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Disparate housing strategies and practices of public and private enterprises in India: Analysis of middle class housing and new towns
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Disparate housing strategies and practices of public and private enterprises in India: Analysis of middle class housing and new towns Arnab Jana⁎, Sayantani Sarkar Centre for Urban Science and Engineering, Indian Institute of Technology Bombay, Powai, Mumbai 400076, India
A R T I C L E I N F O
A B S T R A C T
Keywords: Affordable housing New towns Real estate Middle-income group Urbanization
This paper focuses on housing provision in the context of Indian New Town policy (with special emphasis on new towns such as Rajarhat and Navi Mumbai) and the upsurge of the middle-income group (MIG) and its access to housing. It argues that alternative schemes for housing the growing middle income population should be promoted and—if planned inclusively—new towns can contribute to solving the housing crisis. New policies for housing the middle income groups (such as “Pradhan Mantry Awas Yojna”) are unlikely to affect MIG housing, as in spite of the subsidies offered, the market price of housing stock continues to be beyond the reach of the MIG. Unless policy measures to boost the housing stock for MIG is formulated while controlling the pricing and incentivising the developers, it is unlikely that gaps in terms of demand would reduce substantially.
1. Introduction
HIG demands than the needs of the LIG and EWS. Therefore, housing in urban areas remains a major challenge for the government, and, of course, for consumers. The economic reform of the country after 1990 period marked the onset of the UMIG owing to the better paid jobs in the emerging service sector. Simultaneously with the onset of economic liberalization policies, the Indian market was flooded with newly available consumer items. The steady growth of income and credit-based consumption patterns augmented mass consumption among the MIG, who had previously been constrained by incomes and savings. As such, the market forces were transformed and the focus shifted from the luxury-based items serving the high-income groups, to that of affordable goods for the MIG population. The housing market, following a similar trend, also underwent transformation. In this paper, we focus our attention on the housing issue of the MIG, in the context of two major cities of India, Mumbai and Kolkata. Both have continued to play the role of economic magnets, in the western and eastern parts of the country respectively. They have their long colonial histories and a massive pull factor has led to tremendous population growth in both cities. The demand for housing has continued to exert pressure on the city structures and the infrastructural arrangements have been compromised. In order to relieve this excessive pressure, decongestion of the cities was undertaken through the building of new towns, including Navi Mumbai and Rajarhat. Of the many objectives discussed, one was to solve the housing crisis. In this paper, we attempt to assess the role of Navi Mumbai and Rajarhat in solving the specific problem of housing in Mumbai and Kolkata. Fig. 1
The post 1990s period is marked by a housing revolution, owing to the liberal approach of Indian governments towards the economy and the housing demands of the expanding middle income group (MIG). Much of this demand is attributed to factors like a rise in urban immigration, disintegration of the joint family structure, congested living conditions and higher expectation of the new middle class. The incapacity of the government to provide adequate living spaces for the increased urban population has led to the breakdown of infrastructure and crowding within cities. A persistent gap between supply and demand for housing is evident in the steady growth of informal settlements in Indian cities. The slum population rose to 93 million in 2011 (from 75 million in 2001), a clear demonstration that. Indian urbanization is associated with a housing crisis and poverty. Presently, the urban housing shortage is around 20 million dwellings (Government of India, 2012) and it mainly affects the lower income group (LIG) and economically weaker section (EWS) of the growing urban population. As per Census 2011, the total number of houses in the urban areas was around 112 million, of which around 12 million were unused. The total residential housing stock was around 79 million (including purely residential and residential-cum-commercial: Census 2011). From 2001 to 2011, the number of homes went up by around 81 million, yet this could not diminish the housing crisis. It has been observed that private builders are more inclined towards serving the market-based demands for housing, mainly catering to the UMIG and ⁎
Corresponding author. E-mail address: [email protected] (A. Jana).
http://dx.doi.org/10.1016/j.cities.2017.09.010 Received 11 April 2017; Received in revised form 23 September 2017; Accepted 24 September 2017 0264-2751/ © 2017 Published by Elsevier Ltd.
