Policy is the Key to Housing for All

BY Prof Dhaval Monani Mumbai / November 11, 2024: Housing for all has been the war cry of the government since 2015. Though it has failed to reach its target of 20 million homes, it has done commendable work to create the largest social housing program globally. In spite of delivering over 15 million homes in less than 10 years – to give perspective, the whole of the United Kingdom has 29 million homes and Australia has less than 11 million homes, the deficit in urban India still stands at 26 million homes. 

Historically the Indian state has taken a parental approach, mandating the provisioning of housing. A young India dealing with refugees, mass urban migration, and the need to rapidly industrialise, focused on housing provision either by the government or the private sector through government provided or financed housing during the First Five-Year plan period. The inability of the government then to address the issue meant an acceptance of the proliferation of slums and squatter rights that plague the country to this day. The first Slum Areas Clearance and Improvement Act of 1956 codified squatter rights. 

The Third Five-Year Plan focused on the provisioning of land for development and in 1962, the formation of Town and Country Planning Organization showed the emphasis on physical planning. The Fourth Five-Year Plan recognized the role of the State as a provisioning agency for the first time, and the Housing and Urban Development Corporation was formed to facilitate housing sector finance. In many ways, this was a pivotal moment as it recognized that the private sector needed to play the leading role if the housing issue was to be addressed successfully. 

In 1976, the Government enacted the Urban Land Ceiling and Regulation Act to deter concentration of land holding within a few selected hands. In 1977, another pivotal decision was the approval for setting up of the Housing Development and Finance Corporation in the private sector. The impact of this decision can be gauged by the fact that by 2021, HDFC not only became the largest private mortgage provider globally but had also funded 8.9 million homes in India. 

The Sixth and Seventh Five Year Plans continued the focus on urbanisation. The Indira Awas Yojana, which was launched in 1985, went back to a grants model for rural homes for the underprivileged groups. In 1988, the First National Housing Policy was introduced with the launch of the National Housing Bank. The Policy indicated the Government’s focus on housing through provisioning for the underprivileged and facilitation of the private sector. 

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Post-liberalisation, the government focused on decentralisation of urban decision-making. The Eighth and Ninth Five Year Plans focused on infrastructure and supporting services for housing in addition to facilitating housing finance. Post 2000, a number of marquee lenders such as Gruh Finance, Micro Housing & Finance Corporation, and Home First pioneered lending to the informal sector. They dramatically repriced risk-taking housing finance to the bottom of the pyramid with 200,000 to 300,000 INR mortgages. The Tenth Five Year Plan led to the launch of the Jawaharlal Nehru Urban Renewal Mission which focused on basic services for the urban poor and consensus building amongst communities for eradicating slums. The Eleventh and Twelfth Five Year Plans included the Rajiv Awas Yojana focused on slum prevention and improving infrastructure. Improvement in basic services in slums and the emphasis on consensus meant that it became more difficult for slum redevelopment, increasing bureaucracy and rent-seeking. 

2015 was a turning point for housing policy as for the first time since 1947, the government made it a mandate to create market-based and industry-participatory models to build 20 million urban homes – a colossal challenge by any stretch of imagination. 

Till 2024, over 15 million urban and 20 million rural homes have been grounded under PMAY-Urban – to put into perspective, the 2012 Task Force on Urban Housing Shortage reported that during 2012-2017, the shortage was 18.68 million houses. As much as 95.62 percent of the shortage was for Economically Weaker Sections and Low-Income Group households. 

Initially, the Scheme intervention was to create a vibrant market through the brilliantly thought through and executed Credit Linked Subsidy Scheme – but along the way, due to various factors the scheme started to include middle-income homes instead of the initial target of the Economically Weaker Section and Low-Income Group homes. It was much more lucrative for the private sector to cater to a rapidly increasing middle class and the government had to intervene doing the provisioning themselves. The government built homes have been the mainstay of PMAY-U but the indirect subsidies amount up to nearly 1,500,000 per unit. 

PMAY-U will need to reinvent itself to best utilise government resources and Public Private Partnerships seem to be the best way ahead. PPPs have had mixed results in India, and therefore require a complete rethinking that motivates the private sector and the capital resources. 

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(The writer is an, Associate Professor and Director, Affordable Housing, Anant Centre for Sustainability, Anant National University and Dr Sharadbala Joshi Senior Researcher and Visiting Faculty, Anant Centre for Sustainability, Anant National University.)

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