Friday

15


November , 2019
Mass housing to resolve India’s housing crisis
16:53 pm

Aritra Mitra


The urban population in India has increased from 109 million in 1971 to 377 million in 2011. It is projected to grow to 600 million by 2030. The Ministry of Housing estimated a housing shortage of 18.78 million houses during the 12th plan period, with 99% of the shortage among the economically weaker and lower income groups. At present, a shortage of 18 million homes across the country has been noted of which 15 million are needed for low income families, earning less than `16,000 per month.

This housing shortage is leading to unplanned urbanisation patterns. This crisis can be mitigated through mass housing projects.

However, developing mass housing in India has certain problems. The scarcity of land is a major problem in case of mass housing projects. Private players are unable to arrange large parcels of land that are typically needed for mass housing projects. The government needs to act as the facilitator. Acquisition of land for development of mass housing projects may be necessary. However, land acquisition has been a thorny issue in the past and needs to be negotiated carefully.

Land availability

The lack of land is a major issue, particularly for an island city like Mumbai. With mushrooming population, there is an imminent need to cater to the housing needs of the lower and middle income groups (MIGs) in Mumbai. Therefore, it is essential that the government frees up more land. If additional land tracts are provided, it will significantly address the needs of the existing home seekers. Udaan is a low cost mass housing project at Mumbai and is being developed by Sameep Padora and Associates. Across India, the number of prominent mass housing projects remains dismally low; quite contrary to their need in mitigating the crisis in urban affordable housing.

According to a report titled ‘Study on Land Acquisition v/s Land Pooling’ sponsored by National Housing Bank in 2016, “Under Land Acquisition Act (LAA), land was to be acquired when it was needed for a ‘public purpose’ or a company.”

The definition of ‘public purpose’ in the LAA was expanded in 1984 to include land needed for a government-owned or controlled corporation. The report stated, “Nothing has been more debated in the working of the LAA than the principles governing acquisition of land for public purpose, the absence of an exhaustive definition and the issues that emerge when land is not used for the purpose for which it was acquired. The expression ‘public purpose’ is not defined in the Constitution.”

Issues of land acquisition

According to sources, the biggest challenge faced in land acquisition is lack of proper land records. Also, land owners, at present have become quasi-developers because they want a share of the developer’s profit without going through the troubles of developing a project.

In case of land parcels in the periphery of urban territories of various cities, land owners are aware of the market dynamics and prefer to develop the land on their own or expect high prices. This is a major problem for mass housing projects, which ideally need large tracts of land in areas around metropolitan cities. Mitigating the demands from land owners is difficult for mass housing developers as they need to keep their offerings in the low/affordable price segment.

There is also a lack of marketable land parcels in India. Large tracts of centrally located urban land are owned by railways, port and defence authorities and hence are non-marketable. Additionally, scattered and poorly planned settlements make it difficult to provide land for mass housing projects. Land and construction costs have increased over the years. Financing affordable mass housing projects is resultantly getting difficult.

Additionally, in West Bengal, there are external issues relating to supply of construction materials that needs to be negotiated by developers. Such factors complicate the process for mass housing projects as it leads to escalation of input costs which eventually add up to the price of the offering.

Mass housing projects

West Bengal has a successful example of a mass housing project. Shukhobrishti, a mass housing project being  developed by Shapoorji-Pallonji at New Town, Rajarhat has received considerable market traction. The project entails construction of around 20,000 apartments for the Lower Income Group (LIG) and Middle Income Group (MIG) categories and is being consistently over-subscribed. 

Rana Gupta, Executive Vice President, Shapoorji Pallonji, spoke to BE regarding this mass housing project. He said, “For our project in West Bengal, the state government acquired the land for us. This model should definitely be followed elsewhere in India because it is not possible for any private company to acquire land for such huge projects.”

Ever since the first National Housing Policy was formulated in 1988, the government has tried to reform the housing and the real estate sector. However, its policies pertaining to the development of mass housing projects have been underachieved. The government may look to more Public-Private Partnerships (PPPs) to develop mass housing projects. The Shukhobrishti project is an example of a successful PPP model in development of a mass housing project.  

Gupta informed that Shapoorji-Pallonji is undertaking various affordable housing projects in collaboration with other companies in different cities of India. He added, “These projects are not mass housing projects like the one at New Town but they come under the affordable housing segment. We have purchased the land for these projects from land banks in cooperation with the state governments. The government should be involved and their cooperation is required or else it is impossible to develop these affordable housing projects.”

The real estate sector is a major component of the Indian economy. It is estimated that the real estate sector contributed to 6.3% of the GDP in 2013-14, at an estimated Rs. 3.7 lakh crore and employed about 7.6 million people. Affordable mass housing will not only lead to better quality of life in Indian urban centres, it will help lessen the shortage in urban dwellings. It will significantly boost the country’s GDP.

 

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