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By: Hari Sud
May 02, 2006
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Western media headlines as usual are as follows – twenty five percent
of Indians live on less than a dollar a day and seventy percent live on
less than two dollars a day. The forgoing was the headline of May 9, 2005
in a major international newspaper. Others headlines are not any less
mischievous. These are all meaningless analysis. It does not reflect that
same amount of money has differing values in different places. A more
acceptable and bit accurate description of incomes in countries is
Purchase Power Parity (PPP), which is, pricing identical products and
services as needed by the local population in different countries, thus
establishing a new and a more equitable exchange rate. The foregoing is
applicable mostly to tradable goods. The PPP will put India’s GDP at $3.7
Trillion. This will raise daily monies of twenty five percent of Indians
at the lowest rung of the society to seven dollars. The latter is still
low but is much higher than the Western media would like to project. The
forgoing is not the point; the point is that poverty is a major shame in
India’s otherwise decent, scientifically advanced, peace loving and at
times turbulent image. Poverty creates slums and slums breed hopelessness
and crime. Hence it needs to be tackled as an integral part of economic
development.
The key question that arises - Is the current hype in economical
development in India alter landscape for the very poor?
The answer is that, not much will change in next 20 to 25 years. The real
impact will be felt later than twenty-five years. That is when 8% growth
trajectory will take the PPP daily income of the very poor in India from
seven dollars to forty dollars. By then, a $20 Trillion GDP economy (PPP
basis) and $600 billion in exports (year 2001 basis) will add one hundred
and fifty million jobs, of which forty to fifty million will go to the
very poor segment of the society. This general prosperity will not only
put food on the table but will add to better living, better housings etc.
In the intervening period of 25 years, rising income levels will
definitely add to the exodus from the slums to planned living areas. The
forgoing also requires massive governmental effort to house people
properly.
Let us examine this issue of poverty and slums in Indian cities and its
relationship to the betterment of economic conditions of the masses, a bit
further?
What Causes Slums in the Cities in the First Place?
It is vicious cycle of population growth, opportunities in the cities
(leading to migration to the cities), poverty with low incomes, tendency
to be closer to work hence occupying any land in the vicinity etc. The key
reason out of all is the slow economic progress. After independence in
1947, commercial and industrial activity needed cheap labor in the cities.
Plentiful was available in the rural area. They were encouraged to come to
cities and work. People, who migrated to the cities and found work,
brought their cousins and rest of the families to the cities. Unable to
find housing and afford it, they decided to build their shelter closer to
work. First, one shelter was built, then two and then two thousand and
then ten thousand and on and on. Conniving governments provided
electricity and drinking water. Politicians looked at the slums as vote
bank. They organized these unauthorized dwellers into a political force;
hence slums took a bit of a permanent shape. More slums developed as more
population moved to the cities. By mid sixties Mumbai, Kolkata, Delhi,
Chennai and all other large cities dotted with slums.
Very poor people live in slums. They are not the only one dwelling there.
Fairly well to do people also reside there. They are either offspring of
the slum dwellers that found education and an occupation. They have
prospered but are unable to find affordable housing, hence have continued
to stay in the shantytowns. Others are avoiding paying rent and property
taxes. The latter is more often the case. It is not unusual that in the
dirtiest of slums, where misery prevails that TV sets, refrigerators and
radios are also blaring music. This is quite a contrast from the image
which one gets in the media or from the opportunist politicians.
India’s capital of Delhi has a million and a half out of fourteen million
living in slums. Mumbai is worst with greater percentage living in slums.
Other big urban centers have done no better. Newly built cities like
Chandigarh and surrounding towns where shantytowns could have been avoided
altogether have now slums. The forgoing is India’s shame despite huge
progress.
How will the growing Economy impact Poverty and the Slum dwellers?
As stated above, 8% growth rate of Indian economy will push per capita GDP
to $2,000 level in about twenty to twenty-five years (PPP per capita GDP
will be much higher). The forgoing presupposes that the population does
not explode in the near future but continue a healthy 1.5 to 2% growth.
That is where the magic equilibrium of prosperity and desire to live a
better life begins. These two together usually vanish poverty and slums.
With availability of affordable housing and jobs, slum dwelling is the
last thought on people’s mind.
