Expert Speak Young Voices
Published on Sep 07, 2020
Rental housing scheme must avoid predictable pitfalls In July 2020, the Government of India launched the Affordable Rental Housing Complex (ARHC) Scheme to provide access to dignified affordable rental housing to urban migrants, including workers in industry, health institutions, street vendors, students, etc. under two separate models. One, 1.08 lakh vacant houses built under JnNURM and Rajiv Awas Yojana will be repurposed as rental houses. Two, public and private entities will be incentivised to develop rental housing on their vacant land. The scheme will target urban migrants in the Economically Weaker Sections/Low Income Groups. The Government of Tamil Nadu, as also some private industry players have already shown their inclination to adopt the scheme. Although welcomed by many as a timely measure, the history of housing schemes calls for cautious optimism. A day before the national lockdown began, the Government of India answered in the Lok Sabha that there are an estimated 10 crore inter-state migrant workers. About 50 lakh to 90 lakh workers migrate annually, typically from less affluent states to richer ones for better employment opportunities. Over half of all out-migration, around five crore workers, is from the states of Uttar Pradesh and Bihar. Jharkhand and Madhya Pradesh make the top four sending states, whereas Delhi, Maharashtra, Tamil Nadu, Karnataka, etc. have the highest in-migration. In urban agglomerations with the highest population in the receiving states, i.e. in NCT of Delhi, Mumbai Metropolitan Region (MMR), Chennai, Bengaluru, etc. migrants, including intra-state migrants, make up nearly half the population. While Delhi with 70 lakh migrants, and Mumbai with 99 lakh migrants are home to most migrants in aggregate terms, southern cities in contrast have seen a higher growth rate in migrant population in the past decade. Despite the centrality of migrant workers in sustaining cities as growth engines, the question of where the migrants would live has been a sore point. It is in these receiving states that the ARHC Scheme could find full import. India has seen precious little progress towards urban migrant housing. For a variety of reasons – ranging from migrants’ preference for flexible housing arrangements over investments in permanent ownership of houses, benefits of social networks like informal credit and insurance, proximity to place of work, etc. as also lack of other alternative avenues for housing, slums and other informal settlements have proliferated despite decades of effort by various governments. Cramped spaces and shared bathrooms, lack of access to utilities like water, electricity, etc., poor hygiene, and insecurity of tenure characterise these living arrangements. Migrants often also live within the worksite – in the industrial peripheries of cities and within construction sites. Those unable to secure such accommodations are forced to live in open spaces such as under flyovers and on pavements. To enable construction of rental complexes, the ARHC Scheme provides for a distinct regulatory framework. Each complex must have at least 40 dwelling units in single and double bedrooms, and dormitories, whose sizes have been prescribed by the scheme. Special provisions relating to land use, permission to construct 50 percent additional floor space on a given plot without payment of premium, exemptions from existing rent control laws, and single window clearance for projects under the scheme have been envisioned. Further, the onus of making necessary trunk infrastructure like roads, electricity, etc. available shall be on the local authorities. The operation of these rental complexes shall be as per concessionaire agreements, valid for 25 years, where the local authorities shall fix the rent. Rents may increase biennially by 8 percent, with a cap of 20 percent aggregate increase over five years. Other incentives include income tax and GST exemptions, priority sector credit lending, and plans to allow foreign direct investment as well. The success of the scheme will depend on its ability to avoid the problems that past housing schemes have run into. The primary focus of housing schemes since independence has been on house ownership. Even under the Rajiv Awas Yojana, and later the PM Awas Yojana, ownership is incentivised through loans and subsidies to beneficiaries within certain income limits. While 1.4 crore slum households reportedly existed in 2011, the Ministry of Housing and Urban Poverty Alleviation estimated 1.9 crore houses were required in 2012. In contrast, the PMAY Scheme, started in 2015, has seen 1.3 crore houses sanctioned as of March 2020, while only 32 lakh houses have been delivered to the beneficiaries. The slow progress forces lakhs to continue living in slums. Currently, the ARHC Scheme targets three lakh beneficiaries, which may inevitably exclude lakhs of migrants who require access to rental housing. The scope of the scheme must appropriately correspond to the demand from migrant workers. In 2015, the Central Government introduced the draft National Urban Rental Housing Policy, which saw demarcation of market based, need based (for BPL, EWS, and LIG), and social rental housing (for migrant labour, working persons, and students). Similar to the ARHC Scheme, private and public entities are expected to build on their land under the policy. Incentives included tax exemptions, and reforms in land use regulations and tenancy laws. In the backdrop of 1.1 crore vacant homes in metropolitan and other cities, private builders’ have long demanded reforms in tenancy laws. Builders’ incentive to encourage buyers to invest in second homes which can be rented out may not particularly align with the Government’s nudge towards social rental housing. This was seen in the discontinuation of a rental housing scheme for Mumbai within five years in 2014, whereby focus once again shifted to house ownership – the Mumbai Development Plan 2034 now targets construction of 10 lakh affordable houses in the next two decades. Equally relevant is the issue of vacancy in government built housing, that arise due to low quality constructions, fear of loss of livelihood and social networks, lack of trunk infrastructure and neglect in municipal service delivery, etc. Where houses are located far from the business areas, the absence of affordable transport options plays a critical role. These problems are not new and have led to vacancy of houses built by both state governments and the central government. In the absence of proper monitoring and implementation, these problems may plague the 1.08 lakh government built houses. Similarly, high land costs, and unavailability of sizeable land pockets near business areas in the city may inevitably affect demand for ARHCs and thus the success of the scheme. In view of past government schemes like the Rajiv Awas Yojana, industry players have argued that mandatory provisions regarding size and number of houses per project have discouraged the private sector from entering the affordable housing space. The ARHC Scheme too includes mandatory provisions of construction of at least 40 single/double bedrooms or dormitories of with lower and upper limits on carpet area. As such, excessive regulation that inhibits forces of demand and supply, between migrants willing to take up rental housing and developers, may disincentivise projects under the scheme. In a post Covid-19 world, it is a worthwhile aspiration to provide decent, flexible, and accessible housing to urban migrants. One can ill afford to ignore these existing prescriptions from our past forays into social housing.
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.