48-year-old Ramesh Shukla (named changed) a slumdweller who was rehabilitated a decade ago during the course of a slum rehabilitation project in suburban Mumbai, sold the 269 sqft apartment that he was given in lieu of his slum. Shukla sold his apartment 10 years after the allotment for Rs 20 lakh (Rs 2 million) and went on to construct another slum dwelling in the city.
Shukla is not alone. Hundreds of slumdwellers who have been rehabilitated since 1995 under the Slum Rehabilitation Act by the Slum Rehabilitation Authority (SRA) have sold their apartments and moved back into slums.
What is the SRA scheme?
In Maharashtra, slum rehabilitation is a lucrative business, one in which developers are able to get a profit margin of over 20 per cent. Under the SRA scheme, the developer has to rehabilitate slumdwellers in around 300 sqft of flats; in exchange, the remainder of the Floor Space Index (FSI) can be utilised by developers for construction of apartments, to be sold in the open market.
FSI is the ratio on how much and how many floors the construction of a particular building can have.
Also read: Maharashtra govt gives nod to amnesty scheme for stuck slum redevelopment schemes
Mockery of the law
According to Shukla, the law bars rehabilitated slumdwellers from selling their apartments for 10 years. However, there is no restriction on appointing an apartment caretaker. “Hence, what I did was allow a caretaker to occupy my apartment with a heavy deposit, which is almost equal to the value of the apartment,” he explains.
“I made the caretaker sign an affidavit that I am appointing him as the caretaker of my apartment for a period of 10 years, and later the apartment would be transferred to his name. I did it because we needed money for the family, and I am not used to the kind of expenses that might come up with owning an apartment."
Pramod Sharma, a real estate broker from the Charkop area of suburban Mumbai, explained how it works. “Caretaker agreements are signed and the slumdwellers sell their apartments indirectly in this manner, by accepting a heavy deposit, which is almost the price of the actual apartment."
For example, if the apartment value is Rs 30 lakh, the slum dweller might offer it for Rs 20 lakh, said Sharma. “This heavy deposit is accepted in lieu of signing the caretaker agreement. After 10 years, the agreement for sale is signed. There are risks, but homebuyers do get apartments at a cheaper price.”
Capital value?
According to Sharma, the capital value of an apartment that slumdwellers get under the SRA scheme, when sold, can yield Rs 30-50 lakh, depending on the location, “An apartment at this price is not really available in Mumbai by private developers. In terms of rental returns, the SRA apartments can fetch one Rs 10,000 to Rs 13,000 (a month) in Mumbai, depending on the location,” he said. “There are several factors such as connectivity to public transport, availability of schools, and hospitals in the vicinity that help one fetch more while renting or selling such an apartment.”
Why is this happening?
According to experts, slumdwellers end up selling the apartments because firstly they cannot afford the lifestyle expenses that come with an apartment, and secondly, because it is a free asset.
“Whatever income they generate while residing in a slum — say, Rs 10,000 — they are able to survive on. When they go to a building, they get the house free but at the same time, the cost of their apartment is, say, 10 times that of their slum. When one gets an appreciated asset for free, a person would prefer to sell it,” said Divya Dholay, Maharashtra BJP Secretary, who has been working for a decade in Dharavi, one of Asia’s largest slum clusters.
Dholay added, “Some slumdwellers, after selling the free asset, again build another slum in some other area or go to their native place and survive on the money they get from selling the particular SRA apartment.”
How many people have been rehabilitated until now under the SRA scheme?
According to the Maharashtra Economic Survey 2022-23, tenements are provided to families living in slums under the SRA scheme. Since inception (1995) up to December 2022, 2,231 projects have been completed and 2,45,295 families residing in slums have been rehabilitated in these tenements.
What is the solution?
"It is time now to think about the SRA scheme, where free housing is involved. The government needs to work towards some subsidy or incentivisation wherein slumdwellers pay something for the SRA apartments. When they pay, they will have a choice and a voice. This may stop some slumdwellers selling or renting out their apartments,” said Dilip Muglikar, a housing professional who has worked on Central government affordable housing projects.
“If you pick any SRA project, you will realise that it takes too long to complete. In 30 years, the SRA scheme has rehabilitated only 2.45 lakh families. Currently, the building layout, architectural aspect and quality in general is not up to expectations,” he added.
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