‘Fixing’ Dharavi – a PPP (purely private play) is not viable

By Ruchi Jain

In my opinion, redeveloping Dharavi needs to be a primarily public initiative but with significant non-profit and private involvement (especially at later stages). This will undoubtedly be expensive, but the government will either have to use taxpayer funds or raise money through foundations or corporate CSR departments.

If there was no for-profit agenda on the table, most of the government’s objectives (as discussed in class) would be met. The low-cost way of redevelopment is to not re-build, but to simply provide access to water and sanitation facilities. Access to these basic needs would alleviate health concerns dramatically and improve living conditions. However, this would not do much for removing the blight from the city’s landscape. If large-scale financing through corporate donations or government coffers was a possibility, the government could re-build the slum, which would make Mumbai look better. Any remaining land could be used to create wide roads or parks, which would also help the aesthetic cause. Infrastructure in Mumbai has not kept pace with construction, and using Dharavi to create yet more high-rises for high-income residential and commercial uses is unsustainable from my native-Bombayite  perspective.

 Jain Roads   Jain Trains
Road and rail infrastructure in Mumbai. Mumbai roads (left picture[i]) have traffic jams all through the day. The local trains (right picture[ii]) are over-crowded, resulting in several commuter deaths per year.

With both low-cost and high-cost solutions, heavy NGO involvement would be required. In the first case, using public sanitation facilities would require behavior change, and some sort of accountability from the residents in order to maintain the facilities. If the slum was re-built, social workers would have to encourage families to stay in the buildings. Residents would probably want to sell or lease the units and invest the proceeds in businesses, education or weddings.  I disagree with the argument that simply providing slum-dwellers with property rights will enable market forces to work – India is far from Adam Smith’s “perfect market,” and the root cause of the problem would still exist. Residents would sell and move to other slums, which would mean relocating the problem, not fixing it.

There could perhaps be a financial incentive built in to prevent the sale of the units – one could compensate the slum-dwellers in addition to providing them with the apartments. However this may further increase the cost of the project, without any guarantees that the slum-dwellers will not sell.

The private sector should be brought in to provide the access to water and sanitation at heavily subsidized rates – people do not usually value things that are free but providing these facilities at low prices would increase perceived value. Providing residents with commercial opportunities is a challenge with redevelopment efforts, but if the private sector could work with the government to re-train the residents or vertically integrate slum businesses into their existing operations, residents may be more amenable. With better economic opportunities, one would hope that crime would also reduce (satisfying another government objective.)

While the public-private-non-profit solution does create the problem of moral hazard, in a country as poor as India, to do nothing and wait for other parts of the system to change is to allow people to continue living in crap (figuratively and literally).

[i] Eric Bellman, “Mumbai’s Messy Motorways,” The Wall Street Journal, January 11, 2010, http://online.wsj.com/article/SB126318396488324269.html, accessed February 2013.

[ii] Krishna Kumar, “Mumbai’s killer trains: 805 dead in 3 months, insensitive railways blames commuters,” India Today, May 9, 2012, http://indiatoday.intoday.in/story/mumbai-killer-local-trains-mishaps-railways-blames-commuters/1/188058.html, accessed February 2013.

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