Indian Housing Scenario Problems and Remedies

G B Singh, Chief Consultant - System Building Technologists, New Delhi

Magnitude of Problem

The total housing shortage at the end of tenth plan has officially been assessed as 24.71 million dwelling units for 67.4 million Households, where 98% of this shortage was in the Low Income and Economically Weaker Sections (EWS) segment. The situation even at the end of 11th Plan, despite efforts envisaged to be implemented, is also not projected to improve, but rather this shortage is expected to escalate to 26.53 million houses for 75.01 million households.

Dimensions of the Problem

Un-planned growth of settlements

A number of housing clusters have mushroomed in and around various metropolitan centres in haphazard and unplanned manner, without a proper layout and devoid of service lines and other essential facilities. These unauthorized developments are encroachments on land parcels belonging to Govt. bodies, public- private-institutions or areas meant to be green belts. The removal/ re-settlement of these overcrowded un-hygienic clusters, commanding massive vote banks, is a serious challenge to correcting these aberrations for a planned growth of cities, especially in our democratic set-up? Therefore, massive concerted effort needs to be made with best of administrative actions and deft political handling for the sake of our future generations.

Non availability of developed land and ineffective and unfavorable land management

There is dearth of developed and serviced land parcels at reasonable rates, especially to meet the needs of most needy section of society. The slum clusters currently inhabited by these deprived sections are located in high land cost neighborhoods near central business districts of the metropolitan centres. These land parcels dotted with shanties apart from being eye sores and not properly serviced also mean in-appropriate and gross under utilization of precious land banks.

There is lack of development and enforcement of master planning for long–term growth of cities with earmarked areas for different sectors of growth like light/heavy industry, commercial, Education, health, housing forests and parks etc. serviced by appropriate infrastructure and transportation system. Therefore earmarking of appropriately serviced land with needed infrastructure and growth promoting land management policy are the urgent need of the time.

The current system of management of land records manually by a junior level functionary at district level in different units of measurement, complicated by conflicting hereditary claims are subject to exploitation and lead to long drawn out legal battles. Moreover, the land development rules, permitting very low FSI utilization even in costliest central business districts is ir-rational and far below the international norms. The fees for registration of property deeds is also unreasonably high and needs urgent rationalized.

The remedies would include ensuring that the Development Plans/Master Plans as well as Zonal Plans and Local Area Plans being made and updated regularly, so that adequate provision is made for the homeless as well as slum dwellers. Prepare Master Plan and Metropolitan Plans in consonance with the concerned District Plan and the State Regional Plan. Identifying city specific housing shortages and preparing city level Urban Housing & Habitat Action Plans for time bound implementation.

For supply & management of Land a National Land Policy should be developed for optimal use of available resources including enhanced supply of serviced land for sustainable development. Promote optimal utilization of land by innovative special incentives like relaxation of FAR for ensuring that 20-25% of the FAR are reserved for EWS/LIG units or issuance of Transferable Development Rights for clearance of transport corridors and availability of FAR in outer zones.

Consider for upward review, the presently authorized Floor Area Ratio (FAR) in line with international practice of making more efficient use of scarce urban land through construction of highrise buildings in consonance with densities specified in statutory Master Plans.

Promote planning and development of industrial estates along with appropriate labor housing colonies serviced by necessary basic services. Incorporate provisions of model building bye-laws prepared by Town & Country Planning Organization (TCPO) and National Building Code in their respective building bye-laws. Make suitable provisions in the Building Bye-laws for innovative energy conservation practices and mandatory rain water harvesting for specified owners of buildings. In order to ensure that 10 to 15% of land or 20 to 25% of FAR /FSI, whichever is greater, is earmarked in every new public/private housing project, appropriate spatial incentives to be developed by Urban Local Bodies (ULBs) and Development Authorities.

Encourage adoption of critical urban reforms relating to municipal laws, building bye-laws, simplification of legal and procedural frameworks, property title verification system and allied areas. Promote improvements for elimination of ambiguities in transaction of conveyance deeds, lease deeds, mortgages, gifts, partition deeds and allied property-related documents.

