Squatters as Developers?

Slum Redevelopment in Mumbai

Vinit Mukhija

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351898423
• Edition: 1
• Topic: Negocios y empresa
• Subtopic: Previsiones

In the mid-1990s, the state government of Maharashtra introduced an innovative strategy of slum redevelopment in its capital city, Mumbai (Bombay). Based on demolishing existing slums and rebuilding on the same sites at a higher density, it is very distinct from the two prevalent conventional strategies with respect to slums in developing countries - slum clearance and slum upgrading. So why did the slum redevelopment strategy originate in Mumbai, and how did it do so? What were the key issues in the implementation of such a project? This critical volume responds to these questions by closely examining one particular redevelopment project over a period of twelve years: the Markandeya Cooperative Housing Society (MCHS). It analyzes the problems faced and the solutions innovated; identifies non-traditional issues often overlooked in housing improvement strategies; reveals the complexities involved in housing production for low-income groups; and combines in-depth empirical research with historical, institutional, spatial and financial perspectives to improve our understanding of complex urban development processes.

1 Introduction: A New Strategy in Mumbai

The Puzzles of Slum Redevelopment

I became interested in Mumbai’s slum redevelopment strategy, in the summer of 1996, when I read an article about it in a leading Indian business newsmagazine (Business India, 1996). The strategy, introduced by the state government of Maharashtra in its capital city, was based on demolishing existing slums and rebuilding on the same sites at a higher density, new, medium-rise apartment blocks, including entirely cross-subsidized housing for the slum-dwellers. Its uniqueness and divergence from conventional approaches intrigued me. Since the middle of the twentieth century, housing policy debate on slums in developing countries had been polarized between two extremes – slum clearance and slum upgrading. Slum redevelopment presented a third, very different approach.

In slum clearance programs, slums were demolished and the slum-dwellers were resettled in alternative locations in medium-rise apartment blocks. Typically, the resettlements allowed governments to release the development potential of well-located land parcels. But these often lead to confrontation and political conflict with the displaced slum-dwellers. Furthermore, conventional wisdom suggested that the slum-dwellers were unable to adjust to the alien lifestyle the modern apartment block imposed on them.

On the other hand, in slum upgrading, the slum-dwellers received legal title to their properties from the State. At times the government also helped in the provision of basic amenities, infrastructure and housing finance loans. The premise of this policy was that housing conditions in slums might appear substandard, but they are likely to improve over time. The key to these improvements, however, was tenure legalization. Once slum-dwellers had secured legal titles to their land, they would be willing to invest in their houses and settlements, and would consolidate their homes and improve their communities. In this way, conventional thinking also predicted that slum-dwellers prefer slum upgrading.

International development agencies, often led by the World Bank, have been at the forefront of promoting slum upgrading programs. In a similar vein, in 1985, the state government of Maharashtra, with the support of the World Bank, introduced the Sluni Upgrading Program (SUP) in Mumbai. The article I read, however, suggested that the slum-dwellers in Mumbai were not interested in the SUP. On the contrary, they supported an alternative policy introduced by the state government: slum redevelopment.

Most of Mumbai’s slum-dwellers do not have legal title to their land and are squatters. Why were they behaving differently from the squatters in the housing literature? A possible explanation was that the city’s slum-dwellers were more interested in slum redevelopment because of the cross-subsidy available in the scheme. In 1996, the cross-subsidy was so large that the state government claimed that the slum-dwellers were receiving ‘free-housing’. Although it is true that the participating slum-dwellers did not have to contribute financially for their new houses, the government’s claim is not completely true. In practice, the slum-dwellers received their new houses in exchange for their old ones. Thus, effectively they were to contribute their existing housing assets as equity to the redevelopment projects, and become development partners in the slum redevelopment projects. But why were they willing to assume such risks, endure temporary displacement, and live in the new, medium-rise ‘boxes’? Why were they not interested in simply improving and consolidating their existing housing?

Moreover, governments are expected to prefer slum clearance and the displacement of slum-dwellers. Although Bangkok had a land sharing scheme between landowners and slum-dwellers, the proposition was a result of direct negotiations between slum-dwellers and landowners, with limited government support for the slum-dwellers. On the contrary, the government actually forced the slum-dwellers to negotiate by threatening eviction (Badshah, 1996). But why was the government of Maharashtra behaving differently in Mumbai? Why was it interested in allowing and supporting slum-dwellers to continue controlling valuable land?

I was, and am, intrigued by this unique housing strategy in which the key actors appear to be departing from the usual expected behavior. Why was the slum redevelopment strategy being implemented in Mumbai? Why was this strategy acceptable to the different stakeholders? How old was the strategy? Did it have a history? How did it evolve? In other words: Why and how did the slum redevelopment strategy in Mumbai originate and evolve?

