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Poverty. Riches. The world's largest democracy. An ancient caste system. Bollywood. India is a land of contrasts, a booming new power that remains baffling to outsiders and insiders alike. The Shiva Rules is a year-long GlobalPost series that decodes the many mysteries of India's uneven rise in the 21st century.

India slum dharavi 2012 01 03
Men recycle waste on rooftops in Dharavi slum on Feb. 3, 2009 in Mumbai. (Daniel Berehulak/Getty Images)

The Shiva Rules: Lessons from India's largest slum

In many ways, Dharavi is a self-sustaining ecosystem that serves needs not being met elsewhere.

Editor's Note: The Shiva Rules is a year-long GlobalPost reporting series that examines India in the 21st century. In it, correspondents Jason Overdorf and Hanna Ingber Win will examine the sweeping economic, political and cultural changes that are transforming this nascent global power in surprising and sometimes inexplicable ways. To help uncover the complexities of India's uneven rise, The Shiva Rules uses as a loose reporting metaphor Shiva, the popular Hindu deity of destruction and rebirth.

MUMBAI, India — Barefoot children chase each other around large brick kilns billowing out smoke. In another area of Dharavi, one of Asia’s largest slums, girls in oversized dresses wander onto piles of garbage. And in a third, a boy chases a goat with a cricket bat, near an open sewer.

Developers and some political figures look at Dharavi, centrally located in the increasingly congested city of Mumbai, and see a goldmine. They want to tear down the eyesore, move the current population into high-rises with electricity, water and sanitation and turn the bulk of the area into profitable housing and commercial property.

The architect who is behind the latest redevelopment plans, Mukesh Mehta, says the new Dharavi will benefit the current population as well as India’s economy as a whole.

"If 33 percent of [the] urban population lives in slums — they may live in sub-human conditions, but still, they are a drain on the economy," he told CNN. "Tomorrow they start becoming contributors to the economy."

“They don’t survive because of the state; they survive in spite of it.”
~Kalpana Sharma, author of "Rediscovering Dharavi"

Many of Dharavi’s residents along with activists, journalists and urban planners agree that the area needs redevelopment. They welcome the idea of bringing proper infrastructure like water and sanitation to the shanties and other informal homes there.

But they also say that Dharavi is much more than merely an unhealthy, polluting, trash-strewn slum. It is a self-sustaining ecosystem that in many ways operates quite well and serves needs not being met elsewhere.

Dharavi offers important economic, development, environmental and social lessons for Mumbai and India at large.

India has a nearly 9 percent growth rate a year, and the country has pulled millions out of poverty over the past two decades. But the country still has a massive population of poor people. About half of India’s children aged 5 or younger are malnourished, and the number of people living on less than $1.25 a day is expected to remain close to 300 million by 2015, according to the World Bank.

India’s poor have been streaming out of rural areas and into cities like Mumbai, leading to a larger and larger concentration of the country’s poor in urban settings. India’s urban population grew from 290 million in 2001 to about 340 million in 2008. And yet, the government has not provided enough jobs or housing in the formal sector for these people.

Dharavi and slums like it serve India’s large population of urban poor by providing them affordable housing, skilled and unskilled jobs and low-cost services and entertainment, say those who research and work in the community.

A place of business

While Dharavi has a reputation for having shacks of every size and shape piled on top of one another, the area is also a thriving place of business.

Stroll through the winding alleyways or along one of the main thoroughfares and one finds scenes of robust businesses and small enterprises. In one area, called Kumbharwada, a woman sits on a mat on the ground beating a slab of clay with her hands and then rolling it into a large ovular sphere. Barefoot men walk around her, carrying clay pots from inside their homes and placing them to dry outside in the sun.

In another area, a woman with a straw basket balanced on her head walks past shops selling paan, cold drinks and metal pots as a man drives by on a Dominos delivery-motorbike.

“It’s a humming, thriving place,” said Shirish Patel, a civil engineer and urban planner based in Mumbai. “Everyone’s busy, no one’s begging. They’re all up to something or the other. They live there. They work there. They build enterprises.”

A study by the Center for Environmental Planning & Technology found that Dharavi has close to 5,000 informal businesses, which produce goods worth about $600 million a year, as stated in a report by the Harvard Business School.

