Dharavi Redevelopment: No Easy Goal
The Dharavi Redevelopment Project (DRP), spread over a seven-crore sq ft land parcel or 646 acres, has begun in earnest, with a seven-year milestone set for the humane quotient rehabilitation of project-affected persons (PAPs).
Asia’s largest slum cluster – Dharavi – has finally reached the stage for a comprehensive recast and overhaul, since the first proposal was conceptualised during the then Congress-run Maharashtra government in 1985.
Back then, the Congress party was celebrating its centenary year, and its Prime Minister, Rajiv Gandhi, had visited Mumbai, and particularly the Dharavi belt. Ironically, he was escorted by underworld gang leader Vardarajan Mudaliar, who was based there. For the first time, the promise to redevelop the slum cluster was conceived.
Twenty-nine years later, in 2014, BJP’s Maharashtra Chief Minister Devendra Fadnavis persevered with the project, though repeatedly failing to attract interest in its bid, which was open to both domestic and global players for redeveloping the 601 acres within the mammoth ghetto. The mostly slum residential tenements and informal yet booming business and industrial units (estimated at Rs25,000 crore in annual business activity), located on prime realty space right in the middle of Mumbai city, had appeared doomed to perpetual underdevelopment.
Currently, 601 acres of the Dharavi land parcel, alongside a further 45 acres – of which 24 acres is in possession – is under the DRP. Originally, 100 acres were to be added to the DRP; however, given the railways’ requirement, this was scaled down to 45 acres, of which 24 acres have so far been acquired. As the railway land becomes available in due course, it will be utilised to rehouse an expected 13,000 individual residential and business units under one of the biggest and most complex brownfield projects ever undertaken.
Last week, the foundations were laid, following two months of construction work on the railway land. Though the ongoing monsoon season may witness slower work activity, things will ramp up come September. More importantly, the hurdles posed by a section of reluctant residents, through the Dharavi Bachao Andolan, have witnessed a breakthrough with the residents’ collective group meeting with the DRP CEO last week.
CEO of the Dharavi Redevelopment Project, SVR Srinivas, says quite candidly: “Even two decades ago, the project again seemed ready for take-off (when Mumbai-born and bred USA-based developer Mukesh Mehta proposed his plan for Dharavi’s recast). Two decades of mulling since 1985, followed by two decades of actual serious consideration, went nowhere – till now, when finally, execution of the plan has begun in earnest despite multiple initial bids having failed.”
Chief Minister Fadnavis’s third term witnessed the first cornerstone being laid for the Dharavi recast. The DRP will execute a community development programme on a massive scale.
In Gautam Adani’s own words: “Visualise the world’s largest redevelopment project in Mumbai’s Dharavi to transform the world’s largest slum over the next decade. Not only will this provide dignity of living to its over one million residents, but at the same time this will build an unmatched ecosystem of sustainable living and innovation in the heart of Mumbai.” On the Adani side, Pranav, son of Vinod Adani, has been put in charge of the project. With the 80 per cent shareholding of Adani he would have to travel very frequently from Ahmedabad to Bombay. However, for this story the entire interaction was with the CEO of the SPV, with Pranav not wishing to go on record.
According to BJP’s Maharashtra General Secretary of the party’s trade cell, Mahendra Jain: “Work has commenced to carve out a mini-megacity in the heart of India’s financial capital – Mumbai – that will not only rehabilitate over a lakh of slum tenement dwellers but also leverage the existing business ecosystem, valued at a mere Rs25,000 crore today (in annual turnover terms), and transform it into the IFSC capital of the world.”
In 2016, a bid was globally circulated, and nobody responded. Five extensions were accorded to the bid, and yet no domestic or international interest was evinced. Then the model was changed in 2018, and the idea of setting up a Special Purpose Vehicle (SPV) was crystallised. The DRP SPV draws its chairman and directors from the Maharashtra government.
