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Dharavi: Mumbai’s Cash Cow

June 25, 2019 | Expert Insights

BACKGROUND

According to the United Nations’ HABITAT, a place is categorised as a slum if it meets one or more of the following criteria: lack of access to clean water, poor sanitation, temporary/non-durable dwellings, lack of sufficient living space with more than three people sharing a room. In India, it is estimated that approximately 104 million people reside in slums – which amounts to 9% of the nation’s population.

Located in the metropolitan city of Mumbai in the state of Maharashtra, Dharavi is Asia’s second largest slum, sprawling over 535 acres, home to about 1 million people. It first surfaced as a quaint fishing settlement, but when the British resettled local factories and residents from the city center,  it began to expand as a shelter for migrant workers from all over India. Today, Dharavi is a bustling community of a million people who thrive on the burgeoning informal economy and take advantage of the cheaper rents that residents pay. 

Dharavi is also proximal to the Bandra-Kurla complex, Mumbai’s Chhatrapati Shivaji International Airport, is well connected with two railway lines, and in close vicinity to the Mumbai port. This makes the land invaluable for real estate developers. 

ANALYSIS

Plans to redevelop Dharavi have been on since the 1970’s but strong opposition from residents, combined with flawed urban planning resulted in several initiatives falling through. Since the failure of the Dharavi Redevelopment Project in 2004, successive governments have tried to come up with a sustainable plan to give Dharavi a facelift. 

In 2018, the Dharavi Redevelopment Project was relaunched under the purview of the Slum Rehabilitation Authority. They invited bids for a consolidated development project with an initial value of  Rs.3,150 crore.

While 15-20 top developers participated in a pre-bid meeting for the redevelopment project, only two formal bids were finally  made – the first  by UAE’s Seclink Technology Corporation, and the other by India’s Adani Group.

The aim of the project is to consolidate all redevelopment efforts into one mega  development program to turn Dharavi into a modern-day metropolis. The project plans include the construction of high rise dwellings for displaced residents, a smart city with commercial and high-end residential zones, a large 100-acre park (akin to central park), and a Marina by the bay. According to Seclink CEO Nilang Shah, "Lives will be enhanced without destroying their social fabric. It can be a model for the world".

The project is expected to take 9 years to complete. But the government has not yet formally awarded Seclink the contract. Seclink Group is a relatively new corporate conglomerate which started in 2017. It is partially funded by the Royal Family of the United Arab Emirates. According to a spokesperson, the delay in awarding the contract might prompt the company  to take legal action as the required funds of 28,500 crores for the project have already been set aside. There are some concerns of a diplomatic fallout if the project tenders are reevaluated, and STC bid is set aside. 

Under the new project, close to 70,000 families will be eligible for new and improved high-rise housing along with additional compensation. The 250-300 square feet homes will have access to running water and private bathrooms, perhaps a welcome change for many Dharavi residents with inadequate access to proper sanitation. But many residents are concerned that the new high-rise accommodations will not be conducive to their community-centric lifestyles.

The idea of slum redevelopment is not a new one. Socially committed developers have been able to find solutions to these common problems in many parts of the world. In Singapore, planners were able to overcome the challenges of high rise living by incorporating vertical gardens and courtyards into their designs. In doing so, they were able to encourage tight-knit community-living. and provide residents with access to greenery in a concrete jungle.  At the end of the lease term, residents were able to claim ownership of the property. This increased housing security over generations, and ensured that residents worked for their housing rather than taking it for granted.

Bangkok's Baan Mankong initiative combined slum redevelopment with improvements in financial infrastructure. Under this model, slum residents needed to form cooperatives and savings/credit groups as a prerequisite for development funding. In Brazil, the redeveloment of favelas was successful due to transparent financial management of the project, clear eligibility criteria and community involvement in redevelopment.

COUNTERPOINT

Under the “Make in India” banner, it is surprising that the government did not favor a local development company with greater experience in India. The Adani group’s bid for the project was valued at 4,529 crore which is substantially lower than STC’s bid. Perhaps, in this case, money trumps experience. The Indian infrastructure sector is currently underperforming due to a serious lack of investment.  

ASSESSMENT

It is our assessment that if the government is able to closely work with project developers and regulate the re-allocation of resources in favor of Dharavi’s residents, the venture might actually help to increase the standard of living while simultaneously generating revenue and jobs. The new venture is likely to attract a lot of foreign direct investment and if successful, can be a model for infrastructure projects all over India. We are concerned, however, that the developers may not be aware or sensitive to the real interests in the community and therefore would  be less inclined to ensure a fair distribution of the profits that they would make. A high end commercial and residential zone will certainly generate employment but the question is – for whom? The residents of Dharavi might not have adequate technical or educational skills for the types of jobs that would be available. We believe that the government has to  work with local organizations to provide skills-based training, to ensure that the community is gainfully employed. Unemployed residents are at risk to alcoholism and drug-use, which if unchecked, could elevate crime rates in the area. We feel that the absence of a strong community would leave them vulnerable with no social support mechanism. However, if the Dharavi developers can take inspiration from the cases in Singapore, Brazil and Bangkok, with a sensitivity to the unique socio-economic-cultural requirements of the people of Dharavi, we think there could evolve a successful model for Dharavi as well.