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NICMAR GOA

SLUM REHABILITATION POLICIES

AND

BUSINESS MODEL

A Presentation on

National Institute Construction Management And Research GOA CAMPUS

Presented by

Chavan Abhilasha Pravin (G04105)

Patel Nirav Dineshbhai (G04131)

Rohit Rai (G04137)

Guided by

Asso. Prof. N. Ramesh Babu

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Slum Rehabilitation Policies And Business Model 2

Chapter Scheme

• Chapter 1: Introduction

1.1. Need for study

1.2. Objective of the Study

1.3. Scope of the Study

1.4. Methodology

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Chapter Scheme

Chapter2: Present scenario

2.1. Demographic scenario

2.1.1 Indian demographic scenario

2.1.2. Maharashtra Demographic Scenario

2.1.3. Mumbai Demographic Scenario

2.2 Housing Scenario

2.3.Hosing efforts

2.4 Obstacles to housing efforts

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Chapter Scheme

• Chapter 3: Slum Rehabilitation Policies In Maharashtra

3.1. Introduction

3.2. Evolution Of Slum Rehabilitation Policies

3.3. Policies

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Chapter Scheme

Chapter 4: Slum Rehabilitation :Casestudy1

Tata Nagar , Mankhurd, Kurla, Land Development

Project

4.1. Introduction

4.2. Scheme implemented

4.3. Financial implications

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Chapter Scheme

• Chapter 5: Slum Rehabilitation :Case study 2

– Mumbai Airport Rehabilitation Project , Kurla

5.1. Introduction

5.2. Scheme implemented

5.3. Financial implications

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Chapter Scheme

• Chapter 6:Recomendations and Conclusion

6.1. Comparative Analysis

6.2. Recommendations

6.3. Conclusion

Bibliography

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Contents

• Present Demographic Scenario• Present Housing Scenario

Introduction

Evolution of Policies

Various Policies

Unsuccessful Case study

Successful Case study

Conclusion.

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Introduction

• Industrial revolution 1960’s

• Unplanned migration from rural to

urban areas

• Unbalanced economic development in

the country

2001 20300

100

200

300

400

500

600

700Urban Population Growth

Urban populationYear

Pop

ulat

ion

In M

illi

ons

25%

75%

Total Urban Population

Slums DwellersNon Slums Dwellers

Source: Census Of India 2001Source: Census Of India 2001

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Wor

k/ E

mpl

oym

ent

Mov

ed w

ithHou

se ho

ld

Mar

riage

Mov

ed af

ter W

ork

Educa

tion

Busin

ess

Other

05

1015202530354045

Migration in Maharashtra

Reasons for Migration

Per

cent

age

of M

igra

tion

of

Tot

al P

opul

atio

n

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Indian Demographic Scenario

Total population, slum population, and their percentage in municipal

corporation with population above 1 million in India 2001

City State Total

Population

Slum

Population

Percentage Slum

Population

Mumbai Maharashtra 11978450 6475440 54.1

Delhi Delhi 9879172 1851231 18.7

Chennai Tamilnadu 4572876 1485309 32.5

Kolkata West Bengal 4343645 819873 18.9

Bangaluru Karnataka 4301326 430501 10.0

Hyderabad Andhra Pradesh 3637483 626849 17.2

Ahmedabad Gujarat 3520085 473662 13.5

Source: Census Of India 2001

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Mum

bai

Delhi

Chenn

ai

Kolka

ta

Banag

luru

Hyder

abad

Ahmed

abad

54.1

18.7

32.5

18.910

17.2 13.5

Percentage Slum Population in Major Cities in India

Percentage Slum Population


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Maharashtra Demographic Scenario

Total population, slum population, and their percentage in municipal corporation

with population above 1 million in Maharashtra- 2001

City State Total

Population

Slum

Population

Percentage

Slum Population

Mumbai Maharashtra 11978450 6475440 54.1

Pune Maharashtra 2538473 492179 19.4

Nagpur Maharashtra 2052066 737219 35.9

Thane Maharashtra 1262551 351065 27.8

Kalyan-Dombiwali Maharashtra 1193512 34860 2.9

Nashik Maharashtra 1077236 138797 12.9

Pimpri Chichwad Maharashtra 1012472 123957 12.2


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Mum

bai

Pune

Nagpu

r

Thane

Kalyan

-dom

biwali

Nashi

k

Pimpr

i chi

nchw

ad

54.1

19.4

35.927.8

2.912.9 12.2

Percentage Slum Population in Major Cities in India

Percentage Slum Population


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Mumbai Slum Population Scenario

Percent Land Aquired Percent Population0%

10%20%30%40%50%60%70%80%90%

100%13

54

Chart Title

NonSlum Dwellers Slum Population


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Scenario1

Need for Slum Rehabilitation

Development

Slums

Population growth

Increase in Slums

Failure of slum Rehabilitation policies

Development stops

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Housing Scenario

• Need 20 million new houses

• Substandard housing units which need structural and sanitary

improvements.

