After treading the red carpet at the Oscars in Los Angeles in February, the child stars of Slumdog Millionaire are on the streets: Mumbai authorities have demolished their flimsy shelters only three months after promising them real houses. Azharuddin Mohammed Ismail and Rubina Ali Qureshi are just two of some 60 million slum-dwellers in India and their Garib Nagar and Barat are just two of about 52,000 slums.

After treading the red carpet at the Oscars in Los Angeles in February, the child stars of Slumdog Millionaire are on the streets: Mumbai authorities have demolished their flimsy shelters only three months after promising them real houses. Azharuddin Mohammed Ismail and Rubina Ali Qureshi are just two of some 60 million slum-dwellers in India and their Garib Nagar and Barat are just two of about 52,000 slums.

The film’s director, Danny Boyle, has just intervened to help the children but the problem is bad government policies – nothing that his charity or their bulldozers, large wads of cash or grandiose public schemes can solve. Dharavi, where Slumdog Millionaire was filmed, has a million people in less than a square mile in the heart of Mumbai. It too is threatened with “slum rehabilitation” by the same authorities that perpetuate the problem.

Campaigners complain constantly about the squalid conditions while governments promise constantly to improve the lives of the 55 per cent of Mumbaians who live in slums. Very little has ever materialized.

But for the inhabitants, slums, unlike equally poor rural areas, offer immediate opportunities for families to lift themselves out of poverty. Dharavi grew from a fishing village as job-seekers flocked to Mumbai. Temporary shelters became permanent homes. Today, its economy generates between half and one billion US dollars thanks to the recycling business, tanneries and plenty more – although little more than a few dollars a month stay in workers’ pockets. Of course, Dharavi is a huge embarrassment to the authorities – a reminder of the poverty afflicting just under half of India’s population and close to Mumbai’s business district and the airport. Indian authorities have tried ignoring slums or removing them in a cycle of fear, corruption or neglect.

So it isn’t hard to understand why their denizens distrust the latest, multi-billion-dollar, Dharavi Redevelopment Project (DRP). A private developer promises to bulldoze Dharavi and rehouse the inhabitants in 225sq.ft. (30m2) apartments and give workshops a space too. Worse, in a country where rights are for sale, there is no guarantee that all families will be rehoused. India’s slum-dweller associations and civil rights groups have denounced numerous redevelopment projects, including Dharavi’s, as corrupt deals between politicians and business developers.

The root cause of slums is not unexpected population growth or shortage of land: it is a double plague of a lack of property rights and poor planning policies – from Kenya to Brazil. When people own their property, they have incentives to improve it and they can get loans for those improvements: property rights beget capital, which begets innovation and investment, which beget wealth. In Mumbai, for example, rent control froze rents to the level of 60 years ago, meaning most tenants cannot afford to move out and others cannot afford to move in, so accommodation in Mumbai is the seventh most expensive in the world.

Simply rehousing slum-dwellers in government dwellings will not address these problems. It will only shut down small entrepreneurs and keep the poorest dependent on the state. Before long, a new slum will develop.

The growth of illegal settlements around the world has proved that the poor are not helpless: they have invested money and remarkable effort into building homes and businesses. With the fundamental right to own property and do business, the sequel to Slumdog Millionaire could look like Bride and Prejudice.

Caroline Boin is Project Director at the London-based think-tank International Policy Network, working on sustainable development and the environment.

This article was syndicated by the Alternate Solutions Institute’s Syndication Service to the local print media, and was carried by The News International on July 13, 2009.