Tag Archives: India

India photo-share: Slum upgrading in Ahmedabad, Gujarat

By: Vidhee Garg

On my recent visit to India, I went on a guided tour of Ramesh Dutt Colony, a slum settlement on the outskirts of Ahmedabad, led by Kinnariben of Mahila Housing SEWA Trust (MHT). MHT is a sister organization of Self-Employed Women’s Association (SEWA), with which AHI has partnered since 2008.

MHT was a key partner in the Ahmedabad Municipal Corporation’s Slum Networking Project (SNP), which aimed to transform the physical environment of the slums, and has been working with this particular settlement since the late 1990s. The transformation of the environment established several basic infrastructure services – household water connections, toilets and underground sewerage for individual households, and stone paving of internal and approach roads, among other things.

More than a decade in the making, the residents are now eagerly awaiting government permission to rebuild the settlement under the Rajiv Awas Yojana (RAY) scheme, which will give the residents title to land and permanent housing.


Kinnariben (left) with one of the SEWA members in Ramesh Dutt Colony. Kinnariben is one of many field operation staff (called ‘Saathibens’) who interact regularly with community residents, thereby forming an integral part of SEWA’s last-kilometer delivery system in meeting the banking needs of SEWA members.

Children play gully cricket in the mid-afternoon. Narrow alleys (gully in Hindi) between the houses are good locations for children to play while being supervised by family and community members. 

Children play gully cricket in the mid-afternoon. Narrow alleys (gully in Hindi) between the houses are good locations for children to play while being supervised by family and community members.

Continue reading

Inequality in India’s Development Dreams

By: Stephanie Tam, AHI Volunteer, Canada

In unspoken agreement, individuals melted into a crowd and closed ranks at one end of the Sabarmati Riverfront promenade. A reverent murmur rippled across: “The Chief Minister is here”. The sky clouded over with raised hands hailing Narendra Modi, the state of Gujarat’s Chief Minister since 2001 and India’s Prime Minister-elect as of May 16th, 2014. A feverish undercurrent threatened to bubble to the surface with a few shouts ripping through the silence. Modi’s trademark all-white attire became blinding under the sunlight, and the crowd hushed with awe when he began to speak.

Image 1

Modi speaking on the Sabarmati Riverfront promenade during the National Festival, August 2012.

Labeled as India’s most loved and most loathed politician, Modi has polarized politics nationally in the few years that have elapsed since that afternoon on the Sabarmati. His supporters claim that his Gujarat model of development will launch the country into a new economic era, while his opponents accuse him of inciting the communal riots that slaughtered thousands of Muslims in 2001. Modi’s landslide election victory shows that his platform of secularized development prevailed over misgivings about his right-wing Hindu roots. However, it remains unclear what development means for the 14 million households living in identified slums across India[1].

Throughout Modi’s electoral campaign, development has meant improved built infrastructure and industrial expansion. Gujarat’s major urban centers boast well-paved roads, few electrical outages, and a flourishing upper class that enjoys air-conditioned malls and luxury cars[2]. Enacted in 2004, Gujarat’s Special Economic Zone (SEZ) legislation has attracted foreign investors and industrial tycoons by doing away with taxes and offering up cheap land, thereby increasing wealth according to development measures that focus exclusively on market growth, i.e. GDP.

Development in terms of employment and consumption, on the other hand, reveals stagnation. Atul Sood et al. show through a series of studies that there is “poverty amidst prosperity”[3], revealing increased reliance upon contract workers and casual labourers, as well as overall wage growth that lags behind the all-India wage increase. This correlates to Gujarat’s slow growth in monthly per capita expenditures: with little increase in household profits, there is little capacity to spend. In short, industries are making a lot of money, but those profits are not benefiting the average worker.

Continue reading

Understanding Slum Dwellers: Part 4 – Some Promising Models

By:  Surili Sheth, Analyst

1)     Gujarat – The Parivartan Program

Parivartan, or “transformation” – also called the Slum Networking Project (SNP)- in Gujarat takes an important step in the direction of inclusive development. Initiated in 1995, its slum upgrading model is structured not only as a public-private partnership model, but also as a demand-based, participatory model. In this way, the SNP directly incorporates the existing informal processes of slums – through the community-driven approach – into the process of development and formalization. Its main idea is to integrate slum dwellers into the city.

