Sunshine for affordable housing? Homelessness plagued with unimaginative response from policy pundits
There is a new burst of sunshine for India’s affordable housing sector with the Finance Minister announcing in the course of is budget promises the setting up of an affordable housing fund under the National Housing Bank (NHB). It will be funded from priority sector lending shortfall and fully serviced bond authorised by the government of India.
With the objective of boosting the supply of rural housing and augmenting the supply of affordable housing in urban areas, the government will build in 2018 about 195.1 million homes in rural areas and 3.7 million homes in urban areas.
The budget proposed to assign infrastructure status to affordable housing and facilitate higher investments in line with the government’s aim to provide housing for all by 2022. The proposed financial assistance of Rs 2.04 lakh crore) to 99 Smart Cities will ease the pressure on the existing urban centres. The National Housing Bank will refinance individual housing loans worth Rs 20,000 crore in 2017-18,.
One of the most challenging problems of our times is homelessness. While we continue to record improvements in dealing with poverty, homelessness has been plagued with an unimaginative response from policy pundits. The apathetic approach of successive governments is symptomatic of the disease that ails India’s housing system. Fewer and fewer families can afford a roof over their head. This is a pressing issue and acknowledging the breadth and depth of the problem changes the way we look at poverty. We have still not recognized how deeply housing is implicated in the creation of poverty.
Affordable housing has assumed great importance because it generates direct and indirect employment in the medium term and sustained consumption in the long term. A 2014 study by the National Council of Applied Economic Research indicates that every additional rupee of capital invested in the housing sector adds Rs1.54 to the gross domestic product (GDP) and every Rs1 lakh invested in residential housing creates 2.69 new jobs in the economy. At the national level, the demand for affordable housing alone could be 25 million homes by 2022, which is four times the entire current housing stock-India Ratings forecasts.
There is little more critical to a family’s quality of life than a healthy, safe living space. However, this section of India’s poor lives in inhuman conditions and is often under the threat of displacement, harassment and arrest. Over the last decade, India has substantially expanded its net of welfare policies, aimed at lifting millions from poverty. It seems that the time has come for the ‘right to shelter’. Priority for housing ought to be higher than education and health. Sustainable and inclusive housing solutions can bolster large economic growth efficiently.
There was a time when landlessness, which inevitably accompanies poverty and its attendant ills, affected a smaller chunk of the population. However, the number of landless people has been rising. The ones without land join the ranks of the worst ones in extreme poverty and the task of poverty alleviation became even more difficult. Considering the links between landlessness and poverty or the need to score better successes against poverty, it is important to put a hard brake on the process of becoming landless.
Landlessness and the lack of secure property rights among the poor are among those inequities that perpetuate poverty, hold back economic development and fan social tensions. Demographic shifts, combined with poor or non-existent land ownership policies and insufficient resources have resulted in a surge of slum creation and further deteriorated living conditions.
Hernando de Soto in his book, "The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else", observed, “The hour of capitalism’s greatest triumph,” declares the famed Peruvian economist, “is in the eyes of four-fifth of humanity, its hour of crisis.” Soto explains that for many people in the developing world, the land on which they live is their only asset. If that property is not publicly recognised as belonging to them, they lose out that is, when men and women do not receive recognised legal rights to their land and can, thus, easily be displaced without recourse —development efforts flounder, undermining conservation efforts, seeding injustice and conflict and frustrating efforts to escape poverty.
The lack of official land titles is a major impediment to the acquisition of housing finance. People do not have documentary proof of being owners of the piece of land on which they live. Many low-income villagers have owned their land for generations. Community-recognised institutions can help legitimise claims to land that have been long tenured by a household.
Several State Governments have provided a degree of tenure security to poor households, which grant residents of unauthorised settlements specific period licences for their land or an official assurance that the user will not be forced to vacate the property. It also provides evidence so that usual and customary local practices support this assurance. All these rights entitle the occupant to presumed ownership.
It’s the supply part of the equation that is at the root of trouble. The growing migration of people to urban areas has overwhelmed infrastructure, pushed up land costs, result in housing shortages.
Building costs have also risen in recent years and developers have concentrated mostly on affluent sector where margins are very high. The Government's social housing programmes have largely targeted the rural sector.
The policy pundits and legislators are finally waking up to the seriousness of the issue. Odisha government recently took a revolutionary decision by providing urban poor residing in 3,000 slums land rights for residential use that are heritable, mortgageable and non-transferable. Endowing slum dwellers with mortgageable titles can open gates to many opportunities for improving health, education, employment and providing entitlements to social programmes.
There have also been a few policy sops: builders of affordable housing received 'infrastructure status', making them eligible for tax benefits subsidies, state incentives, and institutional funding; interest-rate rebates and waivers have been extended to households and laws are now in place to protect home buyers and tackle building delays but the solution will remain elusive. It appears impossible if enough land is not released for the creation of affordable housing. Land is a very price-sensitive commodity, and its current shortage in most city-centric areas is a major impediment to the development of affordable housing in areas where it is most direly needed.
The Government must adopt an out-of-the-box approach to break down the thickets of red-tapism. What are actually needed are revolutionary and cutting-edge reforms that rip through the dense jungle of paperwork and documentation. Given the scale, the need for adequate and affordable housing presents significant business opportunities for the private sector, especially for developers, investors and financial institutions.
Growing housing deficits have made it amply clear that this issue has not received the priority it deserves. The need of the hour is for the partners in the housing ecosystem to develop out-of-box solutions. The time is ripe for policy makers to focus on the right to shelter and bolster sustainable and inclusive housing solutions for better economic growth. This is one tide that can lift all the boats.
*Author of "Village Diary of a Heretic Banker"
*Author of "Village Diary of a Heretic Banker"