More people live in the slums of India than the whole of Britain. The city of Mumbai is now gearing up to relocate 135,000 families in the slums that have eaten into the Mumbai airport area and the sprawling area known as Dharavi.
This is as good a time as any to ask why slums exist and what can be done about them. The usual response is to brand them as illegal. Slums are also vibrant centres of commerce and industry, as any visitor to Dharavi will know. They also supply cheap labour to both households and the regular economy.
So, it is good to see that the police state policy of demolishing slums has given way to a more market-oriented system of giving slum dwellers free housing and financing these free houses through the open market sale of the remaining real estate. Yet, there is still the threat of conflict between slum dwellers (who feel they are undercompensated) and the government, an unmoving road block.
But why do we have slums? It’s not the reasons that have been traditionally bandied about — overpopulation, slum dwellers comfortable with breaking laws and even democracy. The root of the problems lies elsewhere — property. Malls, skyscrapers, and luxurious housing grow on private property; decay and poverty fester on public land.
Slum dwellers cannot borrow or enter into long-term business contracts, for they have no collateral to vouch for honesty. Some shanties have televisions and fridges, but not a toilet. Irrational? Not really. When the demolition squad arrives, you can run with a TV but not the toilet. So, slum dwellers do not invest in housing or the usual collaterals, because the property they occupy is inevitably public.
The way ahead? Give slum property to slum dwellers, and sell other public land before they become slums. The latter is essential because the new policy of giving free housing worth many crores of rupees to slum dwellers will otherwise create perverse incentives for others to create slums. But how do we identify millions of people to assign property rights? Interestingly, it’s already happening. The Dharavi Development Authority is using biometric survey to identify slum residents to be given flats as compensation for government-imposed construction.
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