This article emerges from a recent visit to a friend’s house in Vasant Kunj in Delhi. His domestic help, Sonali (name changed), shared her woes of living in a metro city. She said her husband used to move around the neighbourhood selling utensils, which was a common feature in the past. However, she said, for the last two years the rounds have come to a stop due to sales declining by almost 60%.Her employer-patron, my friend, lent her a loan that was never to be returned to buy a refrigerator so that her husband could shift to a daily needs store. Sonali’s story is just one of many in urban India. Sonali is lucky that the loan is not to be paid back, but the story of millions of others is quite different and brings out a new relationship of bondage, which may at times even emanate from benevolence but speaks volumes of surplus extraction in newer forms in the cities.Interestingly, the urban poor sustain the city while being excluded from its rights and entitlements. Sonali is the face of this.Illustration: Pariplab Chakraborty.Not only does the urban informal workforce become a victim of such an exploitative architecture, they face the double whammy of being forced to pay high rents and exorbitant interest rates on small plots of land and informal loans.Formal banks do not lend money to them. The interest rate on a loan taken by an informal worker in urban India is structurally higher than a loan taken by a middle-class family to send their children abroad for studying. It is not just structurally higher but systematically higher.The architecture of urban debtInformal sector lending in India runs at exorbitant interest rates – per some estimates just the median rate levied by moneylenders is a whopping 36% annually. At the same time, education loans that Indian banks offer to middle class sections sending their children abroad are currently around 8-12% according to one estimate.The peasant communities living around Delhi comprising various ethnic groups form different sets of rotating credit societies and microfinance chains, and illegally charge exorbitant rates from domestic workers and other informal sector workers. This is what a city offers its informal citizens – a ‘differential cost of existence’ imposed by another class but where the state apparatus has miserably failed.Also read: How the Ones Who Built New Delhi Were Gradually Pushed OutThe architecture of money lending in Delhi (or any urban settlement), is quite interesting. The informal lending comes from local community rotating credit societies, or employer-creditor relationships, as in Sonali’s case, Micro Finance Institution (MFI) chains and some other forms. In many cases, the money lenders themselves borrow from formal banking systems at around 12% per year and lend that money at 40-60% per annum on average to informal sector workers. They are more or less arbitrageurs between the formal and informal worlds. The informal worker is hit harder in this financial architecture.Many would say it is a market failure, but it is really a form of the market functioning exactly as it was designed – to aid capital accumulation. This further illustrates the framework of wealth extraction in an urban society where the informal worker is the one who subsidises the formal economy through unpaid or underpaid labour, or both. Usurious interest rates paid to creditors are another subsidy.Another laboratory of exploitative extraction is the rent architecture of cities. A living example of how it works is Vasant Kunj in Delhi. Its vegetable market, that runs once a week in the neighbourhood, is an informal vending market run on a plot of land that is controlled and rented out by local community leaders – not by the municipal corporation or any other formal or statutory institution. The rent is charged on a per-square-foot basis, from the informal vendors to the rent-seekers.A middle class locality, Vasant Kunj in Delhi. Credit: Justin Morgan from Richmond, Virginia, USA, CC BY-SA 2.0, via Wikimedia Commons.If this rent is annualised, the amount exceeds what a middle-class household pays in a Delhi Development Authority (DDA) flat or builder colony nearby. David Harvey’s seminal thesis on the urban world, “Accumulation by Dispossession”, acts at different scales even at the scale of a vegetable vendor’s pushcart.Not just that. Recently, it came to light that vendors were not prepared to pay a higher amount of rent. In response, the rent seekers brought in some tractors loaded with debris and dumped that on the field, preventing the vendors from setting up shop. The failure of the city planning apparatus is starkly visible from this event. The vendor has no tenure security, not just in Delhi but across urban India. There is hardly any legal recourse and collective bargaining belongs to an era in the past.Cities built on extractionThe differential credit cost and the differential rent burden are, most times, considered policy failures that can be corrected with some interventions. However, having worked across urban spaces for decades, I find that it is not a policy failure but an architecture, drawn by a system geared for capital accumulation in the cities.Also read: 84% Urban Poor In Delhi Say Their Income Not Enough To Meet Their Needs: StudyIn fact, rent and credit are the two major pillars of urban development that require a large and financially captive workforce to service the city at low wages, who are further trapped into high-interest debt and lack tenure security, perpetually living in a situation where they are unable to exit the processes.It is not a surprise that although among rich urban households, over 80% of loans come from formal sources at relatively cheap rates, the poor are left with the expensive informal credit system. This inversion is apparently the financial architecture and infrastructure of urban inequality. And there lies the democratic deficit – cities are governed for capital and by technocracy, not for the worker who builds them.Will such a situation, simmering for decades, lead to some kind of implosion? Well, the World Economic Forum gave the answer, when it said that global cities are imploding from within because of the double whammy of climate change and massive inequality.The Noida protests are just the tip of an iceberg. The city today is being described across the spectrum as an entity that extracts from its working class at every point of contact. These are at the points of labour, credit and space as well. The Noida protests are a kind of demonstration of the precariousness of the urban worker, which is an “intersection of informal labour, land tenure insecurity and the high cost of living in cities”. (as defined by this author in another article).What kind of cities are being built? A simple question that needs to be answered now, to ensure that those who build cities also gain secure rights over their homes and assets. For that to happen, the state cannot remain oblivious of its responsibility.Tikender Singh Panwar is former deputy mayor of Shimla. He worked on the Leh Vision document and has written vision documents for a dozen cities. Author of three books, he is an urban specialist working in the design of inclusive cities and a member of the Kerala Urban Commission.This piece was first published on The India Cable – a premium newsletter from The Wire – and has been updated and republished here. To subscribe to The India Cable, click here.