House in a Slum? You Can't Afford It.

It's a Catch-22. Mumbai's soaring real estate prices made this idea conceivable. The execution made it impossible.

Today, back in Dharavi, the cross-subsidy theory drives the transformation of the neighborhood's tenements into apartment buildings. Developers are frenetically building middle- and upper-class housing there and across the city, while millions of slum and lower-class residents continue living in ramshackle accommodations.

That's where people such as Gurav enter the picture. In one scenario, a group of slum residents band together and invite a builder to raze their shacks and build new apartments, some to turn over to them and some to sell at the market rate. There are now several such buildings in Dharavi and elsewhere in Mumbai.

The interesting thing about Gurav is that he didn't belong to such a group. He hoarded his money and bought his flat from the original owner, who knew its value and couldn't resist the temptation to sell. The man kept the money from the sale and moved back to a shack, Gurav explained to me during our visit. "In that slum over there," his daughter piped up, pointing out the window at an expanse of rooftops like so many matchboxes in the distance.

And that's one more twist in the cross-subsidy tale.

If you build at the rate that the housing crisis -- or an election promise -- demands, the market crashes, making a cross-subsidy unworkable. Therefore, you build slowly, so that housing prices remain high. But when prices remain high, some of the former slum-dwellers will sell their flats and move back to the slum. Sometimes that was their plan all along.

I have a vicarious personal interest in this whole tangle. Among other interesting jobs that he held in the Indian bureaucracy, my late father was Mumbai's municipal commissioner -- the equivalent of a mayor -- from 1969 to 1970. Low-cost housing was always his great interest, and for the last 14 years of his life, he ran a low-cost project in Mumbai's northern suburbs founded on the cross-subsidy principle. It has about 5,000 subsidized flats, plus about 1,100 others and commercial space for sale at market rates.

My father died last September, but the project goes on. Why does it work? Because the subsidy is small, so residents pay close to market rates for their little flats, and because it has taken so long to complete -- nearly 25 years. The slow progress troubled my father and his colleagues greatly. But they understood that in the convoluted world of Mumbai, this remains the only workable way to provide livable, sustainable housing for the poor. And yet the dilemma persists: The worst off can't afford even the subsidized flats.

As I downed a cup of tea with Gurav and his family in Dharavi, I found myself reflecting on the final, yet perhaps simplest, lesson in all of this. Anyone seeking to solve Mumbai's housing crisis must recognize the enormousness of the problem and proceed accordingly. Ponderously, even. Anything else is a band-aid. Just ask Madhukar Gurav. Two years after he bought it, his flat is worth more than twice what he paid. Naturally, he thinks he might sell and move. Where to? "To another slum," he says and smiles. "Where else?"

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Dilip D'Souza is the author of "The Narmada Dammed: An Inquiry into the Politics of Development" and "Branded by Law: Looking at India's Denotified Tribes."