July 10: Building hype is one thing and building houses another. This is one lesson the Maharashtra Government has learnt almost a year after launching its ambitious Slum Redevelopment Scheme (SRD) to provide free shelter to 40 lakh slum-dwellers in Mumbai.

The government now admits that the scheme has run into rough weather with builders backing out. Chief Minister Manohar Joshi said the government was exploring other avenues of raising finance. ``We may even think of issuing bonds,'' he stated.

Joshi's candid confession, in fact, only strengthens what experts had said even before the scheme was launched. The figures speak for themselves. During the last one year, 280 schemes were approved by the Slum Redevelopment Authority (SRA) to provide free houses to 35,900 families. However, actual work could start only on some parts of 49 schemes to accommodate 12,284 families.

The scheme had an uncertain future right from its inception. Its leitmotif was ``land as resource''; hence it was subject to fluctuating market forces. If land prices had continued to soar, the scheme could have yielded some tangible results.

However, as experts point out, real estate prices were sluggish even when the scheme was launched. They started sliding in anticipation that a large chunk of public land would be released into the market through this scheme.

This downward slide was further accelerated by the government's stated intention at that time of developing surplus lands of the closed textile mills in central Mumbai. Property dealers estimate that real estate prices have decreased by 30 to 40 per cent in the last one year.

Ironically, the foundation of the scheme was the soaring land prices through speculation. The government had even extended additional floor space index (FSI) to builders coming forward to build free houses for slum co-operatives.

Observes P K Das, architect and joint convener of Nivara Hakka Sangharsh Samiti, the scheme was ridiculously infeasible, a view accepted by government officials now. A simple calculation shows why it could not have worked.

The task of providing free shelter to 40 lakh slum dwellers would necessitate building about eight lakh houses of 250 sq ft each (average family size of five members). To build these houses and ensure their profitability, about six lakh houses would have to be constructed on an additional FSI of 2.5 to be sold in the open market. So the entire task involves building about 14 lakh houses. The potential of Mumbai's construction industry is a maximum of 25,000 houses per year. Thus, it would need 56 years to complete the task, which the government wanted finished in five years! To expect market forces to remain favourable to the scheme for such a long time amounts to sheer naivete. Besides, there were serious problems of raising finance, which got aggravated by the liquidity crunch and tight money market throughout 1996. Financial institutions were in no mood to take builders' risks on their shoulders .

If houses in the open market segments remained unsold, no builder would be able to repay loans taken from these institutions. With the current slump in land prices the builders are lobbying with the government. ``Most of them come to convince us that now they would need more than just 2.5 FSI to execute the project,'' said a government official.

To overcome these obstacles, the government eased up on its stipulations. Earlier, it was mandatory for developers to build free houses first and then start construction of the open market segment. Now 30 per cent of both could be started simultaneously, enabling developers to cross finance the free segment. Besides, there was a ceiling of 25 per cent on the profitability of developers, which has now been completely abolished.

Yet the dream of slum dwellers to live in better circumstances is likely to remain just that. Like several dubious schemes before, the present scheme is another well-intended attempt that failed.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.