All urban areas in independent India have been plagued by slums for sound economic reasons. Hence, the problem has refused to go away despite public demand for action and repeated efforts by individual state governments.

In fact, if attempts to rehouse slum dwellers in minimally acceptable dwellings had been efficient, urban areas would have become stronger magnets for the rural poor.

But several changes have taken place lately, allowing us a chance to do better in removing slums. One, urban incomes at the lowest strata have improved significantly.

Two, consumer credit, including housing loans, has exploded and financial services firms see a huge business opportunity at the bottom of the pyramid.

Three, governments, central and state, have a lot more resources - courtesy economic buoyancy leading to tax buoyancy - with which to attempt to remove slums. Four, urban renewal is at last receiving comprehensive policy attention with the launch of the Jawaharlal Nehru National Urban Renewal Mission.

But old habits die hard. Schemes for urban renewal are being formulated under the mission, which are bound to fail because ideological blinkers persist.

A minuscule number of slums will disappear but a viable and replicable model to eventually eliminate slums will remain elusive. A case in point is the scheme recently formulated under the mission to create 8,000 dwellings at a cost of Rs 200 crore {Rs 2 billion (to be met both by the Centre and West Bengal)} for slum dwellers in the industrial towns of Durgapur and Asansol. Slum dwellers will get small apartments virtually free with photo identity cards and be prohibited from selling them.

There are two obvious flaws in this. One, all the laws in the world will not prevent slum dwellers from selling these apartments if they stand to gain substantially.

Eventually there will be pressure from the new owners, politically vocal lower middle class people, to "regularise" such sales.

Two, at Rs 250,000 state funding per dwelling, the resources that can be found for such a pervasive problem will be minuscule.

There can be a better way. Urban slums are either on government or privately-owned land, with the landowner unable to evict the slum dwellers and realise the full economic benefit of redevelopment.

The latter will be happy to be rid of their slum property if it means becoming better off than at present. Slum-dwelling families pay a monthly rent of anything up to a thousand rupees or even a bit more per month for a small room and a shared toilet with a bit of electricity and water.

The total monthly income of such families is Rs 5,000 or more. They will happily pay Rs 1,500 as EMI for a Rs 200,000 housing loan, repayable over 20-25 years, for a small apartment of two rooms, a kitchen and toilet of a super-built-up area of 400 sq ft, built at a cost of Rs 250,000 in a ground-plus-two-floor configuration. Compare the Rs 50,000 subsidy implicit in this with the Rs 250,000 per apartment under the West Bengal scheme!

Such apartments should be available to those who can prove they have been living in a particular slum for, say, at least five years. Long-term slum dwellers typically have ration cards and voter identity cards.

Such an allottee should be free to sell his apartment from day one. Some will but some will not. A small percentage of the apartments should go to the landlord of the slum to rent or sell. Those living in a slum for less than five years should also qualify if they can satisfy the housing finance firm about their ability to pay.

This is one way in which we can remove slums from within municipal areas. But what happens to those who sell out or don't get apartments? In Mumbai, which has a long history of slum development even as slums persist, beneficiaries inevitably sell out and move into other nearby slums.

The solution to this is twofold. Do not allow new slums in municipal areas and construct similar developments as indicated above on the city outskirts on government land to take care of those who have sold out and "oustees".

Past experience indicates that slum dwellers do not like to live in tenements typically five-storeyed. But there is a feeling that a ground-plus-two-floor configuration can work.

There can be competitions among architects to design low-cost dwellings pleasant to live in. From the winning designs standardised, templated specifications for such housing can be evolved and the actual construction done by contractors, who will build and transfer on a cost-plus basis. This will keep out builders.

The incentive to sell will remain as long as the market is willing to pay a handsome price. The key to preventing this lies in the designing by adopting the concept of inferior goods.

The finishing and fitting should be extremely modest and there should be absolutely no scope for parking a car; so a car-owning family will have no incentive to buy such a flat.

This, plus knowing that selling out means moving to the outskirts (finding another slum nearby should be made impossible), should be a disincentive to selling.

There is obviously scope for these ideas to be improved upon. But still every slum developed will yield many oustee families and since all slums in municipal areas will not disappear simultaneously, the problem of people moving from one slum to another will remain.

The key to a better future lies in creating a lot of low-income housing on the city outskirts by earmarking sufficient space for it in the comprehensive development plans, which all cities must have.