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Dharavi slum was founded in 1880s during the British colonial era. The slum grew in part because of expulsion of factories and residents from peninsular city center by colonial government, and from rural poor migrating into urban Mumbai (then called Bombay).Modern day Dharavi came to be founded in the 1940's once the British left India, and once the majority property holders of the area, Shantilal Nemchand and Co sold off there property holdings allowing houses to be built.  It is currently a multi-religious, multi-ethnic, diverse settlement. Dharavi's total population estimates vary between 300,000 to about 1 million.
Dharavi has an active informal economy in which numerous household enterprises employ many of the slum residents. It exports goods around the world. Leather, textiles and pottery products are among the goods made inside Dharavi by the slum residents. The total annual turnover has been estimated at over US$500 million.
In the 18th century, Dharavi was an island. In February 1739, Chimnaji Appa attacked Bassein. Before that, he took possession of Dharavi. The area of present-day Dharavi was predominantly mangrove swamp before the late 19th century, inhabited by Koli fishermen. Dharavi was then referred to as the village of Koliwadas.
Mumbai has been one of the centers of India's urbanization for 200 years. At the middle of the 19th century, after decades of urban growth under East India Company and British Raj, the city's population reached half a million. The urban area then covered mostly the southern extension of Mumbai peninsula, the population density was over 10 times higher than London at that time. Most parts of Mumbai faced an acute shortage of housing and serious problems with the provision of water, sanitation and drainage. Residential areas were segregated in Mumbai between European and 'native' residential quarters. Slums were heavily concentrated in areas meant for 'native' Indian population, and it attracted no planning or London-like investment for quality of life of its inhabitants. Unsanitary conditions plagued Mumbai, particularly in the so-called Native Town, the segregated section where Indians lived. In 1869, as with 19th century epidemics in European slums, bubonic plague spread in Mumbai and then across most of India. The epidemic killed nearly 200,000 people in Mumbai and 8 million in India. In 1880s, concerned about epidemics, the British colonial government expelled polluting industries and many Indian residents of the Native Town, away from the peninsular part of the city, to a distant edge of the city in the north in the village of Koliwadas. Thus was born Dharavi.
The most polluting industries were tanneries, and the first tannery moved from peninsular Mumbai into Dharavi in 1887. People who worked with leather, typically a profession of lowest Hindu castes and of Muslim Indians, moved into Dharavi. Other early settlers included the Kumbars, a large Gujarati community of potters (another polluting industry). The colonial government granted them a 99-year land-lease in 1895. Rural migrants looking for jobs poured into Mumbai, and its population soared past 1 million. Other artisans, like the embroidery workers from Uttar Pradesh, started the ready-made garments trade. These industries created jobs, labor moved in, but there was no effort to plan or invest in any infrastructure in or near Dharavi. The living quarters and small scale factories grew haphazardly, without provision for sanitation, drains, safe drinking water, roads or other basic services. Dharavi's first mosque, Badi Masjid, started in 1887 and the oldest Hindu temple, Ganesh Mandir, was built in 1913. A large influx of Tamil migrants came in the 1920s. Bombay's first Tamil school and Dharavi's first school was constructed in 1924.
At India's Independence from colonial rule in 1947, Dharavi had grown to be the largest slum in Mumbai and all of India. It still had a few empty spaces, which continued to serve as waste dumping grounds for operators across the city. Mumbai, meanwhile, continued to grow as a city. Soon Dharavi was surrounded by the city, and became a key hub for informal economy. Dharavi's Co-operative Housing Society was formed in the 1960s to uplift the lives of thousands of slum dwellers by the initiative of Shri. M.V. Duraiswamy, a well-known social worker and congress leader of that region. The Dharavi co-operative housing society promoted 338 flats and 97 shops and was named "Dr. Baliga Nagar". By late 20th century, Dharavi occupied about 175 hectares (432 acres), with an astounding population density of more than 2900 people per hectare (1200/acre).
The total current population of Dharavi slum is unknown, and estimates vary widely. Some sources suggest it is 300,000 to about a million. With Dharavi spread over 200 hectares (500 acres), this corresponds to an average population density estimate between 1500 and 5000 (600 to 2,000 people per acre).
