Housing For All: A Hope On The Horizon
Maslow's hierarchy theory propagates the three basic needs of mankind – Food, clothing and shelter. In other words, the quintessential “Roti, kapda aur makaan”.
In a country like India, with a vast population of over one billion, and in times such as this, the foremost concern lies with the primary need of shelter. The current stratification across income groups indicate that the major proportion of this need emanates from the economically weaker section (EWS) and the low-income groups (LIG). Most of this housing shortage does not get translated into demand due to the low affordability of the EWS and LIG segment.
As per estimates of the Ministry of Housing and Poverty Alleviation (MoHPA), there is a shortfall of at least 18.6 million dwelling units in the country. A significant 95 per cent of this shortfall is in the EWS and LIG segments. While the shortfall in the middle income and higher income group is only 4.38 per cent, for the LIG it is 39.4 per cent and in EWS it is a whopping 56 per cent. Unofficial estimate of the overall housing shortfall puts the figure as even higher. Furthermore, there is also a shortfall in housing for the urban masses, India's urban population having increased substantially from 27.8 per cent to 31.2 per cent between 2001 and 2011, pointing towards the fact that policies may not have met their intended objectives in a structured manner.
The only imminent solution to address this mammoth shortfall in housing is to develop large-scale budget housing projects.
Meanwhile, the real estate sector, over the past decade, witnessed sharp increase in property prices, at a pace that was higher than the income levels across the country. However, it was also offset with periodic economic slowdowns that impacted its growth. With every adverse economic scenario, developers who initially catered only to the premium segment were forced to sit up and take stock of the current changing dynamics and resolve to plough forward through affordable housing. However, there were challenges a-galore, right from dearth of favourable government policies to the availability of successful working models of affordable housing. Some of the key challenges that exist in India include high cost of land, cumbersome land acquisition procedures, lack of clear rules on land development , rudimentary land records leading to a number of land transactions in litigation, faulty urban planning and bylaws that restrict floor area ratio (FAR) and building height, and lack of institutional financing.
Today, there is hope on the horizon for 'Housing for All'. With the Union Budget 2017-18 having emphasised the importance of housing, according infrastructure status to this sector, things are expected to change for the better. Given the benefits offered in the budget, the clearer definition of affordable housing in terms of area, relaxation of construction timelines for affordable housing projects, and tax incentives, the country's share of homeless people have a fair shot at owning a home in the near future. Besides, the nationwide scheme of Pradhan Mantri Awas Yojana (PMAY), launched with an ambitious vision of providing affordable housing solutions for all Indian citizens, aims to build 2 Crore houses across the country. This initiative envisions a multitude of strategies such as tax rebates, monetary support, relaxed development regulations, discounted interest rates, etc. to provide Housing for All by 2022.
This has spurred developers to strategies to build more modest, affordable apartments to suit middle-class pockets. Since affordable housing typically worked with lower margins, the budget remunerated that with good tax benefits, attracting the interest of developers. Consequently, several real estate firms today have plans to enter the budget housing space after a host of incentives for developers of affordable homes were announced.
While teething issues are expected to come up in implementing these policies, there is no denying that the recent policy developments in the real estate sphere would work towards diminishing the housing shortfall and shape homes and neighbourhoods, integrating the requirements of all income classes across the country. Thus, with the hope that there would be ample support and good intention from all quarters concerned, the vision of 'housing for all' may just turn to reality in the forthcoming future.
Article contributed by Sangeeta Sharma Dutta, Assistant Vice President – Research, Knight Frank India