Tuesday, October 12, 2010

the market solution to slum rehabilitation

I was recently introduced to the concept of market based solutions for slum rehabilitation.
At the fore: slums are not a result of market failure, rather a result of markets. The solution therefore, lies embedded in the working of markets.
The solution is provision of low cost housing to the slum inhabitants, who were too poor to afford extant housing. A prerequisite: inexpensive land. The current demand supply mismatch in the real estate market seems large. Authors suggested accelerated clearance of disputed land, conversion of unused public lands and conversion of agricultural lands at city periphery for urban use.
Following calculations based on cheapest available land around Bombay (Thane district?) at Rs 2,500 /sq ft show ~1,000 acres of residential land needs to be made available (further, land for infrastructure will also need to be made available) to meet demand. There may still be some people who may need titling benefits or subsidies.
Releasing this kind of land should not take much, it is only about 1% of Mumbai’s total land.













  • Households with annual income less than Rs 90,000 per annum will be eligible for subsidies.
  • Given the magnitude of 'inexpensive' land required, converting agricultural land and developing satellite towns may actually be the best available option.
  • Substantial investments would have to be made for provision of infrastructure, particularly transport.
Paper: "Working with the Market: a New Approach to Reducing Urban Slums in India"

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