On the other hand if the above does not happen then slums dwellers will
triple in 25 years and so will the poverty. Delhi will have four and a
half million-slum dwellers. Kolkata and Mumbai will have even bigger
numbers. India’s shame will have no end. To avoid that, India’s economy
has to remain at a high state of growth. Jobs created by the economic
growth, hence higher incomes are key criteria for poverty reduction and
slums elimination. The forgoing together with the current urban renewal in
progress in the urban areas today will give cities in India a new look.
Higher incomes will create a demand for in-expensive housing, which will
have to be met with innovative use of land and building techniques.
Government provided housing would be a great failure as it has been
elsewhere in the world. Instead sufficient cash has to be placed in the
people’s hands together with in-expensive land that people’s housing
program become efficient and affordable. In addition slum living has to be
made unattractive with land taxes and denial of social services. Slum
colonies, which opt out of current hopelessness, should get a better deal
in housing which replaces the slums. This followed with rapidly growing
rural economy will kill migration. That will also reduce pressure on
housing.
No single policy has ever brought an end to poverty and slums. It is a
concerted effort and better policies, which will end it. No country in the
world has ever been able to end poverty and slums completely. That
includes the richest nation of the world – USA. The point is that if
economy progresses and special effort is made to uplift the poor, poverty
and slums will be overtaken by better economic conditions of the people.
How did US Tackled its Slums?
US had its share of poverty and slums in around the immigrant dominated
cities. New York and Boston had great amount of poverty and slums at the
turn of the twentieth century. These slums were further worsened with the
arrival of newly liberated African-American population from Deep South.
The era pictures give a glimpse of everyday life and it is not pretty.
People without job and with no prospects crowded cities in the North. A
new word, Ghetto was coined, which described these places. Immigrant from
different background or race crowded together and gave rise to Ghettos. At
that time US did not have control over its economy and Civil War debt and
additional monies borrowed to rehabilitate agriculture and commerce after
the Civil War was unpaid. As twentieth century progressed a concerted
effort was made to clean up the Ghettos and push people inland with free
grant of land and promise of prosperity. Industrial Revolution, which was
slow in reaching America from Europe, finally arrived. And it made the
difference. It provided the much-needed jobs to the immigrants and
colored. Also, free land in the West gave rise to food self-sufficiency
and paying off of all Civil War and post Civil War debts. First World War
gave US economy a boost and America joined the select group of countries
of Europe in prosperity. Poverty by the end of the Second World War was a
thing of the past. In just fifty years, i.e. by 1950, US were nation of
160 million souls, all prosperous and all well employed (forget the
habitual lazy). That does not mean that all the Ghettos disappeared. They
continued to exist. They exist today, but on a much lower scale. These are
not eyesores.
One critical factors which vanished slums and poverty in US was
quadrupling of the US economy from 1900 to 1940. A free wheeling economy
created industrial giants and a super rich class. Need for war material
during the WWII resulted in creation of huge industrial infrastructure and
innovation. Post war reconstruction in Europe added greater impetus to the
economy. General well being of the people living in the poorer section of
the cities dramatically improved. US raced ahead of Europe and are still
ahead, 60 years after the WWII. In most cities, ghettos disappeared or
shrunk. Urban renewal and building boom in last sixty years has completely
changed the landscape of the country.
There is a parallel here. Poverty and slums in India are at the same level
as they were in beginning of the twentieth century in America. Economic
growth over fifty years vanished them. The same is possible in India if
the economy sustains the 8% growth trajectory.
Slums and the Great Briton
Great Briton was a great big slum before they became a colonial power in
the nineteenth century. For eight hundred years prior, until 1800s, Great
Briton was an agrarian society, where the lord lived happily in his Manor
and Castles and the masses lived in a great squalor. Slums were
everywhere. London had the biggest slums. Colonization brought prosperity
and prosperity brought in a huge effort to improve the lot of the people
and clean up of the cities. That is when the unemployed and slum dwellers
were pushed to newly developing industrial hubs of Sheffield, Birmingham,
Liverpool and Manchester. Compared to that Delhi, Kolkata were heavens.
First slums in Kolkata appeared in 1850-70 as a result of systematic
destruction of textile industry in Bengal and destruction of trading
infrastructure in and around Kolkata. Slums elsewhere followed.
It took all the Victorian age from 1825 to 1900 to vanish poverty and
slums in England. Their GDP multiplied 8 times over this period. British
factories produced goods and services which were sold at profit in the in
the colonies. Work for everybody in England was the cornerstone of
building well-serviced cities.
