Adani Group emerged as the successful bidder for the Dharavi redevelopment plan earlier this week. The Gautam Adani-led conglomerate quoted Rs 5,069 crore to secure the bid, while the DLF group quoted Rs 2,025 crore.
The Dharavi slums, believed to be the largest such site in Asia, are located near major commercial complexes in Mumbai such as Kurla-Bandra and Mahim. As such, it is prime real estate, making it an important project with significant commercial value.
Dharavi is home to a large informal sector employing over 1,00,000 in the slum area, which is spread over 2.8 square kilometers. It is estimated that over 58,000 families will remain in these premises and this redevelopment project will have a huge impact on their lives.
Past plans and current project
This is not the first time that a tender has been floated for the redevelopment of Dharavi. The project has been in the pipeline by the Maharashtra state government for more than two decades since the idea was first mooted by architect Mukesh Mehta in 1997. The state government formally initiated the project in 2003-04 and an action plan for it was approved in February 2004.
In 2018, the BJP-Shiv Sena government in Maharashtra notified the creation of a Special Purpose Vehicle (SPV) for the redevelopment of Dharavi. Global tenders have been invited and the winning bidder is expected to hold 80 per cent stake in the SPV while the remaining 20 per cent will be with the state government. The successful candidate will also be responsible for the entire redevelopment and rehabilitation plan.
Then, even though Dubai-based Seclink Technology Corporation won the tender for Rs 7,200 crore, beating Adani Group’s Rs 4,529 crore bid, the project could not take off. The previous Maha Vikas Agadi government, under the leadership of Shiv Sena’s Uddhav Thackery, had to cancel the project because there was some problem with the transfer of railway land that was under the central government. However, after the BJP returned to power in coalition with Eknath Shinde, these wrinkles were ironed out and eventually Adani came up with the winning bid.
Adani’s profit
The entire project, which will cost around Rs 20,000 crore, will give Adani access to prime real estate space in India’s financial hub. Also, the state government’s decision to cross-subsidize development costs will be a huge win for the Adani Group.
According to the current bidding agreement, “Apart from the equity capital of ₹400 crore, any investment required for the project will be contributed by the lead partner in the form of mandatorily convertible securities such as mandatorily convertible debentures and/or mandatorily preference shares.”
The project will include construction of free housing for all eligible slum dwellers along with other infrastructure development. The Maharashtra government wants the rehabilitation process to take place over the next seven years.
Outside the rehabilitation scheme, Adani’s real estate arm can also build a free sale zone with a relatively high floor area index that can be sold in the open market. The term for the complete reconstruction is estimated at about 17 years. At this point, the commercial value of Adani’s holdings in Dharavi will be enormous.
People’s perspectives
So far, the common people of Dharavi have raised various concerns about Adani’s redevelopment project. While many worry about the future of the thriving informal sector and the wide variety of local businesses, some have also expressed concern about the loss of Dharavi’s diverse culture once the project is completed.
Dharavi is reported to be one of Mumbai’s earliest fishing settlements before the city began to grow rapidly in the 19th century. Since then, it has been a mix of various Indian and even world cultures as international tourists have shown great interest in Dharavi. It is this multicultural environment that will be threatened by the homogenous rehabilitation structures that will gradually emerge.
Ramakant Gupta, president of Dharavi Bachao Andolan, is of the opinion that the project should go ahead as per the planned schedule. “The Dharavi Rehabilitation Project (DRP) was approved in 2004 but nothing has happened so far. In 1995, there were 57,000 shacks in the slum, but now the number has doubled and we estimate it to be around 1,20,000. We welcome the government’s decision, but it should be implemented in time,” he said.
Mahesh Ankush Kawle, a resident of Shastri Nagar in Dharavi, alleged that the project is being implemented for the personal benefit of certain individuals and not for the welfare of the local people. There is no doubt that the cultural image of Dharavi will undergo a huge change once the redevelopment project begins. At the same time, it remains to be seen whether the project will help expand local residents’ commercial capacity or deal a death blow to the hundreds of local businesses in the soon-to-be-renovated slum clusters.
(With information from Press Trust of India)