Please cite this article as: Jana, A., Cities (2017), http://dx.doi.org/10.1016/j.cities.2017.09.010
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Housing components in millions
120
driven the poor to informal settlements. There have been mixed attempts by government to solve the housing shortage. In the early periods (1960–80s), full attention was given to house construction and slum improvement, while the 1990s was slack. The construction process again gained momentum from the mid-2000s when the focus was once more on house construction. ‘Valmiki Ambedkar Awas Yojna’ (VAMBAY) was launched in 2001 to improve the condition of urban slum dwellers through construction and upgradation of dwelling units and provision of community toilets. The Jawaharlal Nehru National Urban Renewal Mission (JNNURM) that ran from 2005 to 2014 had elements of housing provision added under Basic Services for Urban Poor (BUSP). Another similar programme was Integrated Housing and Slum Development Plan (IHSDP), launched in 2005, aimed at combining the objectives of VAMBAY and National Slum Development Programme (NSDP). However, the performance of these projects is unimpressive. In 2012, ‘Rajiv Awas Yojna’ (RAY) was launched with the objectives of (1) bringing existing slums within the formal system and enabling them to obtain the same level of basic amenities, 2) redressing the failures of the formal system that lie behind the creation of slums; and (3) tackling the shortage of urban land that keeps shelter out of the reach of the urban poor and forces them to resort to extra-legal solutions in a bid to retain their sources of livelihood and employment. The most recent scheme launched by the government is ‘Pradhan Manti Awas Yojna’ (PMAY) better known as ‘Housing for All 2022’. It aims to create about twenty million housing units for rehabilitation, promotion of subsidized affordable housing for the weaker section, affordable housing based on public private partnerships and subsidized beneficiary-led individual house construction. Around 82,000 houses have been created through March 2017 and around 62,000 have been occupied. Most of these dwellings have been constructed in Gujarat, Karnataka, Tamil Nadu and Maharashtra. The easy availability of loans for those working in the organized sector, relaxed taxation norms and easy flow of money through foreign direct investments (FDI) in the post-liberalization period contributed to the growth of the housing sector. According to Nijman (2006), “Prior to about 1990, the housing finance industry in India was virtually nonexistent. It started slowly in the early 1990s, accelerated a bit around 1996 and then took off rapidly near the end of the decade.” Similarly, in a study on the Indian housing market (Singh, Kumar, & Prasad, 2014), it has been shown that the housing loans by the Scheduled Commercial
Urban houisng shortage Urban housing stock Urban Households
100 80 60 40 20 0 1971
1981
1991
2001
2011
Fig. 1. Urban housing scenario in India. Source adapted from (Tiwari & Rao, 2016).
shows the urban housing scenario of India. 2. Methodology The paper illustrates its arguments through various case studies. Initially, an overview of the housing scenario in India has been presented. The housing issue is classified into policy driven and market driven scenarios. Policy driven housing caters to the needs of the LIG and EWS in the form of ‘affordable housing’. The market driven housing caters to the demands of the HIG. This study focuses on the MIG and their related housing issues. Further, the study focuses upon the role of new towns in ameliorating the housing crisis, with special reference to the selected case studies of Navi Mumbai and Rajarhat. Fig. 2 illustrates the methodology in detail. 3. Housing scenarios in India “Provision of affordable housing has emerged as a primary concern for the Indian government to deal with the issues related to overpricing of housing stocks and lack of housing for middle and lower income groups including the economically weaker sections.” (Bardhan, Sarkar, Jana, & Velaga, 2015) The rise in house prices and less favourable access to loans have
Fig. 2. Methodology.
Demand Side
Economically weaker section
Policy driven housing
Housing issue in India
Lower Income groups
Middle income groups Market Driven housing Higher income groups
Supply side
New Towns in India Navi Mumbai Ghost Towns?
