Maken housing strategy will be up against the old nexus

Immediately after taking charge of the housing and urban poverty alleviation ministry, an enthusiastic Ajay Maken has made several statements on ensuring that India becomes a slum-free country.

First, the minister wants norms to be put in place for private builders to build at least 35 percent of housing units in any real estate project - or 15 percent of the floor area ratio - for economically weaker sections of society. What he failed to acknowledge is that it is the government itself that tweaks these norms to favour builders instead of ensuring cheaper land for affordable homes.

In Maharashtra, for example, the builder-politician nexus ensures that land comes to the market only when the builders want it. In the past, chief ministers have withheld signing orders pertaining to urban development till they are run past the eyes of builder friends. This is because a situation of shortage helps them hold or raise prices to their advantage. Not all of them will want more land coming to the market to enable more affordable housing.

Secondly, affordable housing is now a politicised issue. Everyone is being included, including the middle and upper classes. People use the vehicle of affordable housing to open the housing market but without strong policies, even low-income housing becomes a speculative market.

Without a proper public-private partnership, housing needs of the poor cannot be addressed. Currently, any builder can approach the government for subsidies in the name of constructing homes for the poor, and while there are stipulations, these exist largely on paper.

Maken noted yesterday that " Of the 3.38 million houses in Delhi, 0.38 million houses are totally vacant and this also includes 50 percent of slums and unauthorised colony houses," adding that the vacant houses in India can burst the housing bubble any time. According to the ministry, bringing these vacant houses to use would reduce the shortage by half without having to build any new houses!

But this proposal is bound to fail since 95 percent of the housing shortage pertains to the economically weaker sections (EWSs) and low-income groups . The Delhi government's record on the allotment of EWS houses has been a flop show. Over 10,000 units have been ready for long and most still lie vacant because only a certain percentage of the people in many slums slated for relocation make the eligibility mark. The remaining have no choice but to fend for themselves.

Also, the 9.43 million vacant houses in India are often owned by investors and held back for better returns or well-paying tenants.

According to the ministry's estimates, EWS and LIGs can afford dwelling units priced at or less than four times their annual gross income. But as is evident in Mumbai and New Delhi, the smallest and cheapest houses constructed by private developers cost not less than Rs 40 lakh. Clearly these vacant houses are way beyond the budgets of the poor. Subsidising large units through tax incentives will only help the middle and higher income groups and will not address the issue of poverty alleviation at all.

Since the slum dwellers are squatting on government property, they can sell the vacated land to builders and create slums elsewhere.

Maken thinks loans to EWSs or the LIGc could prevent the bursting of the housing bubble. Through the Credit Risk Guarantee Fund he aims to provide guarantees to lending institutions against housing loans up to Rs 5 lakh for new borrowers in the EWS/LIG categories by creating a trust of Rs 1,000 crore. But the problem lies in the severe leakage of funds as they traverse from centre to state to local administration so that poor individuals either don't get anything or get only part of what is due to them. In spite of spending large amounts, the urban poor are without quality shelters, given the rampant leakages in project execution.

Already there are slum improvement schemes, slum upgrade schemes, slum redevelopment schemes and slum patta schemes. However, these do not give the required security of tenure. Also those who have a vested interest in making development projects fail are politically powerful.

The mentality of household slum dwellers is that they want everything free. But under several programmes, slum dwellers must contribute 10 percent of the overall building cost of the new house. Beneficiaries also have to start paying for utilities.

Maken has promised that the Central government will push states to give bankable property rights to urban slum dwellers in situ (ie, where they reside) and is in the process of creating a legislation for the same. But formalisation of squatter rights in an economy where metros are sucking in lacks of new migrants may just compound the problem.

Most cities do not have enough space for in-situ rehabilitation. In land-crunched cities like Mumbai, politicians prefer to build towers. Since the slum dwellers are squatting on government property, they can sell the vacated land to builders and create slums elsewhere.

According to Sanjeev Sanyal, President of Sustainable Planet Institute, squatter rights create problems of governance by potentially encouraging land-grabs. "We not only have to think about today's urban poor, but also about the incentive structure presented to the next generation of migrants. Second, the formalisation is usually done on the basis of a cut-off date. This often recognises the rights of better-off old-timers against those of poorer newcomers," he argues.


Published Date: Nov 01, 2012 01:08 pm | Updated Date: Dec 20, 2014 01:56 pm