Promote in-situ slum up-gradation with partnership between the Central Government, State Governments, Urban Local Bodies, Banks/MFIs and potential beneficiaries.

Growth of a city beyond reasonable limits imposes unbearable strain on its services. City planners should be encouraged to lay down norms for development of urban sprawls and satellite townships. Reduction in the rate of in-migration into mega and metro cities is urgently needed through preparation of State/UT level regional Plans based on fast transport corridors for balanced growth.

Model bye-laws should be developed to promote the use of renewable energy sources particularly solar water heating systems in residential and commercial buildings. Promote appropriate ecological standards for protecting a healthy environment and providing a better quality of life in human settlements. Special attention will be paid to housing in coastal areas in order to promote fragile ecology. Further, adequate mangrove and allied plantations should be promoted in coastal areas especially those which are in high disaster-prone zones to avoid loss to life from natural disaster.

Develop Greenfield towns & integrated urban housing extensions of existing towns with complementary infrastructure or Special Economic Zones (SEZs) with both FDI and national investments in housing and infrastructure. Ensure that such fully integrated housing projects are well connected by MRTS corridors.

Enforce regulatory measures for planned development in an effective manner. Check the growth of unauthorized colonies, new slums, and unauthorized constructions, extensions of existing properties and commercialization of residential areas.

Promote Public-Private Partnerships in planning and funding based on potential of local level stakeholders. Develop suitable models for private sector's assembly of land and its development for housing in accordance with the Master Plan. Promote Residents' Welfare Associations (RWAs) for specified operation and maintenance of services within the boundaries of given colonies as well as utilize their assistance in developing an early warning system relating to encroachments.

Sustainability issues in development should be adequately taken care of, for instance by developing Green belts around cities with a view to maintaining the ecological balance. Suitable green recreational areas like zoo, lakes and gardens will be earmarked /developed for public visits in the Master Plan of each city/town. Water bodies shall be protected with special emphasis on keeping the flood plains of tropical rivers free from construction or encroachments. Efforts should be made to encourage cities/towns to keep a significant proportion of the total Master Plan area as 'green lungs of the city.

Lack of Financial Resources

Indian Housing Scenario Problems and Remedies

The assessment of housing shortage and requirement of funds for the same, as per National Housing Bank, for the period 2007-12 has been depicted in chart hereunder.

The National Housing Bank (NHB) and NCAER estimate the market size of the underserved segment at over a 100 million households. Most of this population have limited or no access to affordable housing or housing finance despite being able to afford simple habitable units.

The International Finance Corporation (IFC), the private sector arm of the World Bank Group, however, has indicated that estimated investments to meet this housing requirement through 2012 as close to $80 billion. IFC is a leader in sustainable investment in emerging markets. IFC promotes private sector development and economic growth as a way to reduce poverty and improve people's lives.

A number of Housing Finance Companies and Microfinance institutions have shown interest in entering/expanding housing finance product offerings. However, such institutions have limited experience in managing long-term collateralized financial products and require substantial assistance in capacity building.

IFC provides advisory services by establishing partnerships with donors, governments, and the private sector to design and deliver technical assistance programs and advisory services that promote entrepreneurship, improve the investment climate, mobilize private sector investment and enhance the competitiveness of micro, small and medium enterprises.

The Working Group on Urban Housing pertaining to the 11th Plan has, however, made different assumptions on unit cost of construction of houses in million plus cities and other urban areas for estimat ning the investment required for overcoming the housing shortage. The total estimated investment for meeting the housing requirement up to 2012 was estimated by it to be of the order of Rs.3,61,318.10 crores. This consisting of Rs.1,47,195 crores for mitigating housing shortage at the beginning of 11th Plan and Rs.2,14,123.10 crores for new additions to be made during the 11th Plan period (this includes construction of pucca houses & upgradation of semi-pucca and kutcha housing units).

The National Urban Housing and Habitat Policy issued by the Government of India recognizes the fact, that public sector resources alone cannot meet this high demand. It advocates for the involvement for multiple stakeholders and seeks to promote public private partnerships to meet this demand.

