Radical thinking on affordable housing needed

Radical thinking on affordable housing needed

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One of the gravest problems which India will be facing is the problem of housing for the growing population in urban areas which if not tackled suitably and promptly may result growth of urban slums. Therefore, providing houses to EWS (economically weaker sections) and LIG (lower income groups) and that too at affordable prices will be the greatest challenge for the government

Urbanisation is taking place in India at a rapid pace and at this rate urban population will overtake that of rural very soon. With the country’s agriculture sector having a limited absorption capacity, majority of the growth in urbanisation is expected to be a consequence of rural-to-urban migration. According to one estimate, by 2050, 900 million people will be added to Indian cities.  Housing and Urban Affairs Minister Hardeep Singh Suri has said considering the pace of urbanisation in India, every year we need to build a new Chicago to accommodate the growing urban population. No doubt, rapid pace of urbanisation in the coming years will be accompanied by its own sets of problems too apart from putting a strain on the urban infrastructure in the cities. One of the gravest problems which India will be facing is the problem of housing for the growing population in urban areas which if not tackled suitably and promptly may result growth of urban slums. Therefore, providing houses to EWS (economically weaker sections) and LIG (lower income groups) and that too at affordable prices will be the greatest challenge for the government.

Though the government has claimed that housing shortage in urban areas has fallen from 2011 projection of 18.76 million to about 10 million units, ground reality doesn’t seem to have changed much in regard to creation of more affordable housing stocks. One important thing which need to be noted here is that by changing the goal post one cannot solve the problem at hand but will just be sweeping the dirt under the carpet.  Creating affordable housing stocks is nevertheless a daunting task which necessitates the active involvement of all the stakeholders concerned.

According to a report prepared by Ministry of Housing and Urban Poverty Alleviation in the past, nearly one million households are living in non-serviceable kutchahouses, while over half a million households are in homeless conditions. Though the figures may vary from survey to survey and from agency to agency, but the existence problem is undisputed – only the extent of it may be debatable.

Traditionally, low cost housing has been the domain of the government. Real estate developers, private players in particular, have primarily targeted luxury, high-end and upper-mid housing segment owing to the higher returns that can be gained from such projects. Majority of the housing units built by the private real estate developers are beyond the affordability of the EWS and LIG segment. Further, high land costs, archaic building bye laws, stringent licensing norms, delay in project approval and unfavourable banking policies made low cost housing projects uneconomical for private developers.

Real estate sector in India is in transitionary phase and any policy initiative by the government to pull them into affordable housing should bear this fact in mind. After seeing a robust growth during the last decade which was partly aided by easy availability of home finance, real estate developers are now faced with mounting unsold stocks and downward pressure on the price. Demonetisation in 2016, introduction of RERA and GST in 2017 and enforcement of Benami Properties Act – all have come in quick succession for the sector to recover from lullness. Therefore, unless the government provides enough carrots in the form of incentives, affordable housing program though has a noble objective may not find any takers from the private sector.

Perhaps there is a need on the part of the government to think radically to make the affordable housing program in the country a success. Though the government has announced several PPP models to attract investment into affordable housing program, they are likely to meet with little success unless they are supported by steps like establishment of a single window clearance system, formulation of innovative micro mortgage lending models and tax subsidies would encourage private sector involvement. Also, government need to encourage adoption innovative and low-cost technologies by the developers which could enable them to deliver affordable houses quickly and cost effectively.