Explainer: The Dharavi redevelopment project | The Financial Express

Explainer: The Dharavi redevelopment project

The state tried to rope in a developer for Dharavi first in 2008 and then in 2016, but met no interest.

Explainer: The Dharavi redevelopment project
A view of Dharavi (Reuters file image)

The Adani Group won the bid to redevelop the Dharavi slum cluster, one of the largest and densest such urban habitations in the world, at an initial investment of Rs 5,069 crore. This was the fourth attempt by the Maharashtra government to get the project going. Sarthak Ray explains what the project entails and how it was awarded

Dharavi redevelopment project

Maharashtra’s Slum Rehabilitation Authority (SRA) was set up in 1995 to make the state slum-free, but it hasn’t been very effective; as per official data, between 1995 and August 2021, 2,067 rehabilitation projects were completed involving 223,000-odd families. For perspective, Dharavi alone was estimated to house over 58,000 commercial and family units a decade and a half ago; the number would surely have grown since then. 

The state tried to rope in a developer for Dharavi first in 2008 and then in 2016, but met no interest. The 2019 tender announcement drew two parties, but this was scrapped. On October 1, a fresh tender was announced. Eight firms showed interest, but just three submitted bids. 

Why is the project so important?

The Dharavi slum cluster is spread over 300 hectare, of which the state government has notified 240 hectare for the project. Apart from the currently estimated 56,000 families, it houses tens of thousands of small commercial establishments, ranging from pottery to leather work. But living conditions are quite poor, given the density and the lack of many basic amenities. Covid-19 made this stark when Dharavi became a transmission hotspot. As Mumbai deals with an unprecedented measles outbreak, many fear a repeat.

Also Read: Dharavi mega makeover: Adani Group’s realty firm to execute Rs 20,000-crore project for Asia’s biggest slum cluster

On top of the rehabilitation gains, the project would be a real estate boost. Dharavi’s proximity to the BKC financial hub means huge untapped economic potential from the land. It enjoys enviable existing and prospective connectivity, including metro rail and roads.

The contours of the project

The rehabilitation construction cost is estimated at `23,000 crore. A special purpose vehicle (SPV) is to be formed, with Adani as the lead partner. It will hold 80% equity (`400 crore) in the SPV. The state government will hold 20% (`100 crore). The lead partner has to bring in the investment required in the form of compulsorily convertible securities. The SPV will construct free housing for eligible slum residents, with “amenities and infrastructure as … mentioned in the Bid document”; these include water and power supply, sewage disposal, piped gas, etc. 

The floor space index is fixed at 4, and as per the SRA estimates, a total of 10 million square feet of construction is expected to come up by the end of 17 years—7-8 million sq ft of rehabilitation space and 2-3 lakh sq ft for commercial/sale component. The government will give thousands of crores of rupees in the form of GST and other waivers.

What are the concerns voiced by different parties?

The primary concern is rehabilitating such a huge number of people with disparate needs. To illustrate, a Dharavi resident with a pottery business certainly wouldn’t want to be housed on a floor too high. The space allocated would be larger than what they currently have, but cottage enterprises will have their own constraints. Some experts have also flagged the failure to specify the sizes of rooms, toilets, kitchen, etc, that can be considered adequate for decongesting, in the bid documents. 

At the pre-bid meeting, interested parties had voiced concern about the deadline for the rehabilitation component, with all attendant conditions, being fixed at just seven years. They had wanted 10-12 years for both phases of the project —rehabilitation and commercial development. The SRA didn’t extend the deadline, but said mitigating factors for delays will be considered. Also, the SPV having to indemnify the breach of the deadline agreed to by the railways and the state government for the transfer of the former’s land for the project had been a sticky point pre-bid. The SRA, however, didn’t change the relevant clause in the tender document. 

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First published on: 02-12-2022 at 06:00:00 am
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