While the design of the program is malleable to institutional, social, and technical strategies that respond to the needs and changing circumstances of each specific community, the basic model for the provision of essential components and facilities includes improvements in the physical environment (e.g. infrastructure, water and sanitation) of the slum as well as community development (e.g. health, resources, community groups and empowerment). The public (Ahmedabad Municipal Corporation (AMC)), private (e.g. Mahila Housing SEWA Trust (MHT)), local NGO (e.g. SAATH), and community (Community Based Organizations (CBOs)) sectors all contribute to the finance, design, and maintenance processes of all assets created through the program – and the community is empowered to do so through direct financial stakes as well as mechanisms built into the program such as the mobilization and formation of CBOs, access to financial products, and a no-eviction guarantee of 10 years from the government.

An example of an SNP-upgraded slum is the Pravinnagar-Guptanagar (PG) slum in Ahmedabad, where I conducted some household visits. Below are some of the outcomes of the program that I observed:

Community empowerment and resources for self-investment. SAATH, a local NGO, mobilized the PG community. Mahila Housing Trust provided savings and loans. And an Urban Resource Center (URC), run by a SAATH staff and PG community member in partnership with the AMC, provides resources to link community members to services that they want or need. Each of these resources levels of access made the household members I spoke to feel, in many ways,empowered and part of the process of the development of their community.

Image 1

[Devuben, a SAATH –run Urban Resource Center employee as well as a member of the PG slum, conducts daily household visits. She leads many of the community mobilization, savings group, loan collection, and CBO activities in the PG slum.]

Image 2

[Inside the PG URC – an example of community empowerment. A group of angry community woman came into the URC to complain about the gutter water coming out of their pipes. Devuben (purple saree) explained the process of lodging a formal complaint to the proper government office, to which she provided directions. She wrote a formal complaint from the URC, and told the women to take it, along with two bottles of dirty water to the office.]

Physical infrastructure improvements. Multi-tiered structures and paved alleys show that the slum has undergone some of the stages of the process of infrastructural formalization.

Image 3

[An entrance to the upgraded PG slum, lined with two-storied homes and places of business, which are largely operated by the people living in the PG community.]

Image 4

[Paved chawls (alley-ways) inside the PG community]

Tenure. The process of formalization, especially the 10 year tenure security guarantee from the local government, creates incentives for slum dwellers to invest in themselves and in building assets

Image 5

[External home improvements and asset investment. Seen in the photograph is: 1) verticalization and incremental housing (building up and customized terrace), 2) satellite dish, 3) electricity meter, 4) bike for transportation, and 5) furniture inside the home]

Image 7 Image 6

[Internal home improvements]

Overall, the Parivartan program is a powerful, inclusive strategy formed to respond to slum habitations in Gujarat; however, the requirements of complex partnership arrangements and pre-program characteristics of the habitation (e.g. that the land the slum is built on is level – many slum communities are formed, by nature, on sub-optimal land) are rigorous and may leave many areas out of consideration for the program.


2)     Nagpur, India – Slum Rehabilitation Authority

In Nagpur, the Slum Rehabilitation Authority (SRA) utilizes a dual-pronged approach to slums and land use, through slum rehabilitation and prevention. The rehabilitation portion of the approach includes leasing and regularizing land, improving infrastructure and housing through public funding, and relocating slums by utilizing public-private partnerships and transferable development rights, which allows for higher density development. The prevention portion of the approach involves building more affordable housing, regulating urbanization, encouraging decentralization, and improving public transport.

The SRA was created to implement these approaches through various strategies. The SRA employs inclusive strategies when it incorporates informality and participatory planning through its decentralization approach, brings public, private, and NGO sectors into the process of slum upgrading, and structures its strategies based on specific community needs. It also allows for scale – a total of 391 slums in Nagpur were deemed to be “regularized” under this particular approach.

However, critiques of the SRA approach as it is currently implemented follow two of the major criticisms of public housing approaches utilized in India: eviction and slum demolition are utilized as part of certain strategies, and the affordable housing units built under the SRA may not necessarily be targeted toward the poorest sectors of the population (Times of India)


3)      Solid Waste Management Hybrid Value Chain in Asia – Waste-2-Resource

Inadequate, top-down systems for solid-waste management (SWM) are byproducts of exclusive development strategies adopted by many cities  in Asia. They often fail to reach the nooks and crannies of slum developments, where informal systems (waste-picking and recycling) handle much of the community solid waste disposal needs; alternatively, formal systems, if they do reach these areas, dispose of waste in open landfills – creating social, health, and environmental hazards that disproportionately affect slum dwellers.