Some of the steps outlined in the National Urban Housing and Habitat Policy include:

  1. A Secondary Mortgage Market should be promoted by the Reserve Bank of India (RBI)/National Housing Bank (NHB). This will enhance transparency and flexibility in the housing market.
  2. Residential Mortgage Based Securitization (RMBS) need to be nurtured through NHB, Scheduled Banks and Housing Finance Corporation (HFCs).
  3. A Model Rent Act should be prepared by the Government of India to promote rental housing on the principle that rent of a housing unit should be fixed by mutual agreement between the landlord and the tenant for a stipulated lease period prior to which, the tenant will not be allowed to be evicted and after the expiry of the said lease period, the tenant will not be permitted to continue in the said housing unit.
  4. The feasibility of a National Shelter Fund to be set up under the control of the National Housing Bank for providing subsidy support to EWS/LIG housing would be examined in consultation with Ministry of Finance. The NHB will act as a refinance institution for the housing sector.
  5. Efforts should be made to encourage Foreign Direct Investment (FDI) from International institutions, Non Resident Indians (NRIs) and Persons of Indian Origin (PIOs) in the housing and infrastructure sector in consultation with the Ministry of Finance and RBI.
  6. In order to facilitate RMBS transactions, stamp duty on the instruments of RMBS across all states should be rationalized.
  7. Rental housing provides a viable alternative option to the home seekers and the house providers alike. Incentives are to be provided for encouraging lending by financial institutions, HFIs and Banks for rental housing. Also, Companies and Employers will be encouraged to invest in the construction of rental housing for their employees.
  8. Plan Funds and other assistance for housing and infrastructure should be dovetailed according to the Action Plan prepared and adopted by the States under their State Urban Housing and Habitat Policy (SUHHP). This would bring about synergies in the operation of various schemes and funding sources.
  9. Micro-Finance Institutions (MFIs) to be promoted at Central and State levels to expedite the flow of finance to urban poor. In this regard, suitable mechanisms would be evolved to develop simplified norms for prudential rating and providing finance to MFIs. Adequate regulation of MFIs would be undertaken to ensure that MFIs do not burden the poor by charging usurious interest rates and their operations are kept transparent
Inadequate Fiscal Incentives

There is a lack of fiscal incentives to encourage housing sector in general. The sector does not get the preferred funding treatment from financial institutions for not being defined as an "Industry." The mortgage rates for the buyers are still high for the majority of families. Moreover, there are very limited personal taxation incentives for acquisition of such long–term fixed assets for self–occupation or renting.

It is therefore recommended that:
  • Suitable fiscal concessions for promoting the housing sector would need to be developed by the Ministry of Housing & Urban Poverty Alleviation in collaboration with the NHB and the Ministry of Finance.
  • Develop convergence between urban sector initiatives and financial sector reforms.
  • Central Government and Governments of States/UTs should promote innovative forms of public-private partnerships.
  • States/UTs are expected to develop 10 years perspective Housing Plans with emphasis on EWS and LIG sectors.
  • Special financial and spatial incentives need to be developed for inner-city slum redevelopment schemes.
  • The Central and State/UT Governments should develop special packages of incentives for in-situ slum up-gradation.
  • In order to facilitate RMBS transactions, stamp duty on the instruments of RMBS across all states should be rationalized.
Manpower Shortage

There is a tremendous shortage of supervisory, as also skilled manpower to meet the needs of the construction sector. Even the availability of unskilled labour, said to be available in plenty, is also prone to seasonal shortage during local festivals and harvesting times. Not just unskilled workers, there is a severe shortage of electricians, plumbers, fitters, carpenters, bar-benders, etc to work on big infrastructure projects and in the manufacturing sector.

The Indian construction industry, which is set to witness massive investments in the next five years, is facing an acute shortage of skilled workforce. The construction industry employs about 31 million people, second only to the agriculture sector the workforce requirement is about 5 million people every year over the next seven years to eight years to sustain the current 8 percent growth rate. With only 10 million work force available in the country every year, the construction industry will face a daunting task in future in terms of recruiting and retaining skilled manpower.