What is particularly remarkable about Dharavi is that its residents have managed to build themselves homes and find or create jobs that support them and their families with virtually no support from the state.

“They don’t survive because of the state; they survive in spite of it,” said Kalpana Sharma, an independent journalist in Mumbai who wrote a book on the area, "Rediscovering Dharavi." “Any redevelopment must appreciate the spirit of resilience and self-help and build upon it.”

A unique market

The slum’s massive population — upward of 1 million people live on its 550 acres — has enabled it to be both a consumer and a producer of goods and services.

“Dharavi has become a market to itself,” said Vinod Shetty, the director of ACORN Foundation India, which runs the Dharavi Project, an initiative working with 100,000 so-called ragpickers who segregate waste in and around landfills in Mumbai.

An advantage of having such a large population living and working in a small area, Shetty explained, is that workers are producing goods that not only get sent out but are also consumed by the local population. This enables Dharavi to have a self-sustaining economy with manufacturing, service and food sectors that serve its residents.

Dharavi’s population can thereby do everything from shop and eat to have their clothes ironed and go to the movies, all without leaving the community.

On a recent public holiday, a group of men, most of whom cannot afford Mumbai’s air-conditioned multiplexes, gathered inside a local video parlor, grabbed a seat on a wooden bench or a spot on the floor up front, and watched a Tamil movie. Tickets cost 20 rupees, about 45 cents.

The nature of Dharavi being a slum also fosters a unique market because high-end stores that exist in shopping malls and wealthier parts of Mumbai are less likely to open a branch in Dharavi because it would hurt their branding, Shetty said. Likewise, the residents of Dharavi do not want to buy those goods because they are too expensive and because they live and work in Dharavi and therefore would rather shop there as well.

“What has happened,” Shetty said, “is that a unique market has been created which depends on its own population, which buys the services and also works in those manufacturing sectors. So, by depending on their own consumption, they are now becoming a self-sufficient township.”

Cost efficiency

Dharavi’s high level of congestion — it is one of the most densely populated settlements in the world — helps businesses because they can sell in volume.

This also enables individual entrepreneurs to make profits using a small contribution of capital and a large use of labor. A vendor sitting on the pavement in a Dharavi alley may only be selling slices of watermelon, but the high foot traffic enables him to earn at least a little money.

Furthermore, the congestion enables businesses to quickly and easily find anything they need, whether it is raw materials or skilled or unskilled labor, said Shaikh Mobin, who was born and raised in Dharavi and now runs his family’s successful recycling business. Dharavi’s recycling industry collectively employs about 200,000 people, mostly day laborers, women and children, according to a 2009 report by the Harvard Business School.

However, there is also a fear among some urban planners that the plan to redevelop Dharavi would push what is already a congested area over the edge.

The redevelopment that is expected would squeeze Dharavi’s residents onto less than half of the land in order to free up the rest of the area for commercial property and housing. Such a high density of people would not leave enough circulating area on the ground to accommodate the community, said Patel the urban planner.

“It’s physically unworkable,” he said.

Being able to sell in volume and easily find labor and materials are some of the many ways entrepreneurs can cut costs by doing business in Dharavi.

Businesses have low overhead because rent is cheaper than in more formal areas of Mumbai. Its central location within the city keeps transportation costs down. Deals can be processed and businesses opened and closed quickly because there is less bureaucracy than what comes with doing formal business in India.

Employers can pay laborers less because the workers’ have lower living costs thanks to residing in Dharavi. The workers do not have to pay to commute and have cheaper housing, food and services.

And while one could argue it is unethical, businesses can also pay their workers less because labor laws are difficult to enforce for informal jobs. This has led to much of Mumbai’s manufacturing industry moving to slums like Dharavi and becoming informal, said Aneerudha Paul, the director of the Kamla Raheja Vidyanidhi Institute of Architecture and Environmental Studies in Mumbai.

Affordable housing and cheap services in slums also enables wealthier Indians living in other parts of the city to employ cooks, cleaners, drivers and nannies at low prices.

“Slums exist in a symbiotic relationship with the city,” said Paul. “The city needs labor as much as [the slumdwellers] need opportunities.”