The Waste-2-Resource (W2R) program, initiated by UNESCAP and in partnership with the Gates Foundation, local NGOs (such as Waste Concern in Bangladesh), the private sector, and communities, turns SWM into a local entrepreneurial venture with an integrated, inclusive delivery model with revenue generation at the community level. It relies on innovative partnerships within the waste management chain:

·         Local governments partner with local NGOs that have connections to waste-pickers – hence incorporating a very important informal system into a larger-scale, formalized system – to start up a waste center with community involvement.

·         A social investor or donor (such as the Gates Foundation) commits to start-up costs to capitalize a Waste-2-Resource revolving fund to provide the start-up costs of building decentralized waste centers in localities with poor SWM systems. The initial waste centers would pay back the Fund, which could then be used to provide seed money to build other centers.

·         Technological innovations by the local private sector that focuses on environment and sanitation issues are assimilated into the waste collection and processing system, further tailoring the approach to the local context.

·         Waste-pickers – generally placed on one of the lowest socioeconomic rungs of a community – are empowered through formal jobs at the waste centers. They receive a regular salary and more bargaining power when selling to junk dealers.

Image 8

[Workers collecting solid waste in Cambodia. Source]

·         Local vendors and households are taught how to segregate their trash

·         After establishment and repayment to the Waste-2-Resource Fund, the waste centers can pay operational costs and generate profits through their composting and recycling activities. The centers can be sustained through user and membership fees as well as through profits from selling “assets” created in the waste management process – selling carbon credits (gained by composting waste instead of sending biodegradable matter to open landfills, and hence mitigating methane production) through the Clean Development Mechanism established in the Kyoto Protocol, selling electricity generated through composting back to the grid, or using climate finance.

Image 9

[Composting. Source]

The HVC model has been successfully replicated in a few cities in Bangladesh, Vietnam, Sri Lanka, Cambodia, and Pakistan. It currently has 10 projects operating. Though it is a strong model, it again involves the negotiation of complex partnerships across many different levels and sectors and hence needs mechanisms to encourage local stakeholders to participate. It may also be prone to unsustainable financing mechanisms (such as when the value of carbon credits decreases significantly) – so other, more “evergreen” mechanisms must be found. W2R is a promising, inclusive model of development that has the potential for larger scale.

In the end, many issues remain in the formation and maintenance of public-private-community partnerships and inclusive models of development. Incentive alignment between institutional partners, and between institutions and communities, is often hard to achieve, as is finding financing mechanisms that deliver solutions at scale without compromising on participatory methods and empowerment. However, inclusive development includes people. That means understanding how they live and how they want to live – incorporating informal systems into formal ones, giving people the capabilities to live the lives they want, and the resources to invest in themselves. The programs outlined above provide innovate avenues to further develop promising, inclusive approaches to slums and urban development.

Understanding slum dwellers: Part 3 – Capabilities and Informality

By: Surili Sheth, Analyst

 These observations led me on a journey to investigate service delivery in Indian slums, and more broadly, to recognize that understanding slums is about much more than about understanding the physical shelters in which slum dwellers live. The informal systems that regulate multiple aspects of their lives – such as financial services, incentives for home improvement (renting and owning property in the slum), water provision, electrical connections, infrastructure and connectivity, solid and liquid sanitation, and safety – highly affected people’s capabilities in being able to access tools to improve each of these dimensions, and hence, in their abilities to invest in themselves and their community.

The issue of needing to address different facets of community and informal life in order to assess poverty can be characterized theoretically to the capabilities approach, created by Nobel-winning economist Amartya Sen. The approach theorizes that deprivation, or poverty, should be measured not by a lack of income or utility– but rather by the lack of real capabilities that a person possesses. The emphasis is placed not only on how human beings actually function but also on their having the capability, which is a practical choice based on freedom, materials, socioeconomic standing, and a variety of other factors, to function in important ways if they want to. Having these sorts of “capabilities” enables people to “lead the lives they wish to live”.

Though slum dwellers technically live in a certain country, in a certain state, in a certain locality and under the laws and regulations of those various jurisdictions, their real capabilities often do not intersect at all with these formal systems of order. Slums (see twelve definitions of a slum here) are informal – and the economic, social, institutional, even law enforcement systems within them in them are informal. People move around a lot, so the informal systems are ones that are function efficiently at the community level even in a constant state of flux.