33%

67%

Urban Dwellings

1 Room dwellings

Sufficient large dwelling

37%

63%

Rural Dwellings


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Housing Shortage in India.

Year

1991 1996 2001

Urban 8.23 7.71 6.64

Rural 14.67 13.85 12.76

Total 22.90 21.56 19.40

Source: National Building Organization, Government of India.

Millions Of Housing Units required

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Effect Of Housing Shortage: Scenario 2

Opportunity for Development of

construction industry

Slum increase/Decrease in

Development

Slum growth

Increased housing demand

Boom to housing industry

Opportunity for construction industry

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Supply Of Formal Housing

1960s 1970s 1980s 1990s 2000s0

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

Supply of Formal Housing

DemandSupply

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Chawl•Permanent multistoried dilapidated buildings

Patra chawls

• Semi permanent constructions both authorized and unauthorized built with corrugated iron sheets.

Zopadpatties:

• Built with scrap materials by squatters in additioan there are pavement dwellers.

Mumbai Slums

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Housing development

Housing development

Subsidized ownership Subsidized rentalOwners are not able to

recover

cost

Tenants

sometimes ask

large bulk of

money to

vacate the house

India so far has not

started any rental housi

ng indust

ry

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Obstacles in Indian housing efforts

Development lots -extremely short supply and very

expensive.

Developable lands- small land holders ,difficult to acquire plot.

India is not encouraging

private large scale developers.

No Long term home mortgage

loans .Home

construction for sale and rental

apartment construction has not developed.

Rental housing is in extremely short

supply

Innovative technologies have

not developed.

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Introduction

Till 1970• Demolition

of slums• As illegal

squatter

1970-1980 • Slum

improvement works

• Census of slums • Issue of i-cards

1980-1990• Slum upgradation

works• Lease to the slum

dwellers• Soft loans were

extended• Only on non-

reserved govt. Lands.

1990 till today• The underlying

land treated as resource.

• Incentive FSI for constructing tenements

• The profits generated used for cross-subsidizing the free houses

Evolution of slum development policiesAnd approaches

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Effect of PoliciesUrban population living in slumsReduced from around 60% to 35%

Source: UN Habitat

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Success Of Policies

Failed85%

Succeeded 15%

Success Of Policies

FailedSucceeded

Source: UN Habitat

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Objective Of Study

The objective of this study is to develop and propose a

business model for slum rehabilitation.

.

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Scope Of Study

The scope of this project is limited to study of various cases

and arriving at suitable financing strategy for appropriate

schemes in Maharashtra.

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Methodology

To study the present demographic trends in regard of urbanization

Study History And Evolution of slum rehabilitation approaches

To Study Various Schemes And Policies

To Study Various Cases And Analyzing Their Success

Guidelines For Proposal

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Need For Study

• Around 28% of Indian population lives in city. Around 1/3rd of that

population reside in slums.

• Understand the various policies.

• Sources of funds.

• Help to understand the failure of previous business model.

• Prepare business model for appropriate schemes.

• Zero slum development

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POLICIES

Slum Rehabilitation Policies And Business Model

31

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1960’s

• 1967 & 1969:Special Slum Improvement Cell was

created in BMC ( Bombay Municipal Corporation )

– To clear and resettle slums on municipal lands

– To improve in the basic amenities like drainage, drinking water, roads

toilets etc

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. •In 1970 : Slum Improvement Program (SIP)

• To provide water supply, toilets, roads, drainage and streetlights for slum dwellers.

• The Slum Areas (Improvement, Clearance and Redevelopment) Act, 1971:

• Where competent authority may by notification in the official Gazette,• Declare area to be ‘slum’ .

•The Maharashtra Vacant Lands (Prohibition of Unauthorized Structures and Summary Eviction) Act, 1975

• All lands encroached by squatters can be considered vacant,• All slums covered by the Act are temporary and can be removed,• Police can be mobilized for eviction and alternative accommodation has to be provided.

1970’s

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• Slum Upgrading Programme (SUP) funded by the World Bank, 1985

• World Bank’s Rs 53 crore Bombay Urban Development Project (BUDP)

• With Programmes –

– The Slum Upgradation Programme (SUP)

– And the Low Income Group Shelter Programme (LISP).

• The Prime Minister’s Grant Project (PMGP), 1985

– This is to improve living conditions of slum dwellers in Mumbai.

1980’s

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• Slum Redevelopment Scheme (SRD), 1991

• The Slum Redevelopment Scheme of the SRA aimed to provide enough

incentives

– Such as increasing the Floor Space Index (FSI) allowed in slum areas

– The ability to transfer development rights to other areas of the city

– For private developers and builders to redevelop slums.

