Why Delhi's PPP model for slum rehabilitation has not attracted developers

Indian Express

a day ago

A Joint Government-Industry Task Force, constituted by Delhi Lieutenant Governor VK Saxena, recently submitted a report titled 'How to Revitalise Delhi' to the state government, recommending ways to unlock 'the latent real estate potential of Delhi.' Among its key recommendations was that slum rehabilitation projects in the national capital be undertaken on a Public Private Partnership (PPP) basis.
If accepted, the Delhi government will also begin rehabilitating slums on its land on a PPP basis. The Delhi Development Authority (DDA) had adopted such a policy back in 2007, but has since failed to attract private developers to participate in slum rehabilitation.
How many slums are in Delhi, and who is responsible for rehabilitating them?
There are 675 slums in Delhi, according to the Delhi Urban Shelter Improvement Board (DUSIB). Of these, 376 fall on central government land and thus, under the DDA's jurisdiction. DUSIB is responsible for the remaining 299 located on Delhi government lands. According to DUSIB, roughly 30 lakh people reside in Delhi's slums, while both the Aam Aadmi Party (AAP) and Bharatiya Janata Party (BJP) put the number of slum dwellers in the national capital at around 50 lakh.
The rehabilitation of slums in the city is governed by the Delhi Slum & Jhuggi Jhopri Rehabilitation and Relocation Policy, 2015, which was approved by the state cabinet in 2016. It prioritises in-situ rehabilitation to ensure alternate accommodation to a slum dweller on the same land or within a 5 km radius. To be eligible for rehabilitation, however, the slum must have at least 50 households, must have existed before 2006, and the slum dweller must prove residence in the slum before 2015.
The process of rehabilitating slum dwellers in Delhi has been painfully slow. A decade after introducing the policy, only two in-situ slum rehabilitation projects have been completed where slum dwellers have been allotted flats and have begun living in them. The Kalkaji Apartment Complex and the Swabhiman Apartment in Ashok Vihar have a combined capacity of 4,699 units. Of these, 3,301 flats have been allotted to slum dwellers from Bhoomiheen Camp, Jailer Wala Bagh slum, Golden Park Rampura slum, and a cluster opposite Mata Jai Kaur Public School.
The Delhi government, through DUSIB and Delhi State Industrial and Infrastructural Development Corporation (DSIIDC), is constructing 52,584 flats on the city's outskirts in Dwarka, Sultanpuri, Bhalswa-Jahangirpuri, Savda Ghevra, Pooth Khurd and Tikri Kalan for slum rehabilitation. Of the 24,524 flats completed, only 4,833 have been allotted to the public, and only 2,153 of these to slum dwellers, according to DUSIB's Annual Report 2020-21. These flats have very low occupancy rates given their location in remote peripheral areas and their dilapidated state.
In all the above-mentioned projects, the government has funded the construction of Economically Weaker Section (EWS) and Low-Income Group (LIG) housing for slum dwellers. Under a PPP model, however, the government does not construct houses itself.
In such projects, the government transfers the land on which the slum is located to a private developer. In return, the developer builds housing for the slum dwellers on part of the land, while using the remainder to construct housing and commercial buildings. The underlying rationale is that the developer recovers the cost of building units for slum dwellers by making profits from the 'free sale' component. The model was expected to work well since slums are typically located on high-value land in central city areas.
However, since the policy's inception, only one project has been undertaken in PPP mode in Delhi, and it remains incomplete. The troubled Kathputli Colony project, being developed by Raheja Developers, was conceived in 2009, had its foundation stone laid in 2018, and is still not ready for occupation by slum dwellers.
The DDA has repeatedly tried to attract private developers to participate in its policy, but has failed to do so. In 2022, it floated Request for Proposals (RFP) for six projects covering approximately 10,300 households across 10 JJ Cluster sites, while RFPs for four additional projects covering 15,000 households across eight JJ Cluster sites were being processed to invite private developers for 'in-situ rehabilitation' under the PPP model, according to a reply by then Housing and Urban Affairs Minister Hardeep Singh Puri in Lok Sabha. DDA officials confirmed that these proposals had to be discarded due to developers' lukewarm response and that no slum rehabilitation projects are currently underway in Delhi under the PPP mode, except for Kathputli Colony in Shadipur.
The origins of this policy lie in the Master Plan for Delhi 2021, which was notified in 2007. It mentions 'in-situ slum rehabilitation' as a focal point of the plan to ensure housing for the poor, 'including using land as a resource for private sector participation.'
In 2015, the Government of India launched its flagship housing policy, Pradhan Mantri Awas Yojana – Urban (PMAY-U), aiming to ensure housing for all by 2022. The DDA's rehabilitation policy is based on this scheme. One of PMAY-U's verticals was 'In situ' Slum Redevelopment, under which slum rehabilitation was to be carried out 'using land as a resource with private participation for providing houses to eligible slum dwellers…This approach aims to leverage the locked potential of land under slums to provide houses to the eligible slum dwellers bringing them into the formal urban settlement.'