Examples of how informal systems and processes can differ frastically from formal ones are shown in the tables below.

CropperCapture[110] CropperCapture[111]

In a slum, the capabilities that residents have affect level of informality, and informality, in turn, affects the capabilities that slum dwellers possess. This approach has interesting, and I think, meaningful, implications for how policymakers view people in slums and the importance of participatory planning. It ties together why inclusive development should include and understanding of all three aspects of slums described in Part 1. The capabilities people possess – the tools slum dwellers have to be able to live the lives they want to – affect their livelihoods and levels of poverty, their abilities to contribute to different markets and economies, and the place they and their community hold within the larger context of the society they live within.

Some questions policymakers can ask when addressing slum settlements in their localities are:

·         Who builds the slum housing structures? How? Where do they get materials and technical assistance?

·         Who owns the land? Who actually leases slum homes, who buys or rents them, through what process, and for how long?

·         How do people access and save money? Where do they and send their money?

·         Where do people work? What technical, economic, and social capacities do they have?

·         How much do they move around, within the slum and outside of it? How long do people stay in the same home? What kinds of homes do people stay in (those that they are renting? From whom? Those that they own?)

·         How is the infrastructure (paths, garbage, toilets, electricity, water) for the community built and maintained? What is the process, and who is in charge of each step of it? Who maintains it?

·         Who is in charge of security in the slum? Who resolves disputes?

·         How is the community organized – to whom do people go when they have problems? Where do their loyalties and trust lie?

·         What do people value most about their lives in the slum?

Obtaining answers to these questions can help policymakers to ascertain how a particular slum functions, its level of informality, how the systems and capacities of the people in it can be incorporated into a development policy to integrate the slum into the city efficiently, and what tools people need to improve their quality of life so that they can invest more permanently in themselves and their communities. I argue, then, that inclusive slum policy addresses slum development through this lens, enabling policymakers to assess where the public and private sectors can fit into a strategy that realistically and efficiently addresses the needs of the slum dwellers and the society they live in – to increase their productivity and quality of life, become an accessible market for formal industries, and create more assets (improving and maintaining their own housing, etc.) to contribute to their locality, state, and country.

Understanding Slum Dwellers: Part 2 – Observations of an Indian Slum

By: Surili Sheth, Analyst

I first began to build an understanding of slums while working for an NGO, called Manav Sadhna, in Ahmedabad, India. The NGO primarily works on education, nutrition, and community-building projects with one of the largest slum populations in the city – the Tekro slum, which houses a population of more than 150,000 (unofficial estimates) in approximately 2-3 square kilometers.

Image 1

[Tekro means “hill” –  the slum is located on top of a heap of trash. This is one of its many entrances.]


In the process of working with children at the NGO and in the Tekro slum every day, I began asking some simple questions – what did they do when they went home from school/the NGO? How long had them and their families lived in the Tekro? How many times had the children moved in their lives? What did they plan to do in the future? What did they want to do? I made some simple observations – I saw what the slum looked like, watched what people were doing, and listened to what they talked about when I went to their homes.

Community. The answers to these questions – from the children, their parents, NGO staff, and from my observations when I visited their homes, were far more complex than I imagined. When they went home, the ten-year-olds I worked with at the NGO had many tasks. These included collecting water for their families, cooking dinner, fixing leaks in their (and their neighbors’) tin roofs during monsoon, helping their mothers sew, working at their father’s road-side carts, and babysitting their younger siblings. When time permitted, they played or did some homework. Most of them had been moving around for most of their lives and had families and homes in villages and other slums around the city. However, many families also had ties from generations within the slum, which has been around for more than 40 years.

Most slum dwellers knew everything about their neighbors, and had a strong sense of community. The slum habitation patterns were organized by caste and region from which the residents had migrated –they were day-laborers from around Gujarat and artisans and migrants from Rajasthan who specialized in pottery. Walking from one alley to an adjacent one often entailed a complete change in clothing, language, and mannerisms of the people that lived there. Loyalties within each micro-community ran deep, and crimes, both petty and large, occurred generally without any police interference – they were settled within the community. The slum dwellers’ livelihoods centered in the economies existing in and around the slum – some were rickshaw drivers, some had shops that sold tobacco to the other slum dwellers, and still others were rag/waste-pickers (scavengers). Many of the children simply looked bewildered, or amused, when I asked them about their futures. They generally gave me an entertained or confused look, followed a nonchalant “I don’t know”, “get married”, or “work with my dad at his shop.”

