Affordable housing: Walking the talk

A large number of low and middle income families need housing,which is reasonably priced,meaning affordable while a relatively small number of families have the purchasing power to settle for high-priced homes.

Unfortunately,the reality is that housing being offered in the market is tilted the other way: very little budget housing and plenty of options for high-priced homes.

This is the housing dilemma in India. Further,the demand-supply gap only helps in pushing the prices higher. The outcome of this spiral is that people,particularly the low-income and the poor have no other choice but to take to illegal options.

PAST IMPERFECT

The Indian housing story over the last sixty years has moved from strong state interventions in the early years of independence from the 1950s onwards towards a liberalised regime of private sector initiatives and partnerships towards the end of the century.

In more recent times,however,housing development in India is being perceived more as an activity which cannot be without the active participation of the private sector,be it entrepreneurs,corporate companies,cooperative societies or individuals themselves.

This is a realisation that has dawned on the Government of India and in the recent past,efforts have been made to encourage private housing enterprise,unfortunately,with few safeguards to provide for the masses.

The public sector housing agencies which were created after Independence to provide reasonably priced housing viz. state housing boards and development authorities have left much to be desired.

The housing supply of these agencies has declined substantially in recent times. These agencies were mostly funded by the Housing and Urban Development Corporation (HUDCO) and over the years,got embroiled in various difficulties in servicing the loans taken.

To add to the misery,these agencies have actually taken to developing high-priced housing,obviously catering only to the high income-high affordability groups of the population. The large number of public-private-partnerships created in the last few decades have mostly catered only to the upper incomes and precious little housing has been created for the low income population.

Sadly,the structuring of these partnerships leave gaping loopholes in the way the governments have played into the hands of the real estate firms.

On the other hand,state governments have also been actually promoting high-end housing through township policies and public-private partnerships.

In fact,even the entire housing finance system in India is thriving on providing mortgage housing loans to the well to do salaried formal sector employees,taking shelter under the fact that low income population is not creditworthy. Therefore,government commitment to housing the large majority has come down drastically.

Invariably,the section of the population priced out of the market ends up in high priced rental housing at good locations (to save on commuting time and money for transportation),far-off locations which are within their affordability (but difficult on commuting time and transportation) or end up in informal/quasi-legal settlements where the prices are more affordable,albeit the lack of services. Low income housing projects are hardly being developed these days in the formal sector.

The Government of India set up a High Level Task Force in 2008 to look into the various aspects of providing affordable housing. This Task Force came up with a definition of affordable housing as give in the table.

Assuming that this is correct,if one were to look at the policies and projects being promoted by the state governments in various states of the country,one can see that few are following the recommendations of this Task Force.

The Government of India has been pursuing orthodox policies and programmes,the latest being the Rajiv Aawas Yojana to generate low income housing. All these are but old wine in new bottles. There are no significant departures so as to create a dent in the supply side of the market. They significantly suffer from the continuance of orthodox bureaucracies and inadequate capacities for speedy and quality implementation.

There are quite a few real estate companies who have recently entered this space of affordable budget housing segment and only time will tell how they are going to deliver.

GLOBAL EXPERIENCE

There are many countries where there has been a serious housing problem in the past and have seriously acted and tided over the same.

Singapore and Hong Kong are two Asian cases in point. Both have developed housing policies which addressed the needs of the day and pushed forward enormous housing supply into the market that there is no shortage at all,there is enough housing for all! Strong political will,active development mechanisms,clear construction strategies,innovative financial systems and use of modern technology are imperative.

Post-War housing in Europe is another example of strong state intervention and political will to reconstruct neighbourhoods and communities. Totalitarian examples exist in the Socialist bloc where again it was strong political will which has paved the way for creating huge supplies of housing stock. There are many other countries with different political ideologies which have all acted strongly and seriously to solve the housing crisis. We in India do not seem to be learning any lessons from these experiences.

THE WAY FORWARD

At the end of the day,it is all a numbers game. We need a slew of measures that can make a housing revolution happen in India too. Firstly,what we need is supply and that will happen only by way of speedy construction. Modern construction techniques are today available to make this happen. Prefabrication construction technology has undergone tremendous advancements in the recent past. Many companies are doing the rounds in India today trying to sell these technologies. Unfortunately,our governments are blissfully ignorant of these,forget about implementing them.

Secondly,to make supply happen,we need land,the most crucial input at a reasonable price. This is where governments need to subsidise. Alternatively,governments need to come out with creative models of land sharing and bring in more land into the urban development. Very high densities need to be permitted,today what we have is a completely low density and inefficient way of utilising urban land,thanks to the outdated regulations.

Thirdly,we need financial intermediation so as to achieve inclusion. Most middle class and low income population who do not meet the usual requirements of credit-worthiness need to be roped in through innovative methodologies which are already being tried out by some micro-housing finance corporations. With these strategies in place,we can surely make some headway and satiate some of the demand in the coming decades,if not completely.

Lastly,housing estates without good transportation connectivity and infrastructure in terms of water,etc. would only give us ghost townships.

Housing is an economic activity which has backward and forward linkages with as many as 260 industries. More than the skilled employment which it would provide in any case,a majority of the employment it would generate would be in the semi-skilled and unskilled sector.

Rural unemployed,women labour,seasonal and marginal workers would find gainful employment for a greater part of the year. Housing deserves to be rightfully at the centre of any economic strategy for development. Unless and until we learn the lessons from success stories in our extended neighbourhood,we will not be able to make any progress.

This only speaks volumes of the lopsided housing policy which we are pursuing; we have done too much mindless talking in this area,but is yet to break significant ground.

The author is Professor,SPA New Delhi