The point is that vanishing poverty and slums follow closely with economic
development. Faster the economic development, sooner will the poverty
vanish and with it, the slums.
How did China handle its Poverty and Slums?
Chinese had a unique way of making slums disappear from its urban centers.
Permit system to live in a city or in a particular neighborhood was
introduced just after the Communist took control in 1949. That means that
great rural population migration to the urban areas in search of jobs was
arrested. In addition the war ravaged eastern provinces where rural
population had moved to the cities and into the slums, were emptied out.
Nobody questioned Mao Tse Tung’s wisdom; hence he had a free hand. People
were permitted to return to their homes in the cities only after proof of
their residency had been established. Outsiders were sent back to their
own homes and land in the rural area. Future residency in the cities was
permitted on a permit basis only. Hence major problem of unplanned urban
squatting was prevented. Even today the foregoing policy continues. The
FDI built cities of Guangdong province carry on with the permit system
established in 1949. In order to move there, a person has to have a job
and place to reside. The latter could be a factory provided bunk bed. This
prevents urban squat. The above is no comparison to how poverty was
vanished in UK, US and elsewhere. Major economic progress in last 20 years
has re-invigorated the cities with investment and reconstruction. Whether
the same is true in the China’s rural areas is a debatable issue. China
likes to pretend that poverty has been vanished. Published reports state
otherwise.
http://www.economist.com/World/asia/displayStory.cfm?story_id=5636460
Urban Renewal In India
Urban renewal is in progress in India in a big way for the last 50 years.
The British starved cities in India of the funds for two hundred years.
They only built regal palaces for themselves in Delhi, Shimla and Kolkota.
No new monies was made available to the people to renew and rebuild, hence
Moghul Delhi presented a decaying and a rundown look, when they finally
left India in 1947. The problem got compounded with migration of people
from rural areas. Expanding industry and commerce needed them hence
migration was encouraged. Thus urban slums and squatting began in a big
way. Today, some estimates place 10 to 15% of Delhi population as slum
dwellers. Slums in Kolkata predate Delhi slums. So do the Mumbai slums.
They all began the same way – people’s livelihood was destroyed or they
were invited to work in factories without adequate housing. The problem
grew acute with huge population growth after 1950. From 1950 to today,
cities lacked funds to renew themselves and help build additional housing.
People lacked adequate jobs hence are caught in the poverty cycle.
Only recently a huge building and construction boom has started in all
cities in India. Whereas governments are concentrating on building
infrastructure and industrial base, private construction is building work
places, shopping districts and housing for the middle class. The poor and
slum dwellers are not there in any building equation. Cheap housing
projects are lowest in the category. Hence slum dwelling has become a way
of life.
How Long the Poor have to wait?
If the experience elsewhere is a guide then poverty, slums and urban squat
will be a vanishing phenomenon, if the rapid economic progress keeps its
pace. Today we would have smaller of the slums, had economic policies of
the present were in place 50 years back. Only now, all signs point to a
rapidly rising GDP together with rising per capita GDP. With rise in
income level, tendency to head to the slums has lessened. Die-hard slum
dwellers that wish to pay no taxes and spend nothing on housing will most
certainly continue to stay there. Others will prefer to move out. This is
a normal phenomenon. It happened in US and elsewhere. It will happen in
India too. An economic equilibrium has not been reached in the society
yet, where enough money in people’s pocket will persuade them to vacate
the slums. This won’t we reached for another 20 to 25 years. By about
middle of this period with increased availability of housing and higher
incomes, the growth in slum dwelling will be arrested. Decline will begin
only when much higher incomes are reached (as stated above), provided
India does not make the mistake of regularizing the slums/bustees with
land tenure on tenable land and other amenities. That is a sure fire
method to keep the slums going. People will always wait for free grant of
land ownership even if these grants never materialize. Even the
possibility of this ever happening in a distant future will keep the slum
dwellers in the slums.
Conclusion
Poverty, slums and urban squat are not going to go away in next 20 to 25
years. Reversal of this phenomenon will begin after sufficient economic
progress had been made. Eight percent GDP growths is a good sign. With
quadrupled GDP in 25 years, there is a good chance that the new and
upcoming generation may stay away from slum dwelling. It may take another
25 years before the slums are vacated.
Hari Sud
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