Living in slums and stuck in a cycle of debt

Long-term, multi-institutional survey in Bengaluru shows that over 70% of the families in slums live on loans

Updated - February 06, 2018 11:34 am IST

Published - February 06, 2018 01:08 am IST - Bengaluru

 A slum at Bellandur in Bengaluru.

A slum at Bellandur in Bengaluru.

In Ashok Nagar slum, sandwiched between a busy railway line and a storm-water drain at Pulikeshinagar, Ramesh, 42, and his wife Kutamma, 36, know that their only hope lies with their children. Until then, they remain bonded to the city and bonded to debt.

Each month, they tabulate their earnings: Ms. Kutamma works as a hospital attender and earns ₹8,000 a month, assuming if she does not take even one day of leave; and Mr. Ramesh works as a daily-wage labourer, earning less than ₹4,000 a month. Their expense on their children and groceries comes up to a minimum of ₹11,000 a month.

With little savings, a small jolt of illness, travel or lack of work, sees the family fall into new cycles of debt.

Their story is not an isolated one. A long-term, multi-institutional survey conducted by NGO Fields of View (FoV), with researchers from the Netherlands (University of Amsterdam), Centre for Budget and Policy Studies (Bengaluru), and Washington (World Resources Institute), shows that over 70% of the families in slums live in debt and are trapped in their slums with no where to go.

The study was primarily conducted to tabulate what slum dwellers contribute the city, and in the process, bust myths that those living in slums are freeloaders, said Bharath Palavalli from FoV.

“Even without major health, remittances, loan or emergency costs, slum dwellers just about manage their living expenses. Debt, either in monthly deficit or loans, is seen in most households,” he said, adding that as debt is taken from moneylenders, the rates of between ₹1 to ₹3 per ₹100 borrowed ensures that the cycles of debt continues.

Education not helping

Qualitative data collected from the households shows that education does not have a correlation with employment.

Even with better schooling, children earn as much as their fathers who had little to no education. Similarly, the earnings across generations have not increased as much as incomes in other sections of society.

“There is a willingness of parents to spend on education, often putting their children in private schools and with tuitions. But, there is no evidence that this has led to the children getting better pay. In some ways, the job profile in the formal market continues to rise, so even for a technical training or under-graduation degree it is just the basic, entry-level jobs,” said Mr. Palavalli.

At the Ashok Nagar slum, Pradeep B., 25, is perhaps the only B.Com. holder among more than 1,000 residents. With a steady salary, he has shifted out of the slum — again, perhaps the only one to have done. However, he is acutely aware that his stretched finances, including loans and higher rents, are seeing him on thin ice. “I can only manage my commitments and am in debt. While I may have job security, I do not have financial security as the rest of my colleagues are MBA holders or master’s degree holders. For a person out of the slum, even with my education, I will remain in entry-level jobs only,” he said.

This, says Isaac Arul Selva, who helped out in the study and is a long-time activist working for the welfare of slum dwellers, is a result of the lack of social capital within the slum communities. The study shows that nearly 80% of slum dwellers are from the socio-economically backward Scheduled Caste and Scheduled Tribe communities, while 11% are from forward castes.

Social capital

“Dalits and tribal communities do not have social capital that would help them with upward mobilisation. Without social capital, even an educated lower caste person will not have access to opportunities to increase income. Whereas, in forward castes, slum dwellers have leveraged their caste networks to land sub-contracting and contracting jobs,” he said.

The result, as shown in the study, is that less than 10 people, among the over 5,000 covered in the survey, had known of someone who had managed to find permanent residence outside slums. For many, triggers of disease, increasing rents, deaths in families, loss of work, and accidents have seen them return to the slums and debt.

‘Government credit can be a solution’

Even if the prime concerns of toilets and basic amenities are fixed, for slum dwellers, the cycle of debt would continue.

Mr. Selva said the only way to get the urban poor out of endless debt is to ensure an increase in income by specifying minimum wages, along with ensuring that subsidies reach the poorest.

“What people do not understand is that slum dwellers who work as domestic help or mechanics actually subsidise the middle-class as their incomes are so low. A corresponding growth of middle and upper class income must reflect in the wages they give,” he said.

One way, said researcher Mr. Palavalli, is to ensure government credit or low-cost loans are given for housing. “In the city, even if a universal basic income is enforced and salaries go up, the expenditures of slum dwellers would go up to. Rents in slums will increase as well as other costs which are low now because their spending power is low. However, ensuring housing is given at low-interest loans, rather than having to fall back on moneylenders, is one way to improve their standards of living,” he said.

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