Manav Sadhna had established community and health centers in the middle of the slum, providing many services to the slum community – including medical camps, education, pre-school nutrition centers, women’s savings groups, and a place for community celebrations.

Image 10

[Pre-school nutrition center, or Anganwadi, run by Manav Sadhna from inside a slum home, in partnership with government program.]


Door-to-door visits were conducted by the NGO staff members (using a hand-drawn map of the slum and chalk to mark the homes that were visited) to raise awareness about malaria and TB, alcoholism, individual medical issues, and community-related challenges on an ongoing basis. However, while impacting many is very individualized ways, the NGO did not necessarily cover the residents of the entire slum in a scaled or uniform manner, so major social and physical infrastructural changes often only happened when the local government or a local politician decided to make a certain portion of the slum a place to upgrade as part of his or her agenda (generally to attract a vote bank).

Physical infrastructure.

Image 2

Image 3

Image 4

[The “Gutter Ganga”]


The entire Tekro community was surrounded by a river of sewage, satirically referred to as the “Gutter Ganga” by residents and NGO staff.

Image 5

Image 6

Image 7

[Alleys in the Tekro]


While street lights and paved paths existed in some parts of the slum, many paths were unpaved or semi-paved and had open or over-flowing gutters.

Water was generally procured through public taps, which had running water coming out of them for only one to two hours in the morning and evening. One tap often served more than fifty households, causing daily fights to break out in long lines that formed in front of the taps. Some households opted to procure their own illegal water connections instead of facing the lines, and many also obtained their own illegal connections to the electricity grid. Recently, a government initiative had installed meters for subsidized electricity in many parts of the Tekro slum, but residents complained that they had to pay too much for their electricity (some were still stealing from the grid).

Parts of the slum were entirely comprised of dirt paths, litter, animal carcasses, and people living beneath tarps. These were the poorest portions of the settlement, often comprised of elderly people without family support, those employed in “low-caste” or “impure” work (e.g. collecting waste, making leather or selling meat, etc.), or those with no employed workers in the household who sometimes sustained by begging.

Image 8 Image 9

[A poorer section of the slum]


Other portions of the slum had people living in homes with plastered walls, tin roofs, fans, tiles, household toilets, TVs, and electricity meters. These were generally the households that had multiple employed family members and had made improvements to their homes over time.

These observations illuminated a lot I hadn’t thought about – and led to more questions. They showed that the lives led by the children I worked with and their families were lived in highly transient phases. Slum dwellers had many responsibilities in their homes and communities; because of a lack of large-scale and widespread service provision, they were almost always involved in some part of the informal economy (e.g. building parts of their own homes, repairing overflowing gutters near their homes, selling products to other people in the slum, running a small-scale compost center where rag/waste-pickers turned in their days’ collections, etc.), even if they were also part of the formal economy (e.g. as servants, day laborers, construction workers, rickshaw drivers, etc.). Many sent money back to their families in their ancestral rural villages. Their living situation and quality of life was highly correlated to their bonds with their neighbors, their standing in the slum community (which often meant that families spent large amounts of money on cultural activities or events associated with their reputation, such as religious festivals, marriages, and funerals, as well as on medical bills from private doctors), and their family’s ties with local authorities.

The idea of investing in themselves for the future or in permanent situations (their homes, lives, etc.) did not seem to be of the highest priority – investing in how to keep their lives going in the most current context, in a reputable way (within the community) was the priority of primacy. Families often took off to their villages for months at a time (often pulling their children out of school for long periods of time), or moved to different areas of the city for new jobs, packing up and leaving their Tekro homes for new ones as rapidly as they had moved in.

Understanding slum dwellers: Part 1 – “Slum dweller”

By: Surili Sheth, Analyst

I use the term “slum dweller” as a descriptive phrase – and I choose to use it because it is how people living in slums refer to themselves, it describes the place they live (which is the subject of this post), and it acknowledges the existence of the type of informal settlement that a billion people in the world live in today – slums.

Slum policy

In developing an understanding of slum development policy, institutions have often failed to take services, environment, and community, and how these are linked to the physical structures and productivity of the people living in the slum, into consideration.

There are three major, interconnected aspects to slums that policymakers are generally concerned about:

1)     The unused or underutilized economic worth – market/productive capacity – of the people living in the slum.

