Can India Build Homes For All By 2022?
“By the time the nation completes 75 years of its Independence, every family will have a pucca house with water connection, toilet facilities, 24x7 electricity supply and access.” - President's Speech in Parliament, Para 32, June 9, 2014.
This speech from President Pranab Mukherjee not just announced a massive project of the Narendra Modi-led government to provide homes for all by the year 2022, it also indicated the government's vision of constructing affordable homes in India for the vast majority of economically weaker sections (EWS) / low income groups (LIG) / slum dwellers. Approximately two crore houses will be built for slum dwellers under the scheme.
The project has four key components:
1) Slum rehabilitation of slum dwellers with participation of private developers using land as a resource;
2) Promotion of affordable homes for weaker sections through credit linked subsidy;
3) Affordable homes in partnership with public and private sectors; and
4) Subsidy for beneficiary-led individual home construction or enhancement.
The challenge is humongous: Not only does India suffer from shortage of homes, 95 percent of this shortage comes from the EWS/LIG segments.
The project is aimed at bringing improvement in the lives of urban poor, the homeless and migrants who struggle with shelter, especially in big cities. The scheme would cover all urban areas including metros, big cities and small towns.
What's interesting is the concentration of slums in India - a total of ten states account for 82 percent of the slum population in India. The states are Maharashtra, West Bengal, Uttar Pradesh, Tamil Nadu, Madhya Pradesh, Andhra Pradesh, Telengana, Karnataka, Rajasthan and Chhatisgarh.
With the arrival of foreign companies in India and subsequent growth in the economy, more and more people have been flocking to large cities. In search of jobs, migrants to the metros sleep on footpaths and try building movable structures in and around the slums. The government has recognized the struggle and through the scheme, has now sought to provide property rights to those who reside in dwellings bereft of electricity, clean drinking water, and drainage.
The government is planning to begin this program with a survey to access the demands and needs of housing in urban areas. An initial assessment states that the government needs to build over 16 lakh houses in Mumbai, six lakh houses in Delhi and four lakh houses in both Kolkata and Chennai. Depending on the demand, these figures may change.
What are the Existing Schemes And What Have These Achieved?
• JNNURM: Out of 14.41 lakh houses approved in 947 cities with Central share of 20169 cr, 8.31 lakh homes have been completed, 3.61 lakh homes are in progress. Central share of Rs.17,639 cr. has been released so far to the states
• RAY: Out of 1.2 lakh houses approved in 116 cities with Central share of Rs.3531 cr, 1154 houses have been completed, 18281 houses are in progress. Central share of Rs.1209 cr has been released so far.
• AHP: Out of 20,472 homes approved in 5 cities of 3 states with Central Share Rs.112 cr, 4528 houses have been completed, and 2240 are in progress. Central share of Rs.44 cr has been released so far.
Well-structured, but challenges galore
Homes for all is a great vision. But, India has a real estate problem outside of this plan.
The problems start with escalating prices of homes – despite the slump in GDP growth and stagnant incomes, illegal constructions, project delays and unsold inventory in cities. In addition to this, the biggest challenge remains the construction of homes in the affordable category. Developers often find it unprofitable to construct houses costing between ₹5 lakh and ₹10 lakh and given the scale of project, government will need private participation.
Besides real estate, significant investments would also be needed to adequately develop transport linkages and basic civic amenities. Without these, even the best of planned cities could remain waiting for people to move in.
Other challenge will come in the form of land acquisition, already quite controversial. Certain estimates suggest that about 2 lakh hectare of land would be required to meet the country's urban housing need. Scarcity of land can be dealt with higher Floor Space Index (FSI) relaxation, but even that's been a challenge for urban planning experts in india with Mumbai being an exception of late.
Additionally, corruption-ridden construction approval process in India is no secret fact, which is why the country stands at the 184th position in World Bank's 'Ease of Dealing with Construction Permits' and 121 in 'Ease of Registering Property' parameters.
Lastly, among the EWS and LIG segments, where the per capita income can hover between 2-3 lakh per annum, how affordable will be the homes touted as 'affordable'?
Only time will tell.