As I began my research, I found that the slum redevelopment strategy was much older than I had expected. The state government had introduced three consecutive programs of slum redevelopment in Mumbai since 1985. The first program was the Prime Minister’s Grant Project (PMGP). The second program, introduced in 1991, was the Slum Redevelopment Scheme (SRD). And in 1995, the government initiated the Slum Rehabilitation Scheme (SRS).

But I also encountered another puzzle: the poor implementation speed of slum redevelopment projects. My evidence indicated that Mumbai’s slum-dwellers were interested in slum redevelopment. Since 1991, after the introduction of the SRD, around 75,000 households had presented proposals and received permission from the government to redevelop their slums.¹ Yet, just over two thousand and two hundred housing units had been constructed for the slum-dwellers by August 1998 (Table 1.1). More recent data from March 2000 indicated that since 1991, a total of 3,486 units had been built for housing the slum-dwellers (Times of India, March 12, 2000).

Table 1.1 Slum redevelopment projects in Mumbai, 1998

Note: NA = Not Available.

Source: Slum Rehabilitation Authority, August 1998.

The poor performance was contrary to what the Government of Maharashtra expected. To increase the number of slums redeveloped, the state government had, in accordance with the ‘enabling’ paradigm as promoted in the prevalent housing literature, decentralized and privatized slum redevelopment. In other words, it had opened up participation in the management and implementation of projects to the slum-dwellers, nongovernmental organizations (NGOs) and most interestingly, the for-profit private sector.

Furthermore, the state government had amended the land development regulations to enhance the development potential of slum-encumbered land by increasing the maximum allowed floor area of development on such sites. In redevelopment projects, the government intervention allowed for additional floor space to be built and more floor space to be sold in the free-market. The intention was to increase the financial feasibility of cross-subsidized housing for the slum-dwellers, and also boost potential profits for the project developers. Moreover, by the mid-nineties, property prices in Mumbai were among the highest in the world. This implied that there was a large differential in land values before and after redevelopment, and thus a big financial incentive for redevelopment.

But despite the State’s enabling, its market-friendly policies, the slum-dwellers’ willingness, and an attractive profit incentive for developers; the rate of project implementation was slow. Had this slow speed of implementing redevelopment projects been the result of inefficient government performance, it could have been dismissed as another case of State failure. However, what makes the Mumbai case more interesting is that the failure can also be attributed to the non-performance of the private sector. Why were so few slum redevelopment projects implemented in Mumbai? Were policymakers expecting too much from the private market-actors? What kinds of problems were encountered in the implementation of projects? Was institutional support available to address the problems in implementation? Were the apparent incentives and profit assumptions underlying the strategy flawed? In other words: What were the key issues in the implementation of slum redevelopment projects?

This study attempts to answer the above questions by focusing on a single case of slum redevelopment: the Markandeya Cooperative Housing Society (MCHS). A Mumbai NGO and a cooperative of slum-dwellers initiated the MCHS project in 1987, through the state government’s Prime Minister’s Grant Project (PMGP). Subsequently, in 1993, because of the scarcity of funds for construction, the slum-dwellers’ cooperative invited a private developer to invest in their project and develop it as a Slum Redevelopment Scheme (SRD) project. The developer agreed because he expected to profit from the government’s amendments in the land development regulations to facilitate the SRD. The developer intended to build additional floor space and sell the extra units in the free-market. Later in 1996, the developer was interested in profiting more from the project; and with the community, he applied for the Slum Rehabilitation Scheme (SRS) status. Finally, the slum-dwellers occupied their new houses in 1998. However, a dispute arose between the developer, the community and the NGO on how to share the financial benefits of the project. They could not negotiate an agreement and the state government arbitrated to resolve their dispute. The government settled the conflict by deeming all the parties as equity-partners in the project.

This study analyzes the above case with the purpose of understanding Mumbai’s slum redevelopment strategy. It demonstrates the pivotal role of the State in creating and distributing urban land values. It also shows how the government managed new opportunities, revised development regulations, and resolved social conflicts brought about by the increase in land values.

My analysis of the role of the State in promoting a new housing strategy and providing crucial support in implementation helps improve our understanding of housing provision policies in developing countries in three ways. First, the study provides insights into slum redevelopment as an alternative housing strategy. It analyzes the problems faced and the solutions innovated in the implementation of the strategy. The study also discusses the viability of slum-dwellers as development partners in redevelopment projects. Second, it identifies non-traditional issues, often overlooked in housing improvement strategies, which may help make slum upgrading programs more successful. Third, it reveals the complexities involved in housing production for low-income groups and demonstrates that enabling housing provision, even with the participation of private sector agents, requires an active government role.