“While the earlier proposal was totally builder-driven, with builders enjoying all rights without any accountability, our SPV model introduced the perfect interface between the lead partnering developer, government and slum residents that has worked out very nicely, seamlessly for all these concerned stakeholders of the project,” SVR Srinivas notes.
He adds another change made to the project relates to the payment mechanism, with all revenue accruing to the SPV. Suppose one (ineligible) family wants to purchase a house or stay in rental accommodation: all those payments will only accrue to the state government.
CM Fadnavis has publicly said: “In Mumbai there are eight authorities who make their own DCRs (including BMC, MMRDA, MSRDC), and any such authority like DRP may prepare their DCR. They, however, have to send it to the state government, and only if approved can the same be taken forward. It would be wrong to say that Adani will have control, as he will have to do as the state government says or the contract will be taken away from him.”
Fadnavis publicly explained this and said: “Almost 18 per cent of DRP (land parcel) will be used for roads, 17 per cent for the green belt; 45 to 50 per cent to fulfil needed reservations – with ten per cent being designated for an economic hub where Dharavi’s industry will be housed. For 5 years, no tax will be levied. Only on 40 per cent of land will rehabilitation and cross-subsidy money be generated.”
Thus, the final developable land amounts to only 270 acres as per the master plan. This includes the rehabilitation, renewable, social infrastructure, physical infrastructure and free-sale components. The remaining area will be utilised for a buffer zone, solid waste management treatment facilities, open spaces, schools, a railway station, and other essential infrastructure.
History to date
There have been varying reasons for the decades-long delay – from conception to finally reaching the execution stage – of the DRP.
The erstwhile Congress government first considered a piecemeal development model to include nine distinct segments comprising Dharavi that could be redeveloped individually by separate builders. The plan was then changed to accommodate more developers by carving out 12 independent slices out of the Dharavi realty pie.
In 2016, Fadnavis also initially envisioned five piecemeal, fragmented segments to comprise Dharavi’s redevelopment plan. Yet, consecutive bids failed to attract domestic and global interest, notwithstanding five extensions accorded to the same.
Finally, on 24 December 2018, the First Abu Dhabi Fund-led consortium Seclink bagged the global tender bid for the holistic one-land-parcel redevelopment of Dharavi (601 acres), with a bid of Rs7,200 crore. The Abu Dhabi-based monarch had earmarked over Rs25,000 to Rs28,000 crore for a human development project in India, following which Abu Dhabi-based First Fund issued a letter of interest to the Seclink consortium for the DRP. The Seclink bid was made without the railway land component being included.
The tender papers were picked up by Adani Properties, Seclink, Anil Dhirubhai Ambani and Piramal Enterprises Ltd, with the Ambani and Piramal groups not submitting their bids subsequently. However, for reasons explained below, this tender was cancelled.
Right after the Seclink bid was successful, another committee of government officials raised doubts about the development rights that Seclink had won. This committee came up with the idea of including adjacent railway land, which could be used to persuade the first group of slum dwellers to shift from their old slums. Therefore, in view of the significant change, the panel recommended fresh bids be invited for the project.
Even though domestic and foreign bids were invited for the DRP in 2016, several bureaucrats on the committee privately grumbled that a foreign player would not be able to deal with the ground-level realities of Indian democracy – further delaying Dharavi’s redevelopment
Seclink had qualified on the set technical and financial parameters but, after the IAS officers’ committee recommended inclusion of the 100-acre railway land component, CM Fadnavis sought a review. Subsequently, the state Attorney General opined that the railway land component had collapsed the concluded bid process, which would have to be freshly invited, while stating this as the reason for cancellation of the Seclink bid. Seclink is pursuing the matter through the courts but has not secured a stay on the project.
Subsequently, in 2022, the project was re-bid, with Naman Developers, DLF and Adani picking up the bid documents. In the 2022 bid, only Adani Group and DLF submitted their bids, as Naman was disqualified on technical grounds.
The apparent paradox between the Seclink and Adani bidding prices is justified by the government for several reasons. First, the additional railway land extended the project by 100 acres, which meant extra expense towards rehabilitating several thousand more families. Also, the new bidder had to pay for the railway land added to the project, although as of today only 45 acres of the railway land has been merged into the DRP.