Why are more slums not being rehabilitated by private developers?
Experts have suggested that the lack of interest in Delhi's slum rehabilitation by developers stems partly from their greater enthusiasm for investing in other National Capital Region cities, like Gurgaon and Noida. 'This policy in which a developer builds slum housing in Delhi is a non-starter because the market does not want to play here,' said Gautam Bhan, an urban researcher. 'It is much easier and more profitable for private developers to invest and build in Noida, Gurgaon and other NCR cities. They have never wanted to engage in slum rehabilitation in Delhi,' he adds.
Others have questioned the commercial viability of the policy. 'It is not commercially viable for developers to engage in slum rehabilitation in Delhi,' said PSN Rao, Professor of Housing at the School of Planning and Architecture (SPA), New Delhi. He recommends that the government build housing for slum dwellers using its own funds, as it has done for the two completed projects.
The task force report has also identified funding and financial viability as challenges: 'Limited public funding and hesitant private investors, due to perceived risks and low returns associated with slum redevelopment, create financial constraints.'
In November last year, Lieutenant Governor VK Saxena approved changes to the policy to make the framework more developer-friendly and incentivise participation. These changes essentially increase the construction area developers can earmark for market sale. The proposed changes are currently with the Union Ministry of Housing and Urban Affairs and can only be implemented with its approval.
These include raising the Floor Area Ratio (FAR) for both rehabilitation and remunerative components to 500, up from the previous FAR of 400 for rehabilitation and 300 for the remunerative component. FAR is used in urban planning to regulate density and control development. A higher FAR allows more floors or larger buildings to be constructed, making projects more attractive to builders; conversely, a lower FAR restricts construction to maintain open spaces and reduce pressure on resources like groundwater and roads.
Another proposed change allows developers to use any unutilised FAR from the rehabilitation component in the remunerative/commercial plot area. Additionally, the land allocation for rehabilitation has been adjusted, reducing the minimum requirement for rehabilitation from 60% to 40% of land.
Experts have also noted that the policy requires slum dwellers and flat purchasers to live in close proximity, which could make the sale of the flats difficult. The task force also advocates for separating the rehabilitative and remunerative components: 'The temporal linearity of the project essentially entails heavy initial investment by the concessionaire in financing the rehabilitation component, first, which can be recouped only at a subsequent stage when the concessionaire is permitted to commence the commercial component of the project. This has become a major impediment to the in situ slum rehabilitation under the PPP model,' according to the task force meeting minutes.
One of the changes approved in the policy by the LG attempts to address both these issues by allowing the clubbing of plots across a 5 km area. Harshvardhan Bansal, co-founder of Unity Group and President of National Real Estate Development Council (NAREDCO)-Delhi Chapter, said, 'We have also proposed that the government should undertake rehabilitation in pairs or bunches.' Under this approach, a developer could redevelop one site exclusively for slum dweller rehabilitation, while utilising another site exclusively for commercial purposes. This separation of rehabilitation and remuneration sites, with their simultaneous development, aims to resolve these challenges.
Since slum dwellers face a risk of eviction without getting rehabilitation, they often resist vacating the land. 'Providing unencumbered land to developers is also a challenge as many slum dwellers, especially those who are ineligible to get rehabilitated, resist vacating the land,' a DDA official said. 'Residents of slums are often reluctant to move due to fear of losing their homes and livelihoods. The disruption caused by relocation can lead to resistance from the community, complicating redevelopment efforts,' the task force report identified as one challenge.
Has such a policy worked anywhere else?
Delhi is not the only city which has made very slow progress on rehabilitating slum dwellers. The In-situ Slum Rehabilitation (ISSR) is the worst-performing vertical of PMAY-Urban, accounting for less than 2% of PMAY-U's sanctioned houses, according to research by Debarpita Roy and Rashmi Kundu from Centre for Social Economic Progress (CSEP).
Most ISSR projects were in Mumbai, Maharashtra, and Gujarat's four Million-Plus cities, where slum redevelopment has been underway even before PMAY-U. States like Chhattisgarh, Jharkhand and Madhya Pradesh attempted ISSR but had to cancel projects. According to Roy and Kundu's research, 31% of the projects had to be cancelled, while 70% of the remaining remain incomplete. The PMAY-U 2.0, launched last year removed ISSR as a vertical altogether.
According to Roy and Kundu, issues like 'multiple ownership of the underlying land, legal disputes, changing political agendas, lack of consensus amongst slum households supporting slum development,' are some of the reasons behind the slow uptake of ISSR across the country.
Devansh Mittal is a trainee correspondent with The Indian Express. He studied political science at Ashoka University. He can be reached at [e-mail]. ... Read More