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Business News/ News / India/  Gautam Adani's plan to transform Mumbai's Dharavi raises doubts and allegations: Report

Gautam Adani's plan to transform Mumbai's Dharavi raises doubts and allegations: Report

Indian billionaire Gautam Adani's plan to redevelop Mumbai's Dharavi slum sparks concerns over his ability to deliver amid financial setbacks and allegations of favourable treatment.

A general view of Dharavi, one of Asia's largest slums, in Mumbai, India, August 1, 2023. REUTERS/Niharika Kulkarni (REUTERS)Premium
A general view of Dharavi, one of Asia's largest slums, in Mumbai, India, August 1, 2023. REUTERS/Niharika Kulkarni (REUTERS)

Gautam Adani,  has proposed a plan to relocate one million residents from Dharavi, one of Asia's largest slums. However, this plan has raised concerns among the slum's residents due to Adani's recent financial setbacks and allegations of favourable treatment from Prime Minister Narendra Modi's associates. As reported by Reuters, taking the lead in the Dharavi redevelopment project, Gautam Adani secured a $614 million contract from the Maharashtra state government in July, after multiple unsuccessful efforts over the years.

Dharavi, depicted in the Oscar-winning movie "Slumdog Millionaire," is marked by poor living conditions including open sewers and communal toilets. Situated near Mumbai's airport and upscale corporate buildings, the slum's conditions sharply contrast with India's overall development progress.

 Adani's plan involves transforming the slum, known for its leather goods production, by demolishing what legal documents describe as "unhygienic, deplorable" conditions.

The intention is to construct new towers on government-owned land, providing new housing and business spaces for the current residents. According to estimates by consultancy firm Liases Foras, Adani's investment in revamping Dharavi could range up to $12 billion. In exchange for this initiative, the Adani Group would gain development rights that have the potential to generate revenue of approximately $24 billion.

The individuals who were residents of Dharavi prior to the year 2000, mainly those residing on the ground floors, will receive complimentary housing as part of the redevelopment plan. However, approximately 700,000 people living on higher floors, including mezzanine levels, are categorized as ineligible by the government. They will be presented with the option of relocating to units located up to 10 kilometres away. This could potentially entail upfront expenses or increased rental fees for these residents.

Scheduled to commence around September, the renovation coincides with a challenging period for Adani. He held the position of the world's third-wealthiest individual until January, when his conglomerate's market value suffered a loss of $150 billion due to allegations of questionable activities, as asserted by US short-seller Hindenburg, despite Adani's refutations.

In conversations with Reuters, certain inhabitants of Dharavi mentioned that the billionaire's financial difficulties have added to their apprehensions.

Adani's redevelopment plans face a new challenge in the form of a legal dispute presented by competitor SecLink Technologies Corporation. This Dubai-based consortium, claiming support from Bahrain's royal family, asserts that Maharashtra acted improperly by annulling an original tender from 2018, in which SecLink submitted the highest bid.

Subsequently, the state restarted the tender process with revised terms in 2022, allegedly favouring Adani's victory. These claims are outlined in court documents reviewed by Reuters.

The present state administration, under the leadership of Prime Minister Modi's Bharatiya Janata Party (BJP) and its partners, is actively opposing this legal dispute. Just recently, a Mumbai court granted approval for SecLink to include Adani in its legal proceedings, thereby requiring the conglomerate to justify its position before the judges.

In a comprehensive 809-page submission made last month, as reported by Reuters for the first time, the consortium consisting of eight members contended that Maharashtra's altered bidding procedure was driven by political motives and was specifically designed to align with the interests of Adani Group.

As per SecLink's claims, the modifications encompassed raising the stipulated net worth for bidders to $2.4 billion and limiting consortium members to a maximum of two, a reduction from the previous allowance of eight.

In a submission made privately to the judges ahead of an August 31 court session, Adani refuted SecLink's accusations and contended that the case should be dismissed in consideration of promoting developmental objectives.

According to confidential documents examined by Reuters, Maharashtra countered SecLink's allegations by stating that they were without merit and that officials had adhered to the correct procedure in cancelling the previous tender. The state's response emphasized that the decision to restart the process was influenced by the inclusion of an additional land parcel in the project, a development that occurred after the closure of the 2018 tender.

Adani Group, SecLink, Chief Minister of Maharashtra Eknath Shinde, and Prime Minister Modi's office did not provide responses to inquiries from Reuters in relation to this report.

Both Modi and Adani have their origins in the western state of Gujarat. Frequently, those opposed to them and critics assert that Adani's rapid ascent in the realms of ports and energy was to some extent facilitated by his proximity to and favorable treatment from the administrations led by Modi's BJP and its associates. However, both Modi and Adani have consistently refuted any allegations of misconduct.

The opposing Congress party has utilized the Dharavi conflict as a means to exert pressure on Modi and the BJP in the lead-up to the 2024 national elections. They accuse the government of Maharashtra of providing Adani with an advantage in this situation.

"The fact that it is associated with Adani will automatically result in snowballing into a political controversy," said Sandeep Shastri, director of academics at India's NITTE Education Trust.

The report published by Hindenburg and the subsequent regulatory investigation into Adani have resulted in cultivating a sense of distrust among certain individuals in Dharavi. This sentiment was conveyed by spokespersons for numerous local families as well as 25 other residents and business proprietors who were interviewed by Reuters.

"People have doubts regarding Adani's image after the Hindenburg incident. There are issues of trustworthiness," said Rajendra Korde, president of Dharavi Redevelopment Committee, which is calling for public consultation.

In early August, about 300 opposition supporters and residents gathered in Dharavi to object to Adani's involvement. Some bore banners showing Adani's face with a red cross, shouting, "Remove Adani, Save Dharavi".

Numerous individuals expressed to Reuters that they were concerned about the financial challenges faced by Adani Group, particularly the significant decline in its market valuations.

"If something like that happens again, and if he is not able to complete the project, where will people like us go," said Radha Pawar, a 50-year-old airport cleaner.

Adani, 61, in a July video address said the group had raised funds since Hindenburg's report and that investors supported its governance and capital allocation practices. Still, in a blog post last month, Adani acknowledged that rebuilding Dharavi presented "colossal" challenges - though he hoped the area in future would produce “millionaires without the slumdog prefix", Reuters reported.

As part of the strategy, the billionaire will be required to construct more spacious apartments spanning between 300 to 350 square feet. The state has suggested incorporating fixtures from foreign glass brands such as France's Saint-Gobain.

SVR Srinivas, the leader of the Dharavi Redevelopment Authority, assured that endeavors would be undertaken to mitigate disturbances. Nevertheless, residents continue to feel anxious about the situation.

Mohammad Hasmat Ullah has been a resident of Dharavi since 1995. However, he operates an embroidery business from a rented upper floor, which renders his dwelling ineligible for a complimentary replacement. He earns a monthly income of $145, which supports his family consisting of seven children.

"We are worried that Adani will throw us out of here," said Ullah, 44, sitting inside his workshop accessed by a narrow, steep staircase.

"If Adani gives us a place to work and stay, it's good. Otherwise, we will be forced to go back to our village."

(With Reuters inputs)

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Updated: 29 Aug 2023, 09:15 AM IST
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