One of the conditions of the entire bidding process was that the tender documents had set the net worth requirement of the bidding consortium at an abnormally high level. However, government officials defend the decision by arguing that only a well-capitalised builder could realistically execute such a large project within cost and time. They also argued that capital was needed upfront to pay for the value of the railway land.
Interestingly, almost 45 per cent of the Dharavi landmass is owned by the Brihanmumbai Municipal Corporation (BMC), the richest civic corporation in Maharashtra and even in India. The BMC, unlike Indian Railways, waived the land purchase cost for the DRP. This is another critical point for the success of the DRP.
In other SRA projects, for instance, the BMC is entitled to 25 per cent of the ready reckoner rates of realty prices of the land it gives up or parts with for slum redevelopment schemes. However, the DRP was granted a special privilege: land was allocated free of cost.
Explains BMC Commissioner Bhushan Gagrani: “The DRP is similar to a Slum Redevelopment Authority (SRA) project defined under Section 33(10) of the Development Control Rules (DCR), with special privileges, and is instead covered under Section 33(10B) as a ‘censused slum’. The reconciliation of Mumbai’s Development Plan (2014–2034), dealing with all reservations – except open spaces – is clearly defined under 33(10).”
“Depending on the viability of the project, there is a provision for either relocation or merging of reservations into any SRA scheme within that project. So DRP is an extended SRA but covered by 33(10B). Similarly, cluster redevelopment comes under Section 33(9),” the BMC Chief adds.
An interesting and contradictory aspect of the Dharavi ground layout is its adjacency to the Bandra-Kurla Complex (BKC) business district, while still only being able to command much lower realty rates. Realty rates exhibit a sharp contrast on either side of the Mithi River, which bifurcates Dharavi from BKC, with the latter enjoying almost three times the land prices – currently in the range of Rs1 lakh per sq ft.
Back in 2004, when Mukesh Mehta’s proposal was under active consideration by the Maharashtra government, the realty contrast stood at Rs10,000 per sq ft in BKC as against Rs3,500 per sq ft in Dharavi – just across the Mithi River. Mehta wanted to bridge this realty gap by transforming the Mithi River into a clear-water rivulet running into the sea and envisaged a cool Rs200 to Rs300 crore accruing as profits after totally redeveloping Dharavi back in 2004.
The Mithi riverfront is an important component of the Dharavi redevelopment and will also be addressed now. Multiple agencies – numbering eight – including BMC, MMRDA and MSRDC, currently administer Mumbai along the boundaries of the DRP property and will have to closely coordinate efforts, particularly the BMC, for the DRP.
The recast plan will create crucial social and community infrastructure, including a sewage facility in Dharavi. With close to 1.5 lakh tenements, Dharavi has been missing sewerage facilities for the four decades since the slum pocket initially came into being. Over the subsequent decades, basic needs such as water and electricity were provided to residents. However, most of the connections were illegal and provided by slum lords, though these were later regularised.
Can the planned sewage system infrastructure – expected to create sanitation facilities to ensure sewage disposal is more scientifically managed?
Seven sewage treatment plants (STPs) are currently being constructed in the region, out of which six are in an advanced stage, while one is facing problems. By 2027, Mumbai’s solid waste will be 100 per cent treated before it is released into the sea, Bhushan Gagrani has assured.
Says Gagrani: “What we are currently doing is only a band-aid sort of remedy for the Mithi River. We are only picking up whatever is coming into the water body but doing nothing to stop sewage polluting the river, with Dharavi being the contributor for 90 per cent of the polluting solid waste. Once the DRP is accomplished, the Mithi will slowly revert to its pristine days.”
The dredging plan that will simultaneously be undertaken alongside the STPs reaching completion, involves over eight metres of depth, which has been choked over the years with motor vehicle components and plastic waste.
The coming 7 years will witness Dharavi’s skyline transformed into a modern township equipped with modern infrastructure and social amenities.
