Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
Development processes and the development industry the role of NGOs, SHGs, various groups and associations, donors, charities, institutional and other stakeholders
India is increasingly witnessing growing urbanisation. National Urban Housing and Habitat Policy (NUHHP), 2007 has set the objective of Affordable Housing for All as a key focus. The PM has also given commitment to have “housing for all” by 2022 when India will complete 75 years of independence. So far, about 32 lakh houses have been built under the scheme and by 2019, there is proposal to build 1.35 crores more houses.
Recent update: In a meeting at PMO, private builders were called and were told to take part in the scheme. But overall it has emerged that private sector has some difficulty in taking part in scheme. The private sector builders have not given any proposal to government despite the fact that in December 2016 PM announced interest subsidy of 3% and 4% for those going for housing loan upto Rs. 12 lakh and Rs. 9 lakh respectively, so that availing loan would be easier and cheaper.
Housing for all is important from economic as well as social point of view. From economic viewpoint, the real estate sector is largely catering to the housing development- 80% of real estate is in housing. Here also, 80% supply is required in affordable and EWS segment. The problem is
Majority has to be provided in urban center where high land cost and lack of land availability is major deterrent for such projects.
There is excessive control in land in terms of density and limited availability in FAR and FSI available on land. This limits the development on that particular land part.
Multiple taxation on the housing projects are levied
Higher cost of capital to be borne by developer.
Rising compliance cost
Low cost housing is available and there are subsidies offered by government. But the major problem is to avail those subsidies and to avail a banking loan which is where the subsidies are passed on the housing loan. To avail housing loan, there is lot of paper work which is required as per RBI guidelines. So, poor people who are not salaried class and don’t have salary slip to support their income have difficulties to find source of home loan from banks or NBFCs.
Thus, supply as well as inability of availing home loans is a major deterrent why the private developers are not able to contribute to the scheme.
Government support– Through PMJDY, now atleast one crore people have bank accounts and they can give evidence that they have money in their accounts which may enable the banks to provide them loans in future. To some extent the government may have addressed this challenge but more needs to be done.
Government initiative is equally important and that too from land point of view. Where land is concerned, the departments have been directed to identify the unutilised land which may not be required for long term future and can be given for housing for all scheme. The department have not to necessarily sell their land but can invite the private developers to build their projects on the land and still be owner of land.
There is another concept of rental housing which is prevailing in countries like Singapore and Thailand. Here the government is providing rental housing at cheaper rate. This enables to have shelters for the poor and needy people. Housing for all aims to help people get their own houses. It is a social security scheme where one family has atleast one house. The government can also look at the rental housing plan where it can provide central housing the way it has been provided to government employees.
Proper planning and integrated development is key
The central government has committed Rs. 90000 crores for housing to all scheme. However, the track record of scheme has been skewed- TN has built 1.9 8 lakh houses, MP has done 1.94 lakh houses and AP has built around 2.27 lkahs but other states like Bihar, UP, Odisha haven’t done much.
This shows that just the housing numbers are not going to support the overall big picture. It will be possible when the entire economic development takes place.
Housing has to be near a commercial set up where people have jobs. Cities like Chandigarh, Noida, Gurgaon has jobs and houses in close proximity to each other. This is comprehensive development structure which is needed in other parts of the country. If the houses are developed in areas where there are no or less job opportunities, such houses will remain vacant as people will move to other areas. This defeats the purpose of aim of housing for all.
Capacities to create such huge number of houses has to be created rather than addressing the shortcomings in the sector individually. If industrialisation is focused in certain part of state, the housing infrastructure has to be comprehensive to the employment generation areas. This can be seen being undertaken in Sagarmala project where ports are being developed and around them integrated townships are created. Thus, there has to be coordination between central, state government and their departments before the private sector is called to participate.
Housing in rural areas
Almost 33 lakh houses are to be built in rural areas as 65% of population is dependent on agriculture. Farmers will require housing near to their farms. The problem comes back to the farmer in terms of affordability because he is getting high cost of capital for his agricultural purposes. Another loan for housing purposes will burden him. The state governments have to take great initiatives and have a comprehensive plan to do it. For the private sector to be involved, the government has to provide land with clear titles to them for construction which can be later allotted to the right beneficiary.
Indira Awas Yojana has been subsumed in the new scheme. In the last 4 years, 36 lakh houses are still being built. The norms say that these houses should be built in 6-9 months. The technology is available where such kind of mass housing can be done in short period. But there are various shortcomings in line of achieving efficiency
The multi-level approval system is required. There are multiple agencies which provide 175 approvals to housing project which are time consuming approval processes which the developer is compelled to follow.
A system is required where there is a comprehensive approval process in place along with land clearances so that no further approval is required. Here the developer comes in, develops and hands over to the state government. If this is not in place, it is bound to take 3-5 years.
Private sector finds its capability and capacity in place. Only thing it requires is encouragement and right kind of policies to be implemented by government. If the policies are viable for joint participation of public and private sector, then it will fasten the speed of building housing projects.
The beneficiaries are targeted through the caste and the economic census 2011 which gives the data of homeless people and the people living in kuccha houses. The integration of the loose ends is also needed. There has to be adequate mechanism for providing housing loans to weaker sections of society. The data of non-salaried, low income people who do not have adequate proof to support their income documents have many difficulties in providing home loans. In absence of home loans, affordable housing also becomes a big challenge. Hence, RBI must customise the funding requirement or the funding documentation process to be given to such communities so that they can afford homes.
Connecting the dots:
Is the PPP model in housing infrastructure viable option? Critically analyse.
Brining in private players into fray of affordable housing scheme will no longer keep the housing affordable. Do you agree with the statement? Evaluate.