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Making housing affordable for all

Making housing affordable for all
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First Published: Fri, Nov 19 2010. 10 35 PM IST
Updated: Fri, Nov 19 2010. 10 35 PM IST
The plethora of land scams in urban India are based on one single premise—the control of scarce land by the government and the innumerable ways which it finds to allot land at concessional rates to favoured sections.
The masses of the people, on the other hand, are forced to eke out a miserable living in the slums. Why has the slum population gone up in Mumbai in spite of strong economic growth over the last couple of decades?
The conventional reason is migration from other areas. But the authors point out that Vietnam’s cities are growing at twice the rate as in India, but the incidence of slums is much smaller.
Hong Kong accommodated one of the most rapid influxes of migrants in the 1950s and 1960s, but was able to rapidly accommodate them in decent housing. In short, it’s not just migration that is at the root of soaring land prices and slums in Mumbai’s suburbs—faulty policies are to blame.
The authors dismiss the demand that the government must ensure a house for everybody. This, they say, will cost far more than MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) and will impose an unsustainable fiscal burden. Housing for all will have to come from the market and that calls for a number of policy changes.
For starters, the authors point out that the rules that limit the amount of floor space that can be built on a given piece of land are too rigid in India. The upshot is that in Mumbai, vertical growth, which is the only means to increase the supply of formal housing in the island city, is discouraged. Conversion of land from agricultural to residential use is extremely complicated, calling for a number of permits. Once again, this increases the cost of new supply. The authors also say that a “one-size-fits-all” regulation for housing is counter-productive.
For instance, in China the urban villages system protects “peasant” landowners who have legal land tenure and who do not need to adhere to normal urban building standards.
These villages provide an often very well-located supply of low-cost rental housing for the low-income population, including migrants.
In India, on the other hand, slum dwellers have no rights, thus forcing them into the hands of slumlords and goons.
The paper also underlines that while reforms may be able to increase the supply of land and housing for slum dwellers, the existing infrastructure could still not cope with the increased water and power consumption that would be required. Developing and selling off excess land currently with government organizations could easily provide the funding for the infrastructure.
Will giving incentives to developers in the form of tradeable development rights for providing slum housing work?
The paper says that these policies load the cost of social housing onto the production of new housing units, thus increasing the cost of housing. This then raises the number of households who must meet their needs in the informal sector.
Lastly, the paper points out that each city in India has a different set of issues and housing policies must be tailored accordingly.
The message, in a nutshell is: “Existing urban land management policies that seek to control the urban land market tightly are no longer suited to an India which is growing at rates exceeding 8% for sustained periods and in which 70% of new employment is generated in its cities. These policies have made formal housing expensive and unattainable to a large share of the population, reinforced both chronic urban infrastructure shortages citywide and squalid, precarious living conditions in urban slums.”
Write to simplyeconomics@livemint.com
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First Published: Fri, Nov 19 2010. 10 35 PM IST