Capital infusion challenge
The DRP requires the displacement of more than one lakh families and more than 1,900 industrial units, besides 11,000 or more small-time restaurants and bunk shops operating within this particular ecosystem today.
In the first year and a half of the DRP, a capital infusion by the Adani Group of over Rs9,000 crore is anticipated – no small financial challenge.
Chairman of the Hiranandani Group, Dr Niranjan Hiranandani says: “There is not even a one per cent iota of doubt that the Adanis will achieve financial closure for effective redevelopment of the Dharavi project.”
“Over four decades back, banking or institutional finance for the real estate sector was only wishful thinking. Only private finance options were available. Most land sale transactions involved a 50 per cent black money component. The effective tax rate was also an astronomically high rate of 98 per cent. So obviously, nobody paid taxes completely,” he adds.
Today, every private corporation wants to be in the real estate sector. Whether it is the Tatas, Godrejs, Birlas or any other corporate entity, they all want to be in it. Funding will be no constraint either, with the possibility of REITs for listed companies to get financing at any time. Banks are giving loans for the purpose of construction and development activity today.
Dr Hiranandani adds: “You have corporate entities, individuals, partnerships, old companies, new companies – all of which are getting into real estate. Secondly, you have foreign direct investment available to you. Whether it is Brookfield or Blackstone or any other company in the world, investments are coming in.”
Market experts believe that the Dharavi valuation, in the range of Rs3 lakh crore in market capitalisation, will make fundraising relatively easier. With this valuation, the funds required for the project would demand a relatively small dilution by the Adanis. Depending on successful execution, and with no hidden surprises or costs springing up during implementation, and depending on market conditions, Adani could make significant gains from the upfront capital he is required to invest.
The Adani Group has recently hived off its stake in Adani Wilmar Limited to Wilmar International, Singapore, for Rs7,150 crore!
Slumbai: human quotient challenge
CM Fadnavis told a news channel recently, “When we came to power, we realised that only 60,000 families were made eligible for rehabilitation under the erstwhile MVA government. Such a condition would never allow the project to take off, ever. We decided that not only the ground floor slum residents but also those living on the first-floor dwellings, besides those who shifted to Dharavi after 2011, would also need accommodation. Eligibles housed in situ and ineligibles accommodated elsewhere or through rental housing within the DRP, with the option of ownership after ten years.”
The DRP is being viewed intently all over India, with the CMs of Delhi and Madhya Pradesh already evincing interest in replicating the same in their respective states.
While the earlier Dharavi redevelopment plans envisaged the rehabilitation in situ of only 66,000 families, the current recast plan has increased this to include a similar number of families who were considered ineligible under previous plans.
DRP already finished the numbering of close to one lakh families residing in Dharavi a couple of months ago. More than 87,000 tenements have completed their household survey, which means they are entitled to a new home either inside or outside Dharavi depending on their eligibility status as per DRP’s Annexture-II document. More than one lakh tenements have been numbered. The eligibility survey has almost ended. “We have crossed the Rubicon. Hereon, although there will still be some genuine concerns, others are probably artificially created,” DRP’s CEO states.
SVR Srinivas is right, and while genuine concerns still exist – including those of residents like autorickshaw drivers worrying about whether they would get their entitled free homes within their existing work zones – local political opposition persists, and this may result in delays on the ground.
The eligible residents will get free homes of 350 sq ft each, higher than the 300 sq ft residences offered free under SRA projects. The commercial units will also be eligible to purchase additional floor space, even as a similar demand from residential consumers is not expected. Those who were living on the first and second floors will now be eligible and shifted to Mulund and Malad. This is obviously not as good as being located in Dharavi itself. However, getting a 350 sq ft house even in Mulund or Malad for free is better than being ineligible.
Rehabilitation milestone
With the commencement certificate issued for the project four months ago, the milestone is set for the complete rehabilitation of Dharavi residents within 7 years.
