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Simply Put: The new plan for Dharavi
The Indian Express  |  January 25, 2019

Sandeep A Ashar Mumbai

Spread over 2.40 sq km and home to over 60,000 families, Dharavi, Asia’s largest slum, stands on prime land in the heart of Mumbai, barely a stone’s throw from India’s richest business district, the Bandra Kurla Complex.

 

Plans to give the slum a makeover emerge almost every time an election comes around. Dharavi’s revamp — first planned in 2004 — has been on the agenda of every political party. With Lok Sabha elections approaching, the Maharashtra Cabinet cleared a new makeover plan in October 2018, and the Dharavi Redevelopment Project Authority (DRPA) opened the technical bids last week. At an estimated cost of Rs 26,000 crore, this will be the country’s biggest slum resettlement project, officials said.

 

The land and the stakes

 

The Dharavi slums occupy an entire Assembly segment in the Mumbai South Central parliamentary constituency. The Congress has won every Assembly election in Dharavi since 1980, barring in 1995 when the Shiv Sena won. In Mumbai, every second resident lives in a slum, and a successful revamp of Dharavi can serve as a powerful signal for residents of slum settlements elsewhere in the city.

 

But parties and town planners have been unable to agree on the model for Dharavi’s redevelopment and the size of the resettlement tenements. The construction industry has been eyeing this sprawling chunk of realty — as per the prevalent Development Control Regulations, Dharavi’s redevelopment is expected to release over 5 crore sq ft of saleable built-up space in the market.

 

And yet, the revamp could never take off. Global tenders were invited in 2007-11 and in 2016, and the plan was tweaked, but these attempts did not elicit a response from private builders. This time, some 15-20 construction firms attended the pre-bid conference, but when technical bids were opened on January 15, only two — the Dubai-headquartered Seclink Group and Adani Realty — were found to have participated in the bidding. The financial bids are yet to be opened.

 

The new plan for revamp

 

Under the revamp plan, the developer has to provide a 300-sq-foot tenement for free to those residents who are able to prove that their slum structure was in existence before January 1, 2000, and for a price to those who settled in Dharavi between 2000 and 2011. In return, the government has allowed the builder to go higher (by increasing the floor space index), thus concentrating residents into tower blocks and freeing up space for luxury commercial and residential towers. Some urban planners have opposed the vertical redevelopment idea, saying it would destroy the locality’s original social fabric and land use patterns.

 

The new plan abandons the earlier approach of dividing the 240-hectare slum into five sectors to be developed separately, with most having a predominantly residential character, and combines all sectors into one large cluster. This, officials say, will allow for better planning and more buildable space. Critics say the move is tailored to ensure that only a few construction giants reap the benefits of the project.

 

The new plan also makes “transformation of Dharavi into a commercial hub” the project’s mainstay. The Housing Department had informed the state Cabinet that “the Rs 26,000-crore project will not be viable if it was promoted as a residential redevelopment project&hellip (and) the plan is to transform the region as a hub of business and economic activity.” The department referred to the failure of earlier attempts at redevelopment along the lines of a residential redevelopment project. Under the new plan, the bulk of the over 5 crore sq ft of saleable built-up space will be utilised for economic activity, a senior Minister said. The government has tagged the project as one of “vital importance” in an apparent bid to expedite the resettlement of the slum dwellers and the acquisition of private land.

 

The government has also tweaked the economic development model. It has decided to implement the project through a Special Purpose Vehicle (SPV), in which it will hold 20% stake. Lowering the risk for the ed developer (who will also be the SPV’s lead partner), the state will make a capital investment of Rs 100 crore in the project, whereas the private player will bring in a minimum share premium of Rs 2,850 crore. Housing Minister Prakash Mehta said “revisiting the financial model and extending concessions was necessary considering the project’s overall size and various development constraints”. The SPV route will boost investor confidence, he said.

 

Incentives and concessions

 

To make the project lucrative, the government has extended a bouquet of fiscal sops and indirect subsidies to the project, including a waiver of stamp duty on the development rights agreement and the first sale of the saleable area, and property tax refunds for the components used for rehabilitation of slum families and building infrastructure facilities.

 

While the Revenue and Finance departments had objected to the concessions, the government has gone with the Housing Department’s contention that these were necessary to make the project “economically viable” and to “attract investors”. The Revenue Department has said that waiving stamp duty on the development rights agreement alone will result in a loss of Rs 1,000 crore to the exchequer. The Finance Department has said that “some of the concessions&hellip amounted to indirect subsidies that were inappropriate”.

 

The state has also applied the benefits of its industrial promotion policy for mega investments to the project, agreeing to grant a “rebate of the state’s share in the Goods and Services Tax (GST) over the taxable components in the construction project for 15 years”, with the exception of cement consumption, which would not be exempt after an investment of Rs 2,000 crore. The proposal will soon be placed before the GST Council, officials said.