Case Studies Rajarhat New Town
Possible fate of new towns
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is expected to rise to 41% of the population by 2025 dominating major cities of the country. Shukla (2010), in his study reveals this number to be 153 million people in 2009. Within the MIG, there is wide variation between those who have already gained access to better living condition and those who were new to this class, manifested in the distinction between upper MIG and lower MIG. The National Council has put a similar classification between seekers and strivers forward for Advanced Economic Research (NCAER), where the former has annual income between INR 200,000 and 500,000 and the latter has annual income between INR 500,000 and one million. This growing MIG population has accelerated the demand for housing in the urban areas. According to a report by released by Cushman and Wakefield (Wakefield, 2016), the supply gap among the MIG in eight major cities of the country between 2016 and 2020 is predicted to be around 810,000. Better employment and income has driven the aspirations for better living conditions among the MIG. They are no longer satisfied by the savings-driven attitude towards the purchase of homes. The ease of access to housing loans extended on a longterm basis and the newly launched projects advertising affordability have added momentum to the housing sector. As pointed out by Nijman (2006), “Housing is generally considered the single biggest consumption item for any household, and India's ‘consumer led revolution’ is therefore closely associated with these watershed changes in the housing market across the major urban areas”. This has also hastened the growth of the ancillary industries associated with housing, like paints, cement, and building materials.
Table 1 Disbursement made under Urban Housing Fund. Source: (National Housing Bank, 2016). Year
Allotment
2013–14 2014–15 2015–16 Total
2000 4000 6000
Utilization HFCs
SCBs
RRBs
Total
148 883 94 1125
1852 1661 1256 4769
000 30 33 63
2000 2574 1383 5957
120000
Number of units
99049 100000 80000 60000
45660 28251
40000 20000 0
2013-14
2014-15
2015-16
Fig. 3. Units financed under Urban Housing Fund year wise. Source: (National Housing Bank, 2016).
Banks (SCBs) rose from INR 15,317 million on 31st March 2001 to INR 464,372 million [use standard metrics] on 31st March 2013 and a large proportion of this was lent on long term basis. The housing loans by the housing finance companies (HFCs) rose from INR 33,250 million at the end of March 2001 to 290,427 million in March 2013, also extended on a long-term basis. Smets (1999) has pointed out that long term housing loans suit the housing construction practices and perception of the MIG and HIG as they can afford to build complete housing units, unlike the lower income groups who choose incremental building processes based on short and medium term loans. The scheme of urban housing funds was announced in 2013 to provide refinance assistance in respect of housing loans extended by PLIs in urban areas for the construction/up gradation of dwelling units, repairs/renovations/up gradation of dwelling units and for incremental housing. The loans size under this scheme is INR 1,000,000 disbursed on or after April 01, 2013. The eligible floor area does not exceed 60 m2 or the house cost does not exceed INR 1,600,000. The households with annual income not exceeding INR 400,000 are the targeted beneficiaries of this scheme. Table 1 shows the disbursement made under the scheme and Fig. 3 shows the units financed by the scheme.
5. New towns in India Initially new towns were created in sparsely populated areas with a target to diffuse urbanization as proclaimed by the then central government's “vision of national modernism” (Schindler & Kishore, 2015). Later it changed, to plan new towns around the peripheries of the major cities with the aim to decongest the inner cities and to provide uniform housing opportunities to all sections of the population. A significant factor associated with this strategy is the growth of cities along new transport corridors or pivoting around upcoming new airports on the city outskirts. “Within the housing reform context, as well as supplying land for an emerging real estate boom, the new townships are expected to provide land for low income housing” (Sengupta, 2007). Fig. 4 shows the temporal growth of new towns in India. New towns started with the setting up of urban residential areas in order to accommodate the excess population that migrated to India after partition. Towns like Faridabad in Uttar Pradesh and Ashoknagar in West Bengal were originally planned as refugee settlements. These towns have developed as thriving urban centres, around the major cities of Delhi and Kolkata respectively. With the initiation of the second Five Year plan, an impetus was provided to strengthen the industrial base of the country, especially in the less-developed regions. Owing to the abundance of raw materials like coal and iron ore, as well as the newly erected multipurpose river projects, the tribal areas of the peninsular plateau became the focal points of industrial growth. This was
4. The MIG population and affordable housing in India After the introduction of the liberalization policy of the 1990s the growth of the MIG in India accelerated. According to a report by McKinsey (Beinhocker, Diana, & Zainulbhai, 2007), the MIG population
Fig. 4. Phases of growth of new towns in India. Source: compiled by authors.
