Slums in Delhi, despite being located in the capital city, are often relegated to the periphery when it is a question of access to basic amenities. Saddled with usually inefficient government provision of services, these slums do not even have the option of organised private alternatives since the private sector presumes that they do not possess enough purchasing power.

Consequently, residents of Delhi's slums often pay a penalty in terms of quality and/or cost for most basic services. To ascertain the nature of this penalty – termed the "poverty premium" – we undertook a survey in Sanjay Colony, a 'notified slum' in Okhla phase II, Delhi, with a population of around 40,000, in June 2006. We used stratified random sampling to select 95 households.

C – 271, Sanjay Colony,
New Delhi
11 am

It's a hot May morning and the sun-sheltered house in front of us looks inviting. We notice an old man sitting on a staircase opposite the house and in the hope of getting invited inside, we begin with our staple starter: "Bijli pani ka survey karna hai, uncle… yahan kaisi suvidhayen hain…" (We have to carry out a survey regarding the water-power situation; what facilities are available here.)

"Kya suvidhayen?" He cuts us short. "Koi suvidha nahi hai yahan". ("What facilities? There are no facilities here.")

We ask him if he would elaborate on that. He willingly obliges.

A Delhi Jal Board tanker arrives. Pic: Aditi Dimri.

Jamir Ali is close to 60 years of age, and has spent nearly half his life in Sanjay Colony. His extended family of eight lives in a two-room house. As we sit down on one of the numerous water containers lined up outside the house, his wife comes out and offers us water. That's the cue for our first question.

It turns out that water tankers scheduled for the day, on which most residents rely for their basic needs, haven't arrived yet. That explains the queue of empty containers. We point to a water pipeline running along the lane – and are promptly told that taps in the area ran dry within two months of their installation which, interestingly, was right before Assembly elections.

"So what will you do about water now?"

"We'll go shopping for it."

We are puzzled.

He continues: "Here if you want water, you beg, borrow or buy."

And over the next one hour, as Ali speaks, the puzzled look gradually wears off our faces.

Water is the most valued commodity in the by-lanes of Sanjay Colony, deriving its value from the fact that there is never quite enough of it. Within minutes of striking a conversation with residents, woes of water come pouring out in a way the manna from their taps never has. On paper, the Delhi Jal Board (DJB) is supposed to provide water free of cost to notified slums through tankers. In reality, such provision is massively inadequate for this 40,000-strong community. Inadequacy of the government provision, coupled with lack of well defined user rights over free resources (DJB tankers, public taps/borewells), compels residents to look for other sources of water – usually at a steep price.

Residents in Sanjay Colony consume water at an average of Rs.45 per kilolitre (KL), whereas for priced municipal connections throughout the city, most consumers pay between Rs.6.67 and Rs.11.83 per KL.

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The main avenues for purchase of water are: public toilet complexes where borewell water (meant for consumption within the complex) is 'unofficially' sold, and private bores/taps in nearby areas from where residents carry home water in containers. Nearly 60% of residents' water consumption comes from these priced sources.

Interestingly, the market for water has established a rigid equilibrium in this area. One rupee for every 20 litres seems to be the universal tariff, regardless of the source or amount of purchased water. As per our survey, the average expenditure incurred on water here is Rs.236 per month per household. This includes the actual "product price" as also the cost of access (cost of transportation, bribes paid) and the opportunity cost incurred in looking for water during work hours. For an average household, water consumption of 5.28 kilolitres (KL) a month, this implies that residents here consume water at an average of Rs.45 per KL, whereas for priced DJB connections throughout the city, most consumers pay between Rs 6.67 and Rs 11.83 per KL, as per the DJB tariff card.

12:15 pm

We finally get invited inside. Ali, who had left us a minute back, returns with a small ceiling fan in his hand and reinstalls it on his ceiling for us. As we sigh in relief, he warns us that it may not last for long. The reason: He has not paid his electricity dues for about a year now. This non-payment was intended to be a community initiative against the huge bills slapped against residents by the private power contractor. Gradually, though, most residents buckled under pressure and now he's the only one left protesting.

