How Are We Going to House Them All?

The fourth most populous metropolitan region in the world, the Mumbai metropolitan region, is home to 22 million residents. Of these, around 41% of the people residing in Greater Mumbai live in slums. These numbers are staggering considering that India has only close to 9% of its population residing in slums. UN HABITAT defines slums as a group of individuals who live under the same roof in urban areas that are typically characterized by lack of access to basic amenities, limited housing space and lack of ownership rights. Why is it that close to half of the population in Mumbai resides in slums? Mumbai being the financial capital attracts labor from all parts of the country. To meet needs of a burgeoning population, the city needs to be equipped with a housing market because of an influx of population either looking for work or in an attempt to improve their livelihood.

Mumbai as a city has natural constraints on its land that does not particularly allow for the expansion of the city, this along with various artificial constraints such as the Rent control act and unimaginably low Floor-Space Index (FSI) rates have led to an unresponsive housing market. FSI is defined as the ratio between the built up area to the total size of the plot on which it is built. FSI rates all around the world slope downwards as they move away from the central business districts within the city. However, in Mumbai, the FSI policy is the same for all land, essentially giving no incentive for developers to build affordable housing. The current low FSI rates have been exploited by various governmental organizations through the use of Transferable Development Rights further aggravating the problem of lack of affordable housing. With all these artificial constraints, 94% -95% of people living in Mumbai, based on their incomes, cannot afford a formal house within the city. From the above, it is clear that the supply can never match the demand and hence this gives way to the proliferation of people living in informal settlements or ‘slums’ in various parts of the city. For this article, I focus on the lack of ownership rights and the problems associated with eviction without notice. With the proliferation of slums in various parts of the city, the government has undertaken multiple schemes to address the issue of the lack of formal housing by trying to redevelop and rehabilitate slum dwellers.

The current NDA government in order to address the lack of affordable housing in the country has proposed the “Housing for All Scheme” which seeks to provide affordable housing to everyone by 2022 with a focus on people belonging to the low-income groups and those living in informal settlements. The current housing shortage is around 6 crore units and the scheme aims at providing close to 12 crore units, accounting for growing population rates. KPMG (2016) suggests that it would require close to 3.5 trillion USD to build housing and its associated infrastructure. However, it is important to understand whether simply increasing supply is a feasible solution to the problem. Simply put, the Housing For All scheme does not follow the three basic principles that are essential for a well-functioning market, these are: (a) One price principle, (b) Stock – flow relationship, (c) Epsilon of truthfulness. Ever since the Slum Rehabilitation Authority in Mumbai had been set up by the Shiv Sena government in 1995, only 197 of a proposed 1524 slum redevelopment projects have been successfully undertaken.

Apart from the infeasibility associated with the provision of affordable housing the failure of rehabilitation schemes to successfully rehabilitate slum dwellers is a common theme that can be seen throughout. Such can be seen when the Government of Maharashtra had tried to rehabilitate people who had encroached and settled down on land that belonged to Sanjay Gandhi National Park. The government had provided housing for those who have encroached in Sakinaka, Andheri. However, these houses have reportedly been given away on rent and the people who were supposedly rehabilitated into these houses have moved back into informal settlements in the forest or moved into another locality.

Maharashtra could do well to study examples of how other states have overcome this problem. Odisha, for instance, sought to tackle the lack of affordable housing in their cities. They identified that the large-scale proliferation of slums within their cities are because of the steep land prices. To overcome the threat of eviction or demolition to nearly 3 Lakh slum dwellers, the government has opted to solve this problem through the provision of property rights to slum dwellers living on government land. The Government of Odisha in order to avoid problems associated with the transfer of property rights have come out saying that “the property rights that are given can be transferable only after a period of ten years to eligible beneficiaries.” This move should act as a blue print for slums elsewhere in the country, including cities such as Mumbai, to follow rather than trying to match the demand for housing which cannot be met in the short run.

The provision of property rights to slum dwellers living in notified slums can be the first step to bringing these citizens into the formal market. As they enter the formal economy, the government should structure the provision of property rights in a way such that people living in notified slums that have received property rights would gain legal access to various municipal services such as water, electricity and sanitation. This initial step could be met with hostility from various actors in society including slum dwellers as it would see them having to pay for municipal services which places an additional burden on their limited income. However, the provision of property rights could be framed in a conditional manner where entering the formal economy and paying for municipal services would be required to gain property rights. This solution would only be applicable to slums that have come up in government owned land and will not be possible to implement to those that have come about in private areas. A similar solution had been undertaken by the government of Turkey where they had provided ownership rights to the people residing in slums that have come up in government owned lands across various cities in the country. The Amnesty law to legalize ownership was put forth with the hope that people residing in slums would eventually move into affordable housing after they had received property rights to their slum settlements. The law has proven to be fairly successful and has also been used as a tool for land speculation as the former slum areas have been converted into shopping malls, business districts and so forth as the cities have developed.

As the supply tries to match the demand for affordable housing, an immediate solution would be to provide property rights to slum dwellers and bring them into the formal economy. This solution is seen to have a fairly successfully track record and should be adopted in Mumbai.

Nikhil George