DRP’s CEO says: “The most important aspect of the current recast plan is that it factors in the ‘human quotient’ sensitively, as against previous proposals – right until 2018 – that intended to evict ineligible slum dwellers from Dharavi for failing to satisfy the cut-off line criterion that wavered from 1995 first and then 2000 under the erstwhile (Congress-led) government.” CM Fadnavis has said unequivocally that even those who came into Dharavi post-2011 will be provided housing.
Says SVR: “SRA was set up 28 years ago. Two-and-a-half lakh free homes were handed over to slum dwellers over 28 years. At this rate, the original plan of providing 40 lakh free homes in Mumbai would take 200 years to accomplish in order to make Mumbai slum-free. Our priority is slum redevelopment in Dharavi, as we cannot have multiple objectives taken up in one go.”
For example, the Development Plan for the Mumbai metropolis (2014 to 2034) has several existing reservations for schools, public gardens, amenities, and utilities on paper that apply to Dharavi, as they did even during the earlier DP plan (1991-2014). But in Dharavi, it has remained just that – on paper – for four decades. So, will the DRP factor in these reservations with slum redevelopment as its prime goal and target?
Gagrani is confident that the BKC experience will prove pivotal in aligning Dharavi’s recast through effective measures – ensuring that the traffic chaos witnessed in the former is not repeated in Dharavi, but rather effectively decongested through better connectivity between the two.
When BKC was planned several decades ago, Mumbai had no metro – elevated or underground. Now, within the BKC and DRP enclaves, there will be three metro stations. Similarly, a bus depot is also being envisaged within DRP.
The DRP CEO points out that while the Central, Western, and Harbour line railway lines offer transport corridors, a request has also been made to MMRDA to align the Metro (Line 11) to extend its CSMT line right up to Dharavi, considering the holistic plan for Mumbai. A government resolution to this effect has already been issued.
The holistic business plan of DRP – including the infrastructure plan, business plan, and special master plan (recently released) – also includes the mobility plan, which will factor in aspects both within and beyond the project.
The scope of the DRP is threefold. First, the construction of free homes for 69,000 families in situ and the balance 33,000 in settlements located in not-too-distant suburbs of Mumbai, alongside redevelopment of the commercial and industrial segments. Second, the physical infrastructure, to include sewerage systems, stormwater drains, and drinking water. And third, resolving community living problems. It also includes transport corridors that will hugely benefit and ease traffic congestion in the BKC region as well.
The intention is not to merely create a physical concrete jungle. “People have to live here, study here, children have to grow up. There will be a city within a megapolis and by definition it has the three components: of houses, recreation and open spaces, and amenities,” the DRP CEO notes.
Information, Education, Communication
The DRP project continues to face resistance from stakeholders and opposition political formations and this is likely to pose some challenges. Some Dharavi inhabitants are being dissuaded from sharing their documents with the SPV over perceived concerns raised by local politicians like Varsha Gaikwad, who faces the prospect of a significant portion of her voter base (comprising ineligible slum dwellers) being relocated out of the Dharavi precinct.
Surprisingly, BJP’s former Member of Parliament from Mulund, Kirit Somaiya, was also up in arms about the potential inbound project-affected persons (PAPs) who would be shifted into his political domain – possibly altering voter demographics that could impact his political prospects there. He has since toned down his opposition, according to political sources, in the interest of Mumbai’s holistic plan to turn slum-free.
Says Srinivas: “I am very clear that all stakeholders must come together and include slum dwellers, politicians, and bureaucrats. Information, Education and Communication are key for this purpose. Even residents are not a homogenous entity and include several community groups, because Dharavi is like a mini-India.”
Towards slum-free Mumbai
Sadly, a blot on Mumbai is that more than 50 per cent of its citizens in Mumbai, population-wise, live in slums. Landmass-wise, 40 to 45 per cent of Mumbai city comprises slum tenements. SVR Srinivas, speaking with conviction, notes: “If you ask me, Dharavi is the first big step towards a slum-free Mumbai.”