2)     What part the slum (both the physical infrastructure and the people within it) plays in the larger context of the city, state, or country.

3)     The deprivations and poverty the people living in a slum face.

 Often, the connections between these three aspects go unrecognized and they are treated as separate issues in policies that attempt to address the informal settlements. I argue that a true inclusive development policymaker must possess an adequate understanding of all three, using India as an example.

Slums and Affordable Housing Policies in India

Public sector approaches. Early efforts by the Government of India to provide affordable housing to low-income populations were through public sector housing programs for purposes of rehabilitation of the refugee population, redevelopment of slums, housing for economically disadvantaged sectors and low-income groups, and making serviced land available to the poor. In the initial phases, the government’s efforts relied heavily on providing finished social housing to the populace. Various financial instruments and shelter delivery mechanisms were instituted and housing boards and authorities at different levels of government were set up for this provision. These newly created agencies were funded through financial institutions that supported large-scale programs.

Unfortunately, the poor benefitted the least from these public housing policies. According to one estimate, approximately 85% of the expenditures on construction of dwellings by housing boards went to high-income groups and middle-income groups, while low-income groups and economically weaker sections received only 8% and 7%, respectively (The Inclusive City). Additionally, the houses constructed for the poor by public agencies eventually were instead bought by upper-income groups, because they were priced beyond a low-income family’s capacity to pay, despite subsidies by the government. In other instances, higher-income groups obtained public housing units directly by using means such as concealing their true income or using surrogate people as applicants.

The total number of houses constructed by public agencies under these initial programs was too small to have any perceptible impact on the housing problem, and there was a significant lack of maintenance of the structures and public facilities, and thus a significant lack of sustainability of the entire approach.

Simultaneously pursued policies of slum clearance and rehabilitation of housing, with resettlement programs structured under inadequate public housing programs, resulted in the poor being displaced without resources. Slum demolition continues to be a reality in many Indian slums – approximately 200,000 households in four metro cities, Mumbai, Delhi, Kolkata and Ahmedabad were evicted in the two years between 2004-2006, and slum demolitions still continue. In Ahmedabad, in the three year period from 2006-2008, 30,000 households were displaced (Mahadevia).

Partnerships. The private sector has played an important role in the provision of housing in India, but its efforts have mainly focused on housing for middle and higher income households. The Government of India’s National Housing and Habitat Policy (2007) attempted to bring in the private sector to play a role in affordable housing, and to decentralize housing policy. The policy stressed the need for adequate infrastructure (including social infrastructure), strong Public-Private Partnerships, and the role of the cooperative and corporate sectors. It delegated the task of providing housing to state government and other state agencies, with the central government playing the role of facilitator. It also recommended instituting a social mandate on the private sector, advising actors within it to reserve a specific percentage of housing for the poor in their projects. To solve the problem of inefficient housing for the poor, this approach recommended building cost-effective houses for them while simultaneously increasing their purchasing power by linking economic growth to employment.

In Gujarat, Chief Minister Narendra Modi’s announcement at the 2013 Vibrant Gujarat forum to create 5 million affordable homes through Public-Private Partnership is an example of a state government initiative for affordable housing utilizing partnerships. However, the private actors that are competing for the contracts are mainly large-scale developers with potentially little experience or knowledge about the needs of the populations that the created affordable housing is supposed to target.

Though public-private partnership for affordable housing development is an improvement upon the public sector housing and demolition model, it still remains a model that is based on producing new homes for the urban poor (the majority of whom live in slums and have their own communities already), and uses the private sector as more of an entity to contract production of housing units out to rather than a holistic methodology to address the large percentage of the population living in the slums in a participatory manner. These affordable housing policies are missing a key aspect of slums: understanding the people living in the slum and informal systems they have created and live within.

Some states have recognized a few helpful aspects of these informal system – for example, Madhya Pradesh has enacted laws giving no-eviction guarantees to squatters (patta laws). Most recently, the flagship Rajiv Awaas Yojana (RAY) program, instituted by the Ministry of Housing and Urban Poverty Alleviation of the Government of India, envisages that each state create a “slum-free plan of action” to both upgrade existing slums and prevent the creation of new ones, and its guidelines aim to bring private sector and community based organizations into the fold. Again, understanding slum populations is key to making such a plan evolve from a set of normative guidelines to a practically implementable and effective program.