The theory was that by selling the extra space in the open market,

tenements for slum dwellers would be cross-subsidized and made

affordable to them.

1990’s

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Slum Rehabilitation Scheme (SRS), 1995

– After the change of government, the Afzalpurkar Committee further modified the

SRD and the new scheme was called Slum Rehabilitation Scheme (SRS).

Departures from previous policies were made on various levels.

The scheme was opened to all slum dwellers included in the 1995 electoral

rolls, including pavement dwellers.

The carpet area of tenements was increased to 225 sq. ft. (approx 20 sq.

m.). The tenements were to be given free of cost to slum dwellers.

For every 10 sq. ft. (1 sq. m.) of rehabilitated floor space constructed in

the Island City, the builders were offered a free sale component of 7.5 sq.

ft. (0.5 sq. m.).

1990’s

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• In 2000’s: Govt-NGO Partnership in Slum Resettlement

A major resettlement of about 60,000 people was carried out with popular

participation and partnerships with NGOs in the recent past for the

Mumbai Urban Transport Project (MUTP).

2000’s

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Case study 1

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Project Land development at Mankhurd Kurla

Project assignee MMRDA ( Mumbai Metropolitan Regional Development Authority)

Project implementing authority

MUIP (MumbaiUrban Infrastructure Project)

Project executed by Akruti Hiranandani joint venture

Location Village Mankhurd, Taluka Kurla, Mumbai Suburban district

Total area 62091.30 sq.ms

Tata Nagar , Mankhurd, Kurla, Land Development Project

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• Project Schedule:

Date Event

17.11.2003 Commencement Certificate Received

17.11.2003 Work Commenced

09.12.2003 Plinth Certificate Received

08.07.2005, 21.12.2005 Project Completed

28.12.2005 Houses Constructed Handed Over to MMRDA

23.01.2006 Allotted by MMRDA to RAP in public function

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The Details Of The Constructed Area

Max BUA permissible(iii) Non CRZ area (9 x10 a)(iv) CRZ area ( 8 x 10b)Total ( I+ii)

87993.624651.4992645.11

Prop BUA on plot for rehab including staircase, lift, lift lobby area as per approved building plans

92207.72

Area of B/W, W/C & S/O & passages as per approved building plans

3503.88

No. of rehab tenements of size equivalent to 20.90 sq.m 3736

No. of B/W, W/C & S/O 104

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42Slum Rehabilitation Policies And Business Model

During the F.Y. 2005-06 (A.Y.2006-07) on Completion,

Gross Profit Rs. 51,06,27,772/-

Cost of Project Rs. 51,06,05,521/-,

Resulting in Total Income Rs. 22,251/-

As on 31st mar 2006

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Reasons of Failure

• Total area for development: 81,046 sq.mts.

• Total built up area of commercial units : 11,161.07 sq.mts.

(1,17,800 sq.ft.)

According to the Assessing Officer, as the provisions of section

80IB(10)(d) as applicable w.e.f. 1-4-2005, the limit for having

commercial space in the housing projects is 5% of the total built up

area or 2000 sq.ft. whichever is less

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Parameters Conditions as per Section 80IB (10) Facts in the Case of the Assessee

1 Date of approval should be before 31.03.2007 Approved on 10.09.2003

2 Date of commencement

Should have commenced after 1. 10 1998 Commences in December 2003

3 date of completion should be completed by 31.03.2008 or four years from the end of the financial year in which approval was given, if the same was given after 31.03.2004

Completed on 21.12.2005

4 evidence of completion

Full occupation certificate issued by local authority

full occupation certificate received by the assessee on 21. 12.2005

5 Size of plot 1 acre 46881.01 sq m ie around 10 acres

6 Size of each unit 1000 sq.ft if located in mentors and 1500 sq.ft elsewhere

Each residential tenements is of 225 sq.ft.

7 Size of commercial spaces

5% of the total built up area or 2000 sq. ft whichever is less

More than 1 lakh sq. ft.

8 Whether notified by the board or not

Slum rehabilitation schemes notified by the board are exempted of the conditions of completion and size of the plot

Not notified by the board

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Case study 2

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MIAL : Mumbai Airport Rehabilitation Project

Project Land development at Kurla

Project assignee SRA ( Slum Rehabilitation Authority)

Project implementing authority

MIAL ( Mumbai International Airport Private Limited)

Project executed by HDIL (Housing Development And Infrastructure Limited)and GVK

Location Airport vicinity, Bandra

Total area 276 Acres

Rehabilitation of 82,500 Families

Granted FSI 4

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Distribution Of Shares

Mumbai International

airport

GVK ( 76% shares)

GVK

slum rehabilitation

HDIL

slum rehabilitation

Phase1 Pashe2 Phase3 Phase4

MIAL ( 24% shares)

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Total area for development 276 Acres Airports; 158

Rehabilitation; 118

Airports; 158HDIL; 65

GVK; 53


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Phase1

Rs. 1900 cr Land

Cost 53 Acres Land

38 Acres

Slum Rehabilitation

15 Acres

Commercial Purpose

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Financial Source For The ProjectT

DR Rights costing

Rs 3000/ sq. ft - Rs 3250/ sq.ft

Res

iden

tial

Upf

ront Advanced

booking during Phase-i worth Rs 5000 cr.