"This 'contractorisation' of power has to be ended. But who listens to us?"

Post privatisation in 2002, electricity to this area is provided by the Reliance Energy-owned BSES (Bombay Suburban Electric Supply Ltd.) Rajdhani Power Ltd., through private contractors. Billing is done based on the meters installed in most houses. Getting a new connection costs Rs.1200, while purchase of a new meter costs at least Rs.400. The monthly bill comes to Rs.175 for usage of 70 units or less; for consumption above 70 units, Rs.2.20 is the cost per unit.

The 'contractorised' system is a cause of distress for residents, since contractors work as a cartel. Residents have little freedom to choose a contractor of their choice, or even to install their own meters since contractors insist on putting up their own devices (which leads to complaints of meter tampering). There is also lack of consistency in billing – though the unit charge is Rs.2.20, some people claim being charged Rs.3.50 per unit. There is a monopoly power wielded by contractors in the Colony and so residents have little choice and feel cheated even with the presence of seven different contractors.

Thus, there are several problems faced by residents despite paying for electricity and despite the fact that a legal system is in place to take care of the power situation.

Students of the area's municipal school sitting outside due to lack of enough classrooms. Pic: Amiya Sharma.

1:00 pm

We sit down for lunch, and are introduced to Ali's 14-year old daughter Shehnaz. We ask about her studies, she replies that she dropped out of school after class V.


"Government schools are too far off. My father was apprehensive about the traffic on the main roads… There was a case two years back where a girl lost her leg in an accident…"

The choice of schools in Sanjay Colony is severely hampered by constraints of finance and access. While financial limitations might be expected, what demands attention is the huge role played by distance-to-school issues. This is true especially of younger children and girls. Most government schools are half an hour away on foot, and en route children have to cross busy intersections. In the case of girls, there is another kind of parental anxiety – respondents recount incidents where female students were harassed on their way to school. This is why many parents insist on chaperoning their daughters to school, and when that is not possible, quite a few girls drop out of school in their higher classes.

The average yearly expenditure incurred on children's education in Sanjay Colony, as per our survey, is Rs.4602 per household. This translates into Rs.384 per month, about 5.6% of the average monthly household income. In the 95 households surveyed, there were a total of 167 school-going children. 108 of them (i.e. 66 per cent) go to government schools, 47 (29.5 per cent) are enrolled in a school run by the NGO Deepalaya and 12 (i.e. 4.5 per cent) have opted for private unaided schools. However, when families were asked their preference assuming no financial constraints, an overwhelming 83 per cent rooted for private schools citing "better quality of education" and "English as the medium of education".

Over lunch, we get to know of Shehnaz's tuberculosis problem. She had first gone to a local quack with her coughing fits, and then moved on to Safdarjung, a government hospital. She was on daily medication for the next 6 months. When the cost of medicines started building up, they looked around for help. It appeared in the form of a medical centre run by a non-government organisation. "That was fortunate. If we hadn't come across it, we might have had to stop her medication", Jamir Ali tells us.

The nearest government health facility is an municipal dispensary 7 km away. It takes a good 30-45 minutes to reach the two government hospitals, Safdarjung and AIIMS. These access issues make 80 out of the 95 surveyed residents resort to local quacks for primary healthcare. There are around 50 quack-doctors within the colony, whose authenticity is tough to establish. The cost of consultation here is Rs.30-40 which includes one dose of medicine. For serious cases, residents choose between the two government hospitals and private hospitals around Okhla. Even though government hospitals provide treatment as well as certain medicines free of cost, 54 per cent of the people still opt for the more expensive private clinics. Distance and the waiting time at government health centres are the two major reasons behind this.

