Dharavi redevelopment is a big-reward challenge

The mention of Dharavi, Mumbai’s slum sprawl, evokes a variety of images and conjures up numerous associations. It was labelled “Asia’s largest slum”, a matter of shame for many Mumbai residents who saw the 750-acre conurbation as an eyesore fit for obliteration. It was once the stomping ground for a local slumlord from a southern state who morphed into a modern-day mafia don, inspiring not only semi-biographical cinema fare but also sectarian politics of local-versus-migrant workers. Bollywood aside, Dharavi also inspired Oscar winner Danny Boyle’s Slumdog Millionaire, which depicted the area’s residents as a flinty and doughty lot, one million residents living in hovels, struggling to make ends meet but displaying deep reserves of human resilience and tolerance. Dharavi hosts plenty of enterprise and micro-entrepreneurship, with small manufacturing units, shops and boutiques in cheek-by-jowl existence. Dharavi means different things to different people. This then raises the question of what it could mean to the Adani Group, which last week won the rights to redevelop Dharavi, hopefully fulfilling an ambitious project plan that has been in the works for 18 years.

The instinctive response would be to view the entire exercise as just a real-estate opportunity, as it would free up vast tracts of premium land for commercial exploitation and sanitize the city’s mid-town that abuts its financial centre now, the Bandra-Kurla complex. The Adani Group’s winning bid, which entitles it to re-develop about 593 acres, has two parts. The first part requires it to rehabilitate all eligible families in high-rises comprising 400-sq-ft apartments. These buildings, as per the tender conditions, must have running water, electricity and piped gas. The second part involves the free sale of real estate for profit and is the sweetener that incentivizes the package deal. The project will be undertaken through a special purpose vehicle in which the Maharashtra government will hold 20% equity, with the Adani Group holding the rest. The project structure and dynamics requires the latter to complete the construction of free-sale commercial space and tie up sales as soon as possible to enable lower costs and higher margins. This is not without its attendant drawbacks: such vast quantities of commercial real estate coming to the market all at once has the potential of impacting prices and dampening realizations.

But, beyond just the real estate aspect, the Dharavi Redevelopment Project needs to keep in mind two other dimensions. First, an exercise so vast and complex will be devoid of meaning and flawed at birth if it does not involve all stakeholders from day one. As a unique urban settlement, Dharavi has an organic ecosystem of its own, meshing social structures that work along community networks—comprising diverse religious groups and ethnicities—with much micro-level commerce. This fragile equilibrium has been achieved over decades and it would be foolhardy to subject it to a wrecking ball. The second issue that Adani must keep in mind is the fact that the land being redeveloped belongs to the city, not to politicians, nor government-owned slum rehabilitation agencies. It then behooves the Adani Group to return some of the land to the city in the form of soft infrastructure: parks, playgrounds, community centres, libraries, museums or auditoria. What was once a maze of shanties shouldn’t turn into a concrete jungle.