The human quotient is, in fact, the biggest aspect to be factored into any project of this scale and nature. This does not mean only good houses, but much more – to include the same quality of life and accessibility. Those running some businesses from close to their existing homes in the same ecosystem would prefer to stay in that particular location. All those social aspects need to be considered.
SVR is in total agreement: “How could we just throw out the ineligible residents, and where will you evacuate them to? This time we threw out this inhuman element of eligibility and are following the diktat of ‘Housing for All’ envisioned by Prime Minister Narendra Modi, to be encompassed in the present-day Dharavi redevelopment model being executed right now.”
Business district of Dharavi
The Dharavi recast master plan recognises the mostly informal and yet thriving industrial ecosystem within Dharavi – including leather (tanneries), food processing, plastics, textile, and waste reprocessing and recycling industries. For instance, India’s largest recycling facility operates here, besides thousands of small shops and establishments.
Discussions were held on the merits of common facility centres for, say, the 25 tanneries that operate in Dharavi instead of separate individual facilities, as this would allow for their comprehensive technology upgradation. Also, there is the Kumbharwada region of potters (mainly from Gujarat) that is based out of Dharavi, who will benefit by being organised as an industry through the DRP.
Even the cycle-borne ‘Idli-wala, seen strutting his edible wares across Mumbai’s cityscape, sources his food products from the Dharavi belt today – albeit from a less than hygienic ambience.
Dharavi’s contribution to GDP
Prime Minister Narendra Modi announced India’s targeted GDP of $5 trillion by 2030, with Maharashtra’s share of $1 trillion. The MMR region will contribute a significant chunk to this. The redevelopment of Dharavi will itself be a major contribution to the GDP of the MMR region.
Hiranandani cites the realty sector as the perfect example to understand growth. “Money and capital is not short, but perfectly qualified and skilled personnel are the key. The contradiction in terms is that today’s GDP is growing at 6.2 per cent, and real estate grew last year at 12 per cent when Crisil estimated it at only 8 per cent. This year, Crisil estimates 10-12 per cent growth in the realty sector, and we will grow by 15 per cent. So there, and the proposed rail corridor to Karjat, will be the next big disruptor and gamechanger.”
SVR Srinivas, who was brought in to speedily complete Mumbai’s metro project, is expected to bring the same skills to bear in the Dharavi project. He is set to retire in just over a month from government service, without any extensions to his career so far. For the timely completion of the Dharavi project, it would be appropriate to grant him the necessary extensions to lay strong foundations for the whole DRP and give it a flying start.
Box
What Gautam Adani gains from DRP
While the rehabilitation of the slum dwellers within Dharavi outlines a seven-year deadline, the developer will likely exploit the railway land component of 45 acres that has a capacity to rehouse 13,000 families, including the existing 3,000 living on the plot currently.
The railway land will first be exploited for construction of rail infrastructure, to include existing staff quarters. Over and above that, the initial lot of 3,000 resident slum dwellers plus 10,000 from the remaining portion of Dharavi will be rehabilitated here. This is a crucial step for Dharavi so that 10,000 families will get their free homes before being asked to vacate their slum tenements.
The business plan of the Adani Group is still to be provided to the SPV. As explained above, this would allow the Adani Group to effectively free up close to 100 acres of land that the 10,000 families are currently occupying within the remaining 601 acres of Dharavi land over the next 18 months. This freeing up of 100 acres will allow capital to be raised.
The financing for the entire project and SPV is controlled by the government. Resources can be raised by NCDs, CCDs and Compulsorily Convertible Preference Shares (CCPS).
The Adani Group will be entitled to revenue streams in the ratio of 80:20, shared with the Maharashtra government from the free-sale component of generated realty as well as transferred development rights (TDR) accruing from the DRP.
The TDR computation is based on the construction carried out by the developer in DRP, with the pricing based on where the same is loaded by the purchasing entity. For the first time, a digital TDR platform, expected to be created by the BMC in a few months’ time, will not only list the total generated and available TDR from DRP, but also ensure transparency in all related transactions.