As per our survey, assuming no serious illness or accident in the family, a household spends Rs.300-400 per month on healthcare (consultation fees, medical tests, cost of medicines and transportation cost). In case a family member is on regular medication, this amount may go up to Rs.800-1000 per month.

An aspect closely related to health is sanitation. Our survey throws up surprising statistics about the usage of public toilet complexes. Despite three such complexes in the vicinity, only 15 per cent respondents use them regularly. Sewage lines are restricted to the outskirts of the Colony and it costs a minimum of Rs.6,000 to set up a toilet at home. Thus, the most common option (used by 62 per cent residents) is the jungle land behind the slum, despite concerns regarding hygiene and women's safety. The main reason behind under-utilization of public toilets is the fees charged: One rupee for toilet and two for bathing.

And for getting drains cleaned – which is supposed to be taken care of by municipal workers – each household pays up Rs.15-25 per month.

Suddenly there is a commotion outside – water tankers have finally arrived. As the family rushes off with their empty containers, we are left munching our food.

2:30 pm

After lunch, we get ready to wrap up our survey; it has taken too long already. But when Jamir Ali returns, he has a direct question for us: Can we arrange for a loan for him? We ask if he has tried obtaining credit under the various bank schemes targeted at the urban poor. Yes, he replies. He did try, but he "could not afford the bribe". We ask for details.

"You have to slip in 5,000 to get a Rs.50,000 loan sanctioned… what use is it then?"

Not deemed creditworthy by commercial banks, residents have to resort to local moneylenders when faced with major expenditure. Most people, however, simply avoid borrowing on interest and try to make do with either their savings, or by asking friends/family for help. The reason for this aversion to borrowing is not hard to figure out – local rates of interest are exorbitantly high. Community fund ("chit funds") interest rates at 2-3 per cent per month (24-36 per cent per annum) are only the lower end of the spectrum. Moneylenders shell out loans at nothing less than 5 to 10 per cent per month interest. This converts into an interest of 60 to 120 per cent per year, as against the usual bank rate of 8-12 per cent per annum. Loans at short notice, in fact, are charged an interest of 15 per cent per day! No wonder borrowing money is not a popular option in Sanjay Colony.

2:45 pm

We prepare to leave. One last look around the room and we estimate it to be about 6 feet by 8.

We know we should be moving, but we have to ask how he came in possession of the land. He relates to us his story, and wraps it up with a question:

"I've lived here for 30 years. My entire family stays here. My daughter knows no other house. And tomorrow they'll just hand us a notice telling us to pack up and leave. Am I not worth even this 25 square yards of land?"

* * *

The term 'urban poverty' is as difficult to define as the phenomenon itself is easy to encounter. Poverty premium is defined to be the differential between the "real cost" per unit of a commodity paid by the urban poor and the formal market price paid by more affluent residents. "Real cost" includes the actual price paid for a commodity as well as hidden costs like cost of access, opportunity cost of procuring the service, cost incurred due to poor quality of the product, etc. In other words, the premium can be qualitative as well as quantitative in nature.

The reasons for poverty premium are numerous. The pertinent point is this: Despite incurring costs on most basic services, are residents of urban slums getting any value for their expenditure, or are they simply being penalised for not having a 'legal' residence? Don't they deserve reliable and better quality services? What should or can be done about this? Is it fair for residents to end up paying a penalty for 'free' water? Will setting up more public toilet complexes help? Why are special bank credit schemes not reaching the target community at all?

The questions are innumerable and so, perhaps, are the possible solutions. Although the phrase "urban poor" usually evokes vague equations with "people in slums", urban poverty is far from homogenous in nature. This is probably why various government initiatives targeting India's urban poor often fall short of expectations. A macro approach to the poverty issue won't do, and a more intensive micro analysis of individual problem areas is needed. The key lies in understanding the needs of this specific community of urban slum dwellers and acting with sensitivity, not just out of political considerations.