Dharavi redevelopment is not social policy

By Neil Padukone

The Dharavi Redevelopment Project is not social policy. It is a grab of a piece of land that has become extremely valuable by virtue of its location. The key aim of this project is not the upgrading of the lifestyles of what are essentially middle-class slum-dwellers. If the lives of poor were the central priority, there are far more deserving slums in Mumbai alone, notably the airport slums which have outsized Dharavi and have far worse human development indicators. Moreover, a multi-billion dollar redevelopment project provides little in the way of scalable solutions, given that the slum dwelling population constantly replenishes itself due to rural migration.

Instead, this redevelopment project is for the sake of recapturing valuable land to make the area alluring to (foreign) investors. This is not a social investment, but a real estate investment that will involve the de facto displacement of the current population — the slum dwellers are more likely to make a premium on their fancy new apartments by selling them to middle class glitterati and returning to a different slum, particularly if property taxes kick in; after some time, there will be a complete turnover in the area’s population.

This is not a value judgment: claiming land for aesthetic upgrading may well be a worthy cause. But we must acknowledge this fact of the project’s aim. Assessing the worthiness of this goal is a separate issue.

On one hand, yes, improving the health, aesthetics, and density of the area of Dharavi to make it more accessible to foreign capital and to a rising middle class is likely to attract private capital, which will come with increasing returns. (Whether it is worth the investment to displace the existing order is a wholly political and values-laden question that will not be answered by mere statistics on return). Still, it is on this potentially very lucrative basis that the government has sought to redevelop these slums.

Two other considerations: first, the effects of disrupting the informal economy. The “informal” economy is not simply one that exists independently of that which is regulated, but in India, the two are entirely synergistic. Small-scale manufacturing firms provide cheaper but comparable consumer goods, such as soap, than their formal sector counterparts. And Dharavi’s vast recycling system serves not only the informal sector, but manages the waste of the whole region. And it does this at a much more carbon-efficient and cost-effective rate (three vs. ten Euros per ton) than their formal sector counterparts. Without this (free) service, Mumbai would be far filthier than it is.

If removing aesthetic blight in a scalable way — while simultaneously improving the lives of the poor — is the true aim of public and private sector intervention (while simultaneously making a buck), smaller scale interventions would be more successful.

Discounting the political hurdles that would draw out this project for years and drive up costs and disruptions, more interesting, innovative, and scalable interventions have capitalized on the intersection between formal and informal —  “jugaad innovation.” In the case of slums, this could involve granting tenure security to those that have settled them. Turkey, an upper-middle income country, provides an example. Istanbul’s population skyrocketed from about 3 million in the 1980s to nearly 18 million today. Most of that was owed to the rural poor that settled in gecekondu or “overnight houses”. By a legal quirk, settlements that were constructed overnight (not in the day) were given de facto tenure of that land. Secure that their houses would not be bulldozed, residents invested in their dwellings. Informal neighborhoods soon had water pipes, roads with street names, electricity and even natural gas pipelines, bus stops and parks; they developed the city.

There are far more effective ways to help a population, develop a region, and make some money that “slum redevelopment projects.”

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One thought on “Dharavi redevelopment is not social policy

  1. I read the thought that the Dharavi redevelopment is not social policy and began to ask myself, what would be a good social policy for Mumbai. I agree for the most part with your arguments for pointing this as a real estate investment that might ultimately displace the poor further out of the formal economy. This said I am not convinced that smaller scale interventions will make a difference. Considering the scale of Mumbai, and Dharavi and the many other slums around the city, are smaller interventions enough?

    Should Mumbai instead go bigger, put in place a social policy that can transform the city? One of the problems is that there is no option for affordable housing in the city. Mumbai keeps the supply short by limiting the height and FAR of development. As the case states, Mumbai allows a 1.3 FAR for private land, and 3.1 FAR for municipal land. For reference, the Empire State Building has an FAR of 33. Maybe what Mumbai needs is more development, more housing options, taller buildings that can reflect the value of the land in Mumbai, and that takes away pressure from the informal settlements, the only viable option for people with low incomes.

    Increasing housing supply will enable people to transition out of the informality and would let Dharavi keep playing its role. People moving to the city from the countryside will end up going to Dharavi, but eventually, once they get on their feet, affordable options must be made available for them to move on.

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