Currently, TDR transactions are privately done in Mumbai, with prospective realtors seeking the same, finding those owning TDR and transacting with them without knowledge of total available stock in the real estate market. The digital TDR website ensures transparency regarding total availability of TDR, with transactions being market-driven and openly available on the digital website, DRP’s CEO says.
These measures were introduced by the Government of Maharashtra to ensure TDR-related transparency and prevent potential market manipulation.
The Adani Group will not be able to either hoard or manipulate the price of TDR, as the availability of TDR will be reflected on a portal created and managed by the BMC on a real-time basis. Moreover, the price of TDR has been capped at 90 per cent of the ready reckoner rate of receiving plots.
The use of TDR across Mumbai is not a new one. Even the 2018 tender had a provision for the use of Dharavi TDR across Mumbai. The changes made in the TDR for the Dharavi Redevelopment Project were duly notified three days prior to the issue of the tender through government resolution (GR).
Both the Adanis and Maharashtra government will earn revenues generated from the free-sale component of realty as well as TDR transactions in an 80:20 ratio respectively. The private player will be entitled to geographically unencumbered Transferred Development Rights (TDR), known as construction TDR, as well as resale rights.
Thus, the Adanis will effectively be able to monetise the DRP much earlier – even after 1-2 years – as per the government formula worked out for the project once 10-15 per cent of work has been accomplished to reach the plinth level of construction.
The plan envisages that the TDR allocated to the developer will be listed on the digital website, allowing major realty players to purchase it at a premium. This will generate a windfall for the DRP developer in exchange for their upfront capital fund infusion in the Dharavi redevelopment over the next 7 years.
To achieve the quick timeline of 1.5 years, DRP could resort to modern construction methodology and new-age technology that allows for the construction of one slab in a mere nine days – allowing for 35 slabs in 2 years.
DRP’s CEO explains: “TDR rules must be conducive to the market and so, we introduced a condition that any surplus TDR generated will be non-indexed. That is the basic plan. Before 2017, TDR was indexed to local ready reckoner rates and could only be loaded northwards of the land parcel being developed – that was changed in 2017.”
While there are three types of TDR – Road TDR, Municipal TDR and Slum TDR – the DRP was envisaged with the intention of according priority to Slum TDR, as slums get the uppermost priority.
As a condition of the DRP deal, Adani, tasked with clearing up the slums of Dharavi, must pay for the salt pan and other seafront land allocated by the state government at Axsa beach on Madh Island and in Mulund. This will be the prime service provided by the international port developer.
Under the erstwhile plan, a large number of slum dwellers were excluded from the Dharavi recast rehab plan. The Adani Group, as lead partner, is now committed to procuring land elsewhere to rehouse them. The government will merely facilitate the process.
The rehousing plans for ineligible residents were the crucial step – without this, the project would not have taken off. In addition, rental housing for the erstwhile ineligible residents within Dharavi, with the option to purchase a home after a decade, was the gamechanger that brought them on board.
A person familiar with the DRP’s structuring says: “The floor space index (FSI) earned by the SPV called Navbharat MegaDevelopers Pvt Ltd (NMDPL) – of which Adani Properties controls an 80 per cent stake, with the balance 20 per cent resting with the state government – will be linked to the outcome of the total rehab buildings to be constructed for the total number of residents derived as follows:
The TDR rate will be calculated on the basis of the free housing units provided for the eligible Dharavi residents, as well as the ineligibles rehabilitated elsewhere without the Dharavi realty, as per the data provided under Annexure I and Annexure II (eligibles and ineligible residents), including the business units, and used to compute the per sq ft rate of accruable TDR.
According to industry experts, the FSI earned by the SPV (NMDPL) will be an outcome of the total rehab buildings to be constructed for the total number of residents derived from Final Annexure-II of the redevelopment project.
Moreover, before any profit can be realised, the SPV’s obligation is to maintain the infrastructure and societies at its cost after redevelopment for 10 years, which is itself quite significant. Furthermore, Adani Properties will also bear the interest cost of investment made for rehabilitation from now until the realisation of sales.”