About 33% of the population of Dharavi is Muslim, compared to 13% average population of Muslims in India. The Christian population is estimated to be about 6%, while the rest are predominantly Hindus (60%), with some Buddhists and other minority religions. Among the Hindus, about 20% work on animal skin production, tanneries and leather goods. Other Hindus specialize in pottery work, textile goods manufacturing, retail and trade, distilleries and other caste professions - all of these as small scale household operations. The slum residents are from all over India, people who migrated from rural regions of many different states. The slum has numerous mosques, temples and churches to serve people of Islam, Hindu and Christian faiths; with Badi Masjid, a mosque, as the oldest religious structure in Dharavi.
Dharavi is situated between Mumbai's two main suburban railway lines, the Western and Central Railways. To its west are Mahim and Bandra, and to the north lies the Mithi River, which empties into the Arabian Sea through the Mahim Creek. To its south and east are Sion and Matunga. Both its location and poor drainage systems make Dharavi particularly vulnerable to floods during the wet season.
Dharavi has a high population density, and as with other worldwide slums, overcrowded. It is mostly low rise structures surrounded by Mumbai city. In most large cities, the floor space index (FSI) varies from 5 to 15 in the Central Business District (CBD) to about 0.5, or below, in the suburbs. Dharavi's FSI is very low. Still, in expensive Mumbai, Dharavi provides a cheap alternative where rents were as low as US$4 per month in 2006.
There is a disagreement if Dharavi is the largest slum in Mumbai. Some sources claim other slums in Mumbai have grown to become larger than Dharavi. Other sources disagree, and rank Dharavi as the largest slum in India.
In addition to the traditional pottery and textile industries in Dharavi, there is an increasingly large recycling industry, processing recyclable waste from other parts of Mumbai. The district has an estimated 5000 businesses and 15,000 single-room factories.
Dharavi exports goods around the world. The total (and largely informal economy) turnover is estimated to be between US$500 million, over US$650 million per year, to over US$1 billion per year. The per capita income of the residents, depending on estimated population range of 300,000 to about 1 million, ranges between US$500 to US$2000 per year.
There have been many plans since 1997 to redevelop Dharavi like the former slums of Hong Kong such as Tai Hang. In 2004, the cost of redevelopment was estimated to be 5000 crore (US$820 million). Companies from around the world have bid to redevelop Dharavi, including Lehman Brothers, Dubai's Limitless and Singapore's Capitaland Ltd. In 2010, it is estimated to cost 15000 crore (US$2.5 billion) to redevelop.
The latest urban redevelopment plan proposed for the Dharavi area is managed by American-trained architect Mukesh Mehta. The plan involves the construction of 2,800,000 square metres (30,000,000 sq ft) of housing, schools, parks and roads to serve the 57,000 families residing in the area, along with 3,700,000 square metres (40,000,000 sq ft) of residential and commercial space for sale. There has been significant local opposition to the plans, largely because existing residents are due to receive only 25.0 square metres (269 sq ft) of land each. Furthermore, only those families who lived in the area before 2000 are slated for resettlement. Concerns have also been raised by residents who fear that some of their small businesses in the "informal" sector may not be relocated under the redevelopment plan. The government has said that it will only legalize and relocate industries that are not "polluting".
Dharavi has severe problems with public health, due to the scarcity of toilet facilities, due in turn to the fact that most housing and 90% of the commercial units in Dharavi are illegal. As of November 2006 there was only one toilet per 1,440 residents in Dharavi. Mahim Creek, a local river, is widely used by local residents for urination and defecation, leading to the spread of contagious diseases. The area also suffers from problems with inadequate drinking water supply.
Dharavi has experienced a long history of epidemics and natural disasters, sometimes with significant loss of lives. The first plague to devastate Dharavi, along with other settlements of Mumbai happened in 1896, when nearly half of the population perished. A series of plagues and other epidemics continued to affect Dharavi, and Mumbai in general, for the next 25 years, with high mortality rates. Dysentery epidemics have been common throughout the years and explained with the high population density of Dharavi. Other epidemics reported include typhoid, cholera, leprosy, amoebiasis and polio, through recent years. For example, in 1986, a children cholera epidemic was reported, where most patients were residents of Dharavi. Typical patients to arrive in hospitals were in late and critical care condition, and the mortality rates were abnormally high. In recent years, cases of drug resistant tuberculosis have been reported in Dharavi.
Fires and other disasters are common. For example, in January 2013, a fire destroyed many slum properties and caused injuries. In 2005, massive floods caused deaths and extensive property damage.
A few travel operators offer guided tours through Dharavi, showing the industrial and the residential part of Dharavi and explaining about problems and challenges Dharavi is facing. These tours give a deeper insight into a slum in general and Dharavi in particular.
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