FD

I From US and Europe,

10%Dilution of control.

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• Location: map•Major potential for slum

rehabilitation and

development

•Major investment in

infrastructure in the region


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•Largest rehabilitation scheme

in India

• Rehabilitation >1 million

people

• Generation of more than

10000 jobs over next few

years


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SRS projects with low slum density can avail FSI up to 3.0x, while high density projects can avail FSI of 4.0x

Developers can execute SRS only on getting consent from at least 70% of the slum owners.

During the slum rehabilitation period, the developer can construct and sell free sale area available to him as part of the SRS scheme with a cap of 90%.

. Source: SRA

MIAL: Incentives

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Particulars Sealable area

Phase 1

Phase ii

Phase iii

Remarks

Mn sq.ft.

Land TDR 8.9 2.6 2.7 3.6 (82500 (families)x269sqft x1.2 (loadings)/4)

Construction TDR

35.4 10.3 10.7 14.4 82500 (families)x269sqft x1.2 (loadings)/1.33(FSI)

FSI at Airport site

9.9 9.9 65 acres x 2.5 (FSI) x1.4 ( Loading)

Total 54.2 12.9 13.4 27.9

Source: Company, Angel Research

HDIL’s Saleable Interest from MIAL Project.

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Financial Impact

2007 2008 2009 2010 2011 2012

Gross sales

1214 2395 1750 1479 1775 3106

Net sales 1214 2395 1750 1479 1775 3106

Total operating income

1214 2395 1750 1479 1775 3106

EBIT 620 1568 798 680 682 1602

PAT 548 1410 677 590 734 1310

% of Sales 45.1 58.9 38.7 39.9 41.4 42.2

Source: Company, Angel Research

All figures in Crore Rupees

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ConsiderationsThere is possibility of increasing FSI in suburbs from 1x to 1.33x which will Impact TDRvolumes and thereby prices negatively

Fall in TDR prices

Over-dependence

on MMR

Delay in execution

Long gestation

SRS projects

•Mumbai property prices have gone up by 20-30% from its low.• With MMR accountingfor 87% of HDIL's saleable area, any decline in demand or prices could impact our NAV

•As the company follows project completion method to book revenues we expect substantial jump in Revenues in FY2012E.

•Any delay in executionwill impact our estimates and in turn our NAV.

• SRS has long gestation period

•Any delay in above processes could increase project costs and delay in sales from project FSI, creating a cash trap

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Comparative analysis

Tata Nagar MIAL

No consideration for fall of TDR prices Consideration for Fall in TDR prices

Over-dependence on MMR No Over-dependence on MMR

No Consideration for Delay in execution Consideration for Delay in execution

No Consideration for Long gestation SRS projects

Consideration for Long gestation SRS projects

No proper planning removing above flaws

Proper Pre-Planning

Socio-cultural imbalance Social considerations

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Conclusion:

By studying various Slum rehabilitation policies and cases it is

clear that, along with appropriate policies socio- cultural

considerations and financial strategies are the foundation for

the successful business model of slum rehabilitation projects.

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Bibliography

1. Woods Robert, “Slums and Sustainable Development”, International conference

on habitat and sustainable development vol-1” dec-97, New Delhi.

2. Das, Amiyakumar, “Urban Planning In India”, Jaipur, Rawat publication 2007

3. Spence, Michael, Annez, Patricia Clarke, Buckley Robert.M. “Urbanization And

Growth- Commission On Growth And Development”. Jaipur, Rawat Publication-

2010.

4. Cherunilam, Francis, “Housing In India”, Himalaya publishing house, Delhi

1987

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Bibliography

1. http://www.sra.gov.in/

2. http://propertybytes.indiaproperty.com/index.php

3. http://www.theglobeandmail.com/report-on-business/

mumbais-slums-reach-for-the-sky/article1889462/

4. http://www.hdil.gov.in/

5. http://www.mial.gov.in/

6. http://www.altlaw.org/

http://www.sra.gov.in/

http://propertybytes.indiaproperty.com/index.php

http://www.theglobeandmail.com/report-on-business/mumbais-slums-reach-for-the-sky/article1889462/

http://www.theglobeandmail.com/report-on-business/mumbais-slums-reach-for-the-sky/article1889462/

http://www.hdil.gov.in/

http://www.mial.gov.in/

http://www.altlaw.org/

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Thankyou!!!