Placing the Research in the Context of the Literature

Self-help and Enabling the Communities

Toward the middle of the twentieth century, many developing countries gained independence and embarked on ambitious housing plans, including slum clearance. Slum clearance was expected to help eliminate the substandard urban housing stock and the former slum-dwellers were to be provided with new public housing. However, most countries were unsuccessful in building enough public housing. Unfortunately, they had more success in destroying the existing housing stock.

The most influential critic of the intended housing policies was John Turner (1963; 1968; 1972; 1977; Mangin and Turner, 1969; Turner and Fichter, 1972). Turner, and a vast array of scholars, claimed that the State had failed by providing medium-rise apartment blocks that were unsuitable for low-income groups (Perlman, 1976; Hamdi, 1991). They also argued that there was no need for such housing as housing conditions within squatter settlements improve over time. Partly as a consequence, many governments restricted their programs of slum clearance. However, governments also reduced their programs to develop more public housing. Even though no one had made a compelling case against such housing for the poor.

Moreover, it was quite clear that there was a continuing need for additional housing. But Turner had persuasively argued that governments should cease doing what they do badly, i.e., building and managing housing. He proposed that instead of central institutions providing housing, users should be the principal actors. Power and responsibility should shift from the State to the popular sector because, he claimed, it was more efficient. Turner also had a political agenda. As an anarchist, not only did he have faith in the ability of people to constructively take control of their own lives and build their own houses, he had reservations about the corrosive effects of State assistance and control (Harris, 1998). Collective control over housing decisions was a way of empowering communities. Moreover, he argued that improvements in housing signified a process of realization. This process, on its own, was considered to be of positive value for individuals and for society (Turner, 1972; Mghweno 1984). Turner viewed housing as ‘an existentially and politically relevant activity’ (Turner, 1978, p. 1141). Thus in the Turner school, housing was much more than mere shelter. It was a tool of development. And Turner argued that the right lens through which policymakers ought to view housing was not material values but human use values (Turner and Fichter, 1972; Turner, 1977; Nientied and van der Linden, 1985).

Scholars in the Marxist tradition challenged Turner’s anti-interventionist views. They argued that contrary to the view that the poor had the freedom to build; their choices were constrained. Therefore, there was a need for structural reforms in the land market (Gilbert, 1982; Ward, 1982b). However, the Marxists were also suspicious of the State and its attempts to co-opt the poor. Turner was also criticized for his enthusiasm for self-help housing on the basis of his ideas of the use value of housing. Critics argued that in practice, housing was ‘petty commodity production’ and primarily about market values (Burgess, 1978; 1982). Indeed, later research clearly demonstrated that land markets are commodified, and enterprising land developers play a key role in developing squatter settlements (Doebele, 1975; Payne, 1982; Baross, 1983). In the literature, however, there was little discussion of the role governments may play in developing land and housing markets.

Slum Upgrading Programs

The World Bank’s urban policies of the seventies, though strongly influenced by Turner’s ideas, were based on a more market-oriented approach. First, the World Bank introduced projects of sites-and-services (World Bank, 1972). hi these projects, beneficiaries were provided with land plots, on a full-cost basis, with varying degrees of infrastructure, and were encouraged to build their houses. Subsequently, the World Bank promoted the idea of tenure legalization, through its slum upgrading programs. Slum upgrading was aimed at transforming squatters into legal owners (Dunkerley, 1983).² The centerpiece of the slum upgrading strategy was a policy intervention to legalize the land-titles and provide security of tenure to residents of the largely illegal and informal squatter settlements. The straightforward logic of the strategy was that in the absence of security of tenure, residents would hesitate to invest in their housing, as they would be concerned about demolition, displacement and relocation (Jimenez, 1983; 1984; Friedman, Jimenez and Mayo 1988; Malpezzi and Mayo, 1989). Moreover, it was argued that the documentation of legal title would allow beneficiaries to use their property as collateral to access credit for housing improvements (Struyk and Lynn, 1983; Soto, 1989; 2000; Dowall and Clarke, 1996).

In its critique, the contrarian literature questioned the legal and economic wisdom of the positive causality between titling, security of tenure and investment in housing. There were two main criticisms that questioned the implied policy recommendation that all the State had to do was legalize tenure to promote housing improvement. The first criticism was that security for low-income residents was less dependent on legal status and more on the occupants’ perceptions of the probabil...