Slums & Money – one

New tools to banish slums, VALUE FOR MONEY – Published on Busines Standard, by Subir Roy, New Delhi December 13, 2006:

Schemes for urban renewal are being formulated under the mission, which are bound to fail because ideological blinkers persist. A minuscule number of slums will disappear but a viable and replicable model to eventually eliminate slums will remain elusive. A case in point is the scheme recently formulated under the mission to create 8,000 dwellings at a cost of Rs 200 crore (to be met both by the Centre and West Bengal) for slum dwellers in the industrial towns of Durgapur and Asansol. Slum dwellers will get small apartments virtually free with photo identity cards and be prohibited from selling them.

There are two obvious flaws in this. One, all the laws in the world will not prevent slum dwellers from selling these apartments if they stand to gain substantially. Eventually there will be pressure from the new owners, politically vocal lower middle class people, to “regularise” such sales. Two, at Rs 2.5 lakh state funding per dwelling, the resources that can be found for such a pervasive problem will be minuscule.

There can be a better way. Urban slums are either on government or privately-owned land, with the landowner unable to evict the slum dwellers and realise the full economic benefit of redevelopment. The latter will be happy to be rid of their slum property if it means becoming better off than at present. Slum-dwelling families pay a monthly rent of anything up to a thousand rupees or even a bit more per month for a small room and a shared toilet with a bit of electricity and water. The total monthly income of such families is Rs 5,000 or more. They will happily pay Rs 1,500 as EMI for a Rs 2 lakh housing loan, repayable over 20-25 years, for a small apartment of two rooms, a kitchen and toilet of a super-built-up area of 400 sq ft, built at a cost of Rs 2.5 lakh in a ground-plus-two-floor configuration. Compare the Rs 50,000 subsidy implicit in this with the Rs 2.5 lakh per apartment under the West Bengal scheme! …

… There is obviously scope for these ideas to be improved upon. But still every slum developed will yield many oustee families and since all slums in municipal areas will not disappear simultaneously, the problem of people moving from one slum to another will remain. The key to a better future lies in creating a lot of low-income housing on the city outskirts by earmarking sufficient space for it in the comprehensive development plans, which all cities must have. The main point in favour of the scheme outlined above is that it is significantly self-financing and so can let the state funding available for abolishing slums stretch much more than is now possible. (Read the whole article on Business Standard).

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