying their own way, the government can demand that affordable homes are also simultaneously built on the available free area. 

In the slum rehabilitation policy now being attempted in Dharavi on a grand scale, the families that live or work in some 57,000 huts are to be re-housed in 300 sq ft tenements. Apart from this there are 15,000 to 25,000 families that live as tenants on the first floors of the huts. They have not been taken into account while preparing the plan and their fate and possible opposition is not yet known.

The total cost of the project is said to be Rs15,000 crore but its break up is something of a mystery. Around 60,000 tenements of 300 sq ft each would cost around Rs2,000 crore to build at the rate of around Rs1,200 per sq ft. Of the balance commercial or residential area of total FSI (floor space index) of 1.33, the reconstruction area would cost around Rs4,800 crore at Rs2,000 a sq ft. If sold at Rs15,000 a sq ft, this would give the builders and the government Rs 36,000 crore or five times the reconstruction cost of the hutments and the new offices/upmarket residences.

With prospective bidders not very confident about the market for office space in the Dharavi area, more residences would further crowd the already very high population densities. While a worthwhile innovation in the current plan is that people could continue to work near their homes in shops or galas (work spaces that could double as industrial spaces) in the ground floors of their residential buildings, it is galling that the winners would depend on how high they bid, with all the money going to the government.

The expert committee has instead proposed that the land be leased out to slum dwellers to construct their homes. Such self help has never worked in the past and to think it would do so now is utopian. With the state government being broke and no longer building homes for the lower income groups, there is no way builders can be dispensed with. They are businessmen and like to make a profit. It is for an elected government to ensure that social goals are also being met.

For instance if the bids were based not on how much the builder is willing to pay the government but on how little extra FSI he would be content with (this regularly happens in infrastructure projects when the bid is chosen based on the shortest period for which tolls will be collected), the overcrowding would be reduced.

The government has also to move away from a policy of free housing, a policy that
can never work on the scale needed to meet  demand. But this would require a political consensus, difficult enough when competing populism dominates politics and impossible when state assembly elections are around  the corner.

The writer is a commentator on social and political affairs