The most exploited segment in Mumbai real estate: middle-class

I must concede that during my younger years I believed that such a policy was a much-needed remedy to create a more equal society in Mumbai. Then idealism mattered more than solutions. It took me a while but I realised the naivete of my belief. 

In pursuit of the perfect solution to satisfy all stakeholders, the government had dissatisfied all stakeholders.

The slum-free mission failed as miserably as the Indian cricket team in the recent T20 World Cup. Far from becoming slum-free, Mumbai added more slums. Lessons ought to have been learnt.  

Going by the recent announcement – they haven’t.

The change made last week

Last week's announcement was that slum dwellers who receive free apartments as part of the policy, can now sell their apartments five years AFTER DEMOLITION of their huts. There is now a possibility that apartments will in many cases be sold immediately on possession or even prior to possession. Thus, the short summary of the process is:

Step 1: Illegal slums encroach on public/private land

Step 2: Slums are then regularized. That makes the illegal slum - legal

Step 3: Slum dwellers are then provided a free flat on the encroached land

And now Step 4: Slum dwellers thereafter are permitted to sell the free apartment with ease

Sale of apartments at an early stage only sets the stage for future encroachment into the limited land parcels that are yet remaining. Moreover, it will create a speculative market in under-construction slum rehabilitation towers, which are easy pickings for manipulation.   

One can wash the announcement off as just a political move prior to the upcoming municipal elections. It’s possible. Two years back a similar announcement was made wherein the minimum size of the free flat would be raised to 500 square feet – a size close to the 2BHK apartments that are sold to home buyers. The size was not raised but expectations certainly were. This consistent build-up in expectations is one of the reasons for slum rehabilitation projects struggling in “consensus building”. It is little surprise then that merely 2 lakh replacement homes have been created over two decades despite the approval of 1,481 projects.

The one major improvement in the announcement is the requirement of slum dwellers to make a payment of Rs. 2.5 lakh for the new apartment of 300 square feet. This is for eligible slum dwellers and people who had stayed in slums between 2000-2011. At that pricing it is slightly over Rs 800/sqft to be paid by slum dwellers. Given the rates that prevail in Mumbai, the amount is petty and will almost certainly be arbitraged by several people. Yet it is a beginning to get a key stakeholder to contribute in slum redevelopment.

For everything else of development in Mumbai, the key stakeholder remains the same: the middle-class home buyer. The one who pays lifetime savings for a home in Mumbai and funds successive administrations who continue to ignore it.