Get Innovative on Housing

Abstract

The slowdown in the Indian economy since 2008 is a cause of concern for policymakers. The growth rate continues to be stubborn at the lower end and the current global environment is not very helpful for increasing exports.

The Indian economy has to look inward for avenues to grow. One productive way to spur demand would be to address the issue of shortage of houses in the country.

As is well known, the housing sector has interlinkages with nearly 269 other industries and sectors in the economy such as cement, steel, paints, building hardware, etc. Therefore, developing the housing sector can have a direct impact on employment generation, GDP growth and consumption patterns.

The shortage of housing is concentrated in the lower segment of the market, and mainly in urban areas. According to official estimates, there was a shortage of nearly 22 million units for the economically-weaker sections (EWS) and three million units for the low-income group (LIG) as of 2007 in urban areas.

To effectively address this shortage, it would also be important to consider the physical location of houses for weaker sections. If these houses are far from city centres, there is every possibility these will not be occu- pied, and weaker sections may continue to inhabit slums or even roadside pavements. On the other hand, if these houses, generally located in far-flung areas, get occupied, they could cause additional pressure on the existing transport system. In such a situation, housing amenities with modern technology, high-rise buildings and efficient land utilisation may be appropriate for consideration. Meeting such a large demand of housing needs substantial amount of cement, iron and steel, sanitary ware, plumbing material, wood and other materials, including raw materials and energy in terms of electricity. The country does have some installed capacity but it would be too short to meet the demand for such a huge expansion of housing stock. Here, it would help to think out of the box. India can take advantage of the grim economic situation in some countries in Europe and the US, and import necessary material for undertaking such expansionary housing projects. In view of the prevalent economic situation in these coun- tries, there is unutilised capacity in their industry and idle shipping capacity across the world. If India is able to have an agreement with the US or other countries, it can manage to import, at lower prices, a substantial amount of raw materials through easily-available shipping. In addition to raw materials, India could also consider importing wooden fittings, given that India has poor forest cover. India can also import technology and know-how to build 1,000 apartments in one building with centralised facilities, including airconditioning. This scheme can help spur growth in our economy as well as enable the US and other countries in the west to spur industrial production. Pursuing a housing treaty with the US and other western countries probably could also be productive. In India, urbanisation has been progressing rapidly from around 11% in 1901 to 31% in 2011, and is expected to reach 41% by 2030. House prices are rising rapidly in almost all metropolitan cities. Also, one reason for ris- ing house prices is the huge increase in land prices mainly because of its scarcity in urban areas. In this context, one wonders why expansive cantonment areas are permitted to stay within the city limits of Mumbai, Delhi, Bangalore, Hyderabad and other megacities. Cantonments have their own dedicated administrative services, and are designed to be self-sufficient and self-dependent. The government incurs a huge amount of expenditure to ensure this self-sufficiency for defence. Similar is the story of old and unutilised airports occupying large urban spaces. And then, right in the heart of our national Capital, there is the Lutyen’s bungalow zone (LBZ) set up in 1920s, covering about 7,000 acre of prime land. These old, thick-walled bungalows must be expensive to physically maintain for the national exchequer. In contrast, modern, spacious multi-storey apartments that are more energy efficient can be built for our political elite and senior government officials, setting an example of optimal utilisation of scarce urban land. To tap the hidden potential in housing sector and encourage development in a planned manner, the government could consider some measures that instil confidence in the market. That means an active regulatory and supervisory body for the housing sector.