How Not to Rebuild Mumbai's Dharavi Slum

This blogger visited India for about a week in March this year and passed through both New Delhi and Mumbai cities. My major conclusion is that despite the fact that the country has recently maintained an admirable GDP growth path, the visible problem of housing for the low-income city dwellers is evidence that development is both chaotic and very complicated. I saw the unplanned settlements in which some of Mumbai's most indigent residents dwelt in and concluded that there's yet work to do.

Now, this piece by Ramola T Badam in Forbes.com reports that the Maharashtra State government has sent advertisements seeking foreign and local builders to undertake a project to replace the shantytown known as Dharavi. It intends to build free homes for its 57,000 dwellers over seven years. Understandably, there is already controversy about the number of dwellers with some insisting that the total number of dwellers is closer to a million.

This need to assist the indigent dwellers of these neighborhoods notwithstanding, it appears to be a directive based on the development of a solution and foisting the same on a problem. The project is to be financed entirely by a private sector builder and is calculated to cost US$ 2.3 billion. This works out to a nominal US$ 40,350 for each household if the numbers anticipated by the government are accurate. This would be extremely generous but I am certain that this kind of approach constitutes very poor use of these resources.

Assuming that the money is available, the option ought to be given to each household to determine whether it would prefer to accept the money in cash or take up the intended dwellings when they are complete. A similar argument was presented by Professor Edward Glaeser of Harvard University following the devastation of New Orleans by Hurricane Katrina in 2005. Professor Steven Landsburg also presented a similar argument on Slate Magazine here.

In short, the problem of uninhabitable housing need not be resolved with a big construction project. As the main article contends, there is a great likelihood that this project will only be a bonanza for builders. Granted that the Dharavi may have up to 1 million residents, a good number may still prefer a check or voucher for a nominal US$ 2300.