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A recent survey by the United Nations on the share of urban population living in slums among APAC countries placed India considerably high in the list, with 35% of its urban population residing in slums(1). Based on the country’s last census in 2011(1) the slum population can be expected to continue to rise as more people come to already densely packed cities from all corners of the country for better economic opportunities.
Dharavi is an urban slum situated in Mumbai, India. With an area of over 2.4 square kilometres (approx. 520 acres) and a population density of over 350,000/ square kilometres, it is considered to be India’s largest slum and one of the world’s most densely populated areas(2).
I. The playing field
Dharavi is as diverse in its public perception as its composition. Most people in the developed world know it as an unplanned dense maze of shacks, romanticised by the hit film Slumdog Millionaire. Many in Mumbai have dismissed Dharavi as a grimy space inhabited by the urban poor burdened with the toil of their fate – an implicit eyesore at the heart of the shining metropolis. To Indian rap enthusiasts, it is the creative bed for content creation, and for tens of thousands, it serves as their source of employment. Most importantly, to around 1 million people, Dharavi is their only claim to affordable housing amidst rising rent costs in India’s financial capital(3).
The significance of Dharavi also lies in the heterogeneity of its composition. Dharavi is a thriving microcosm of human enterprise with small industries ranging from leather, textiles, pottery, jewellery, to bakeries and recycling businesses(4) generating an annual cumulative turnover of over $650 million(5). Most residents use their cheap residences as makeshift workspaces and get electricity, cable television and other services through non-official networks(6). The society here is varied with different religions, castes and occupations living together in relative harmony with a strong imbibed sense of community. Dharavi is not just ‘squalor’– a meshwork of various social networks, valuable complexity exists here(7).
There is undoubtedly a need for development in terms of infrastructure, sanitation, hygiene, etc. However, in order to effect these, recognizing the vitality and variety of ways in which ‘Dharavi-ites’ have created their own environment is pivotal for inclusive sustainable urban development, recognized as a target under UN SDG 11.
II. Who are the key players?
Redevelopment of Dharavi, in its current state, was envisioned in 2004, by the Maharashtra State Government. The project seeks to convert Dharavi into high-rise buildings and re-house the current slum dwellers in a portion of these new residential towers. However, the programme has run into widespread opposition from slum-dwellers.
Although the redevelopment plan looks reasonable on paper, it involves a myriad of complexities. Given the social and economic fabric of Dharavi, a displacement would involve residents losing more than their places of habitual residence. Their new residences would be devoid of any of the informal social security structures and auxiliary economic opportunities that they currently rely on. Thus, they would not only be losing what they now consider their ‘home’ but also their livelihoods and community. Any gains from the better living conditions that the redevelopment promises, are unravelled by the resident’s social displacement and loss of economic opportunities.
The key issue with the current proposal is that it completely excludes the Dharavi residents from the decision-making processes. It also excludes NGOs in Dharavi, that have experience working with residents and upgrading informal settlements. By doing so, it fails to incorporate voices and experiences of field players who are well-versed with the needs of the residents. This is a ‘missed opportunity’ in facilitating empowered participation in redeveloping Dharavi.
Another point of concern is that in order to attract private investors to the development project, the state has capped a very high floor space index (FSI)(8). The higher the FSI, the greater the ‘sale component’ for developers through commercial projects, and thus lower space for Dharavi residents to be rehoused.
The land that Dharavi occupies has an estimated value of over $1.3 billion(9) due to its prime location near Mumbai’s new central business district. Demand for valuable urban real-estate has seen commercial players setting high FSIs. This would essentially involve forcefully stripping residents of their living and working spaces(5), and cramming them into high-rise apartment blocks. High costs of maintenance associated with high-rises, including electricity costs from elevator operations and other ancillary costs, would make it unsustainable and a burden for residents in the future(8).
III. The ‘new’ game plan
For sustainable redevelopment of Dharavi, it is imperative to incorporate an empowered participatory design to the decision making processes, i.e., informing residents and giving residents a say in their future relocation.
The status quo relies heavily on being attractive to private investors, making the residents’ needs secondary to the project. For traditional private investors, financing is dependent solely on the profitability component of the project. This is where sustainable finance and the emerging wave of sustainability-linked lending in the country can provide a solution, by incorporating sustainability criteria into the lending exercise.
Social and sustainability linked lending for affordable housing in India has seen a pickup recently with the ‘Housing for All’ initiative launched by India-based mortgage lender HDFC. This initiative has secured a $1.1 billion syndicated facility to finance affordable housing in India(10). This news is especially heartening when seen from the context of redeveloping Dharavi.
Private capital channelled to the Dharavi Redevelopment Project through such a structural shift in financing would incorporate residents’ voices into the decision making matrix, making redevelopment feasible for the government as well as the residents. This alternative strategy would provide slum residents with funds to undertake infrastructure upgradation, acquire titles to the property they occupy and facilitate rehousing when required. This would catalyse ‘de-slumification’ in tandem with economic development(4) precluding the need for demolishing whole communities.
The game plan would involve dividing Dharavi into residential blocks based on surveys of population, households, structures, ownership and topography while also instituting committees to supervise the redevelopment of collectively managed land. This could be done by the State in collaboration with NGOs like SPARC(11) and PROUD(12) who have experience with housing the urban poor, and who could also potentially serve as ideal beneficiaries of the private debt acquired, to ensure empowered participation. The relatively high average literacy rate of Dharavi at 69%(3) also makes it more feasible for effecting such a participatory design.
IV. Scoring for impact
A key feature in sustainability linked lending frameworks is the quantification and tracking of sustainability outcomes. This is primarily to ensure accountability in the use of funds. In the setting of Dharavi, measuring the sustainability quotient in the use of proceeds or the ‘impact’ of funds deployed would involve quantifying and reporting whether the residents are actually better off following redevelopment i.e. they have access to better living conditions with improved sanitation and hygiene facilities while also having access to their livelihoods and communities. This would constitute the social return for any sustainable finance invested.
Defining social returns quantitatively alongside financial returns is not only useful for sustainability linked lenders looking to quantify their impact, but also for borrowers who can attract more sustainable finance from institutional lenders based on their sustainability score. In the recent past, intuitive methods had to suffice for balancing financial return with impact. However, with the rise of international impact measurement frameworks aligned with UN SDGs and other sustainability goals, investors and sustainability linked lenders and borrowers can comprehensively account for all financial, social and environmental factors(14) into a ESG/ Impact score to define the performance of investments and portfolios.
In the context of Dharavi’s redevelopment, such a framework of impact measurement would be pivotal in invoking a participatory design based development system where FSIs would need to be complemented with Impact and Sustainability scores, warranting a solution best suited for both developers and residents.
