UPA to try 'de Soto model' for slum development

The day Kumari Selja assumed charge as the Union minister for housing and urban poverty alleviation in the second United Progressive Alliance government, she got an unusual gift: a set of two books from none other than Prime Minister Manmohan Singh.

The books, The Other Path and The Mystery of Capital, were by eminent Peruvian economist Hernando de Soto, hailed as the “poor man’s capitalist”for his work on the informal sector. Time magazine chose him as one of the five leading Latin American innovators of the century and included him among the 100 most influential people in the world in 2004.

Singh asked his Cabinet colleague to read the two books for a better understanding of issues relating to urban poverty and slum development.

On Tuesday, de Soto arrives in India to help prepare a road map for slum development in the country. De Soto and his Lima-based Institute for Liberty and Democracy (ILD) will become the sherpas of the Manmohan Singh government, helping it merge the informal economy in the slums of the country with the formal or mainstream one.

This is the first time the Union government will be taking the help of foreign experts for slum development, according to sources in the ministry of housing and urban poverty alleviation.

The government, however, says it is not about to import a foreign model of development into the slums of Mumbai or illegal colonies on railway lands in Kolkata.

“The group led by de Soto will be providing us a methodology for changing the face of the informal economy through routes like property titles and land ownerships,” Kiran Dhingra, secretary in the ministry, told Business Standard.

This will be de Soto’s second visit to India this year. He had come in February to deliver a lecture at the Federation of Indian Chambers of Commerce and Industry.

He had also met Congress president Sonia Gandhi, the party’s youth icon, Rahul Gandhi, and the Prime Minister.

His team from ILD arrived on Sunday and has begun the initial talks with the ministry officials. Sources in the ministry said the team would be doing the work for free, even paying for their air tickets.

While de Soto will roll out an overall road map on the issues of property rights in the informal economy of the slums, the government intends to also take his advise on the implementation of its ambitious Rajiv Awas Yojana for the urban poor.

“Rajiv Awas Yojana is currently in its preparation mode. We will be holding talks with the ILD for its speedy and better implementation,” said D S Negi, director of the National Buildings Organisation, an attached office under the ministry of housing and urban poverty alleviation.

Justifying the decision to bring in de Soto, Dhingra said: “He brings with him a global perspective and years of experience. He is one of the leading names in this field. And, if ILD joins hands with us, then the slum development issue gets a global recognition as well.”

“De Soto’s approach is essentially based on capitalist economic principles. Our government will try to meld them into our socialist objectives,” he added.

A non-profit organisation, the ILD has advised governments in many countries to vest slum-dwellers with property rights to maximise the economic use of assets in slums, create organisational forms to increase the productivity of enterprises and provide identity devices to allow entrepreneurs to operate in expanded markets.