News Hour- Parallel economy in Mumbai's Dharavi slums: Economic output estimated to be more than $1 billion

Dharavi

MUMBAI: At the edge of India's greatest slum, Shaikh Mobin's decrepit shanty is cleaved like a wedding cake, four layers high and sliced down the middle. The missing half has been demolished. What remains appears ready for demolition, too, with temporary walls and a rickety corrugated roof.
Yet inside, carpenters are assembling furniture on the ground floor. One floor up, men are busily cutting and stitching blue jeans. Upstairs from them, workers are crouched over sewing machines, making blouses. And at the top, still more workers are fashioning men's suits and wedding apparel. One crumbling shanty. Four businesses. 
In the labyrinthine slum known as Dharavi are 60,000 structures, many of them shanties, and as many as 1 million people living and working on a triangle of land barely two-thirds the size of Central Park in Manhattan. Dharavi is one of the world's most infamous slums. It is also a churning hive of workshops with an annual economic output estimated to be $600 million to more than $1 billion. 
"This is a parallel economy," said Mobin, whose family is involved in several businesses in Dharavi. "In most developed countries, there is only one economy. But in India, there are two." 
India is a rising economic power, even as huge portions of its economy operate in the shadows. Its "formal" economy consists of businesses that pay taxes, adhere to labor regulations. India's "informal" economy is everything else: the hundreds of millions of shopkeepers, farmers, construction workers, taxi drivers, street vendors, rag pickers, tailors, repairmen, middlemen, black marketeers and more. 
This divide exists in other developing countries: Experts estimate that the informal sector is responsible for the overwhelming majority of India's annual economic growth and as much as 90 per cent of all employment. The informal economy exists largely outside government oversight and, in the case of slums like Dharavi, without government help or encouragement. 

For years, the government has tried with mixed success to increase industrial output by developing special economic zones to lure major manufacturers. Dharavi, by contrast, could be called a self-created special economic zone for the poor. It underscores the determination of those migrants to come anyway.
"Economic opportunity in India still lies, to a large extent, in urban areas," said Eswar Prasad, a leading economist. "The problem is that government hasn't provided easy channels to be employed in the formal sector. So the informal sector is where the activity lies." 
Dharavi is Dickens and Horatio Alger and Upton Sinclair. It is ingrained in the Indian imagination, depicted in books or Bollywood movies, as well as in the Oscar-winning hit "Slumdog Millionaire." Dharavi has been examined in a Harvard Business School case study and dissected by urban planners from Europe to Japan. Yet merely trying to define Dharavi is contested.
"Maybe to anyone who has not seen Dharavi, Dharavi is a slum, a huge slum," said Gautam Chatterjee, the principal secretary overseeing the Housing Ministry in Maharashtra state. "But I have also looked at Dharavi as a city within a city, an informal city."
It is an informal city as layered as Mobin's sheared building - and as fragile. Plans to raze and redevelop Dharavi into a "normal" neighborhood have stirred a debate about what would be gained but also about what might be lost by trying to control and regulate Dharavi. Every layer of Dharavi, when exposed, reveals something far more complicated, and organic, than the concept of a slum as merely a warehouse for the poor.
Said Hariram Tanwar, 64, a local businessman, "Dharavi is a mini-India."
(Source- http://economictimes.indiatimes.com/)