The objective of the scheme is to make 2 crore homes available in India's urban areas. What is essential to achieve this is a fast-tracked approval process, financial empowerment of the low-income categories to enable them to purchase a house in such areas - and unlocking land for creating affordable housing.
By providing an interest subvention/subsidy scheme, the government is allowing access to cheaper structured finance to such low-income categories. Also, it has already previously increased the amount of home loan that can be availed by people in the metro cities, thereby acknowledging the fact that houses in urban areas are more expensive, that greater financial support is therefore required. By increasing the income limits for the EWS and LIG categories, the government has also ensured that a larger portion of the urban poor will be covered under the scheme.
This scheme aims to provide the urban poor with the financial muscle to buy affordable houses. The next important step is to provide the working mechanism for this scheme, with the guidelines to be formulated by the ministry and RBI, to allow for its execution by the banking sector. Which leads to the first question mark in the government's Housing For All by 2022 scheme.
While the slum-dwellers will be provided liveable shelters at no cost under this scheme, likely through public-private partnership slum rehabilitation project, the scheme does not offer tangible solutions for the urban poor who is not residing in a slum and wants to own a house in a metro city. Though the loan amounts have been increased, his income levels may not qualify him for the loan disbursal amount that is high enough for him to buy a house in the current scenario, when housing prices are high.
This leads us to the next question mark - namely, the issue of achieving a solution whereby cheap, newly-constructed houses are available to such class of urban poor and migrants who do not stay in slums which will be covered under the slum redevelopment part of the Housing for All scheme. To create housing for these urban poor, the only solution lies in the unlocking of land in the urban areas. The kind of housing supply that the government is targeting seems out of the question if appropriate lands are not made available.
To gauge the actual land requirements to make the Housing For All by 2022 feasible, here is a quick back-of-envelope calculation:
- Houses to be built: 20,000,000
- Area assumed per house: 500 sq.ft.
- Total area to be constructed= 20,000,000 X 500: 10,000,000,000 sq.ft.
- Total land requirement (assuming FSI of 4): 10,000,000,000/4= 2,500,000,000 sq.ft.= 57,392 acres= 232.25 sq. km., which is around 50% of Mumbai's area (BMC limits)
Needless to say, this will require massive efforts to recognise and delineate the non-essential lands currently being held by large government bodies such as Indian Railways, Ministry of Public Enterprises, Port Trusts and Department of Heavy Industries. Unlocking such lands while speeding up the approval process and creating incentives for private sector participation are all needed as part of a large, coordinated effort if we are to realise the vision of Housing for All by 2022.
The author is Chairman & Country Head of JLL India