Posts Tagged ‘informal system’

Formalization within an Informal System

December 22, 2008

Temporary housing has been set up across the road from my office for construction workers and their families who have come in from rural Maharashtra. I am not talking about temporary apartments with electricity & water access, these are shacks with metal slates used as siding. Water is delivered in the morning for the community and if I come to the office before 8:30am I walk right by them having their morning showers! So I asked a colleague what will happen when their work is done? He responded that although the construction workers and their families would move to the next job, the whole area would soon be re-inhabited by homeless families looking to establish slum housing. First these families will sleep outdoors he said, next they will set up basic, inexpensive siding using burlap sacks, and only once it is clear they will not be kicked out will they invest in more expensive building materials like metal and wood. Eventually the slum lord will come and start to collect “rent” from them to occupy the space and keep municipal and police officials from “noticing” them. After 1-2 years once a community of people becomes established those who can afford to will start re-enforcing their homes with bricks. Like Dharavi, one of the largest slums in Mumbai, this community will operate almost entirely outside of the formal economy.

My next question – why doesn’t the Indian government pay to build low-cost housing and transfer these communities? Well it turns out the government has tried and one of the problems is that families awarded the housing sell it on the market for income and then set-up a slum dwelling elsewhere. According to my colleague the main issue with new housing is that they are not used to formalized systems for rent, electricity, building maintenance, taxes….and revert back to slum lifestyle.

Now please keep in mind this is just one person’s version, and I am sure there are nuances that I have missed, but I do find it fascinating that there can be such complex formalization within a system that operates almost entirely within the informal economy. Below is a picture I snapped yesterday on my walk to the office.

Joanna Harries Personal Blog

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