Mortgage emulators: pro-poor housing finance innovations (Part 1)

by Matt Nohn, AHI Senior Advisor

Last summer I came back to India to revisit the Mahila SEWA Housing Trust (MHT; see
www.sewahousing.org). I know MHT well, as I worked with them in Ahmedabad, one of India’s fastest growing cities, for three years. Still today I serve as an advisor to MHT, too. AHI and MHT are closely collaborating since around 2007, as AHI supports the larger SEWA network, to which MHT belongs, in launching a market-driven housing microfinance company that is co-governed by the urban poor.


MHT is a Mission-Entrepreneurial Entity (MEEs) founded by the Self-Employed Women Association (SEWA; see www.sewa.org). The support of poor, informally and self-employed women (and their families) to access improved housing and neighborhoods is its mission. MHT’s poor members are usually self- or informally employed—such as street vending day laborers and home-based piece-rate artisans and industrial outworkers. Particularly for the later group, rarely leaving their settlements and producing at home, housing improvements are of the highest relevance and closely related to income improvements (e.g. through access to electricity, subsequent use of more productive machines) and expenditure reductions (e.g. through better health but also reduced fees for access to subsidized or fairly priced public services).


In this regard, through slum upgrading in the scope of Ahmedabad’s Parivartan Slum Networking Program, MHT became a big player in low-income housing in India MHT implements various schemes for improving service delivery and basic infrastructure in low-income areas, especially informal ones; see e.g. https://www.box.com/s/6ui7j8zvfr8lc4lp5co8. Since inception in Ahmedabad, these poverty reduction programs have been replicated across multiple Indian states, often with the participation of MHT. For example, at present MHT works with DFID in order to replicate sanitation and solid waste service projects in Bihar, one of India’s poorest states. Since 2007 MHT, SEWA Bank and AHI collaborate in launching SEWA Grih Rin, an emerging housing finance company. To bridge the time until Grih Rin’s launch MHT works with two credit and savings cooperatives that also deliver housing finance. This work allows MHT to test new products and to innovate the housing finance space. One of these innovative products is what we call Home Asset Loan Finance at AHI: or, simply, HALF as it squares half way in-between typical microcredit and traditional mortgage finance.


No margin, no mission

Launching HALF for semi-formal properties is challenging because it requires to do all of multiple things right: failure to do so may even lead to extermination of the lender—as housing is a capital intensive product, and the lender is “nothing but” a group of poor women:


1.      To screen the loanee’s probability of repayment,
as in case of any typical microfinance product


These proceedings are basically identical to any microenterprise or consumer loan.


2.      To screen the security of the collateral (part 1),
proofing tenure of the land (and home), as in case of a mortgage.


However, unlike in case of a mortgage this can be hard in case of HALF, as the underlying asset’s title is neither illegal/informal nor fully legal/formal but is placed somewhere in-between. On this regard, UN-Habitat speaks of the continuum of land rights, which also reflects in the latest Report of the Special Rapporteur on adequate housing Raquel Rolnik to the UN Human Rights Council. Thus, how to establish the likelihood of eviction and loss of collateral?



The continuum of land rights (Source: UN-Habitat (2012). Handling Land, Innovative Tools for Land Governance and Secure Tenure. Accessible online at: http://www.unhabitat.org/pmss/getElectronicVersion.aspx?nr=3318&alt=1)


3.      To screen the security of the collateral (part 2),
eliminating potential conflict with the urban planning regime


Even if land tenure is safe, the house may still be destroyed if it was in conflict with future development—such as this road in Wenling, Zhejiang province, China.



Would you give them a loan? Will they hold out? (Source: Reuters)



Well, they did not—even though they thought the compensation wasn’t worth it. (Source: Reuters)


4.      To establish contractual proceedings that, in case of default, allow the lender to take possession of the collateral—even without mortgage.


 Thus, how do you make sure you get the house in case you need to take the defaulting borrower to court (in absence of mortgage foreclosure, which would allow you to just take the house even without the court.)


5.      To screen the security of the collateral (part 3),
proofing the physical qualities of the collateral

Even if land tenure and construction site are safe, the lender still needs to ensure that the structural quality of the house is safe enough to e.g. withstand a disaster. Also the lender needs to ensure that the money is really invested in the construction of the tangible collateral.


demo_1 demo_2

Are you sure it is strong enough? (Gujarat Earthquake 2001; picture credit: CASA)


[To be continued in next week’s Part 2.]