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The proposed ‘Housing for All’ scheme is many years late and falls short on many fronts. The scheme aims to provide 2 crore urban homes. This dream cannot become a reality through interest subvention and better financing alone.
There are three main questions that need to be addressed. One is the affordability and protection for home buyers. The fast growing neo-middle class segment finds itself shut out from the dream of owing a home due to sky high prices. Home buyers also have no protection and are at the mercy of developers who may delay projects or change specifications. Developers say that soaring land prices and delays in approvals along with the high interest rates they pay for their funds is the reason why the ticket price is high. Two, a large number of workers in the cities are self-employed – over 40 per cent as per NSSO survey data for 2012 —and they have difficulty in getting a home loan. A plumber or an electrician who wants to buy a home is unable to do so as there is typically no credit history or banking transaction record to estimate credit risk. What systems will be created to include more people inside the housing loan net?
Three, housing and infrastructure development requires land and acquiring it in cities is a Herculean task. We saw this with the metro rail projects in cities such as Chennai, Hyderabad and Kochi, where land acquisition issues add to gargantuan cost escalations and project delays. Two crore urban homes, assuming a size of 270 sq ft (based on EWS definition) and a more generous FSI of 3, puts the land requirement at 167 sq km -- 40 per cent the area of Chennai city, just for the homes. Add in land required for infrastructure and commercial space, we are looking at requiring vast expanses. It seems like the proposed solution lacks a punch, given the enormity of the problem. About 11 crore houses will likely be needed by 2022 in both urban and rural locations to meet the goal of housing for all. Urbanisation is a trend that is expected to accelerate in the coming years. The proposed solution does not address the magnitude of the issue.
Chief Research Analyst
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