According to a Planning Commission report, the economy needs to invest nearly $500 billion in infrastructure over the next five years. And, to implement such mammoth projects, the manpower required would be huge. In fact, by 2013, India's total manpower requirement would balloon to 92 million, of which, 57 million would be blue-collar workers, the report says. Where will industry find so many workers?

A study undertaken by the Association of Indian Chambers of Commerce and Industry (Assocham) has shown that the number of vocationally trained workers in India stands at just 5.3%, compared to 95.8% in Korea, 80.4% in Japan, 78.1% in Canada and 75.3% in Germany. The report points out that nearly 93% of workers (or, 353 million people) in India’s un-organized sector do not get employment-related training. The country is likely to face a shortage of nearly 50 million skilled workers by 2010, it cautions.

The only way industry can beat the crunch is to start training its own manpower. Take, for instance, the case of L&T, which set up Construction Skills Training Institutes in five metros of the country. The institute trains people in essential skills like masonry, carpentry, bar-bending, steel-fixing, plumbing and electrical wiring. L&T personnel who work on construction sites are drafted and professionally trained to instruct workers at these institutes. They are assisted by other experienced workers who demonstrate field practices. The trained workers are eventually posted to different work sites. L&T has, so far, managed to train nearly 8,500 people.

The CIDC has since initiated a number of such workmen training institutions in different states to train and certify workmen and construction supervisors. With a pan India footprint, the programme is increasingly being patronized by both corporate and development sectors. The sustainability of the programme lies in the fact that it has now spread to 17 states and has benefited over 200,000 citizens with a target to train, test and certify over 500,000 people in 2008-09.

Technology & Materials – Urgent Need for Improvement

It is matter of great concern that the traditional burnt clay bricks continue to be the primary raw material for housing activity all over India. Brick making consumes fertile top soil from agricultural fields making these unfit for cultivation for many years. Moreover baking of bricks consumes energy and burning coal emits unhealthy smoke and carbon dioxide into the atmosphere.

It would be worthwhile to note, that the land wasted in the production of current annual requirement of 170 billion bricks deprives the country of food production that could feed 30 Lakh Indians for the whole year. Moreover, production of these bricks consumes around 24 million tonnes of coal and the process emits 61.3 million tonnes of CO2 into the atmosphere. We, as a nation need to continuously increase our food production to feed our growing millions. Therefore, we can ill afford to waste our precious agricultural land for brick making, since it is against our national interests. This amounts to meeting one basic need of shelter, while sacrificing the other basic requirement of food.

It is therefore imperative that we must look for and develop alternative materials, which are energy efficient and more environment–friendly. Fly Ash Clay bricks, Fly Ash lime Sand bricks are some of the alternatives being promoted by CBRI, NTPC, Fly Ash Mission, but with limited success. Fly Ash based Autoclaved Aerated Concrete (AAC) blocks, produced in big plants or more efficient and economical alternative of site produced Cellular Lightweight Concrete (CLC) blocks are gaining increased usage. The latter produced in an environment–friendly process need least intrinsic energy, offer superior thermal efficiency and lower water absorption than clay bricks, need lower raw material inputs and make productive use of fly ash – a waste industrial output. This seems to be one of the ideal futuristic material.

Even on the technology front, we continue to depend on manpower intensive traditional construction practices, which are slow and highly dependent on skilled labor input - a category already scarce in availability. Therefore, in order to be able to meet the huge housing shortage, we need to adopt partially or fully mechanised methodologies, which primarily need some unskilled labour inputs. Large scale application must be encouraged for semi-mechanised and mechanised systems like monolithic concrete/CLC construction using large area wall-, slab- forms or room sized forms or tunnel forms, with appropriate thermal insulation for external walls. These in-situ technologies are highly effective for mass scale application in earth-quake and tsunami prone conditions in India. These would provide faster, durable, economical dwellings deploying limited unskilled inputs. Use of prefabrication technology or ready-made building components in traditional constructions needs to be urgently encouraged. This can however be feasible, only if the establishments, producing and marketing such components are subject to similar labour laws and taxation structure as applicable to manufacture of clay bricks.

The proposed alternative technologies, which offer safe, durable, energy efficient, economical and environment–friendly green dwellings to our countrymen are recommended to be encouraged for wide scale application.
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