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The sixth phase is characterized by the growth of townships along the major transport corridors, such as high speed rail and industrial corridors. For example, the Delhi Mumbai Industrial Corridor, the industrial development project planned across seven states along the 1500 km Western Dedicated freight corridor, aimed to develop several new industrial cities like Dholera Special Investment Region (SIR) in Gujarat, to accelerate the economic activity in the region. The current phase of new town growth is directed towards increased use of information and communication technology in urbanization processes through smart cities. The government declared its plans to develop 100 new smart cities in the form of satellite towns around the major cities in 2015. This involves creation of new towns as well as upgradation of the existing low tier cities through provision of infrastructure and basic services. This involves the creation and improvement of water supply, sewerage, solid waste management and storm water discharge under the Atal Mission for Rejuvenation and Urban Transformation (AMRUT). Special impetus is provided for strategic and planned development of the heritage cities like Varanasi and Kanchipuram under the ‘Heritage City Development and Augmentation Yojna’ (HRIDAY). With these policies in the backdrop, the real estate sector has flourished and augmented the construction practices in the urban areas. The lack of developable lands in the city cores has diverted attentions to the peripheral areas. Bhattacharya and Sanyal (2011) pointed out, “the development of new towns and integrated townships close to existing metropolises in India is partly due to a vibrant political society that that resists large scale gentrification of the existing cities”. On the grounds of the relation between the steady growth of MIG households in the country and the impetus given to the growth of new towns, it can be argued that the latter are being created to cater to the housing needs of the growing MIG population (Yin & Yi, 2013).
Fig. 5. Location of Mumbai and Navi Mumbai. Source: Ananthakrishnan (1998).
accompanied by the construction of industrial towns, like Durgapur, Bhillai and Raurkella in a second phase of new town growth. The third phase of planned urbanization was marked by the growth of several planned towns. Chandigarh was the first planned city of India developed as a new capital for the newly partitioned Punjab state. Later, owing to the unprecedented growth of ‘colonial’ big cities, in the 1970s and 1980s, the central government funded projects with the objective of decongestion by developing counter magnets or satellite townships while simultaneously limiting densities in the cities through the Urban Land Ceiling Act of 1976 (Wang, Kundu, & Chen, 2010). New townships like Navi Mumbai (near Mumbai), Kalyani (near Kolkata) and Salt Lake (adjoining Kolkata) were engineered to serve this purpose. The urbanization process underwent considerable reform following the economic liberalization policy of 1991. The open market policy of the government promoted large-scale foreign investment, as high as 100% in the infrastructure sector that allowed direct investment in urban service provision (Planning Commission, 2002; Sengupta, 2007). Subsequently, the urban areas of the country witnessed a massive spurt in construction-based development projects. The new towns planned in this period (like Rajarhat in West Bengal) have also followed the same course. This can be demarcated as the fourth phase of new town development, in which the growth decelerated as the focus was shifted back to the big cities, undertaken by JNNURM in 2005. This was also the period of growth of private townships, an idea slowly getting traction in India. For example, new private townships like ‘Lavasa’ and ‘Aamby Valley city’ both developed in Maharashtra, are in the vicinity of Mumbai and Pune. Lavasa was planned for a population of 200,000, to offer diverse work possibilities, mainly hospitality and tourism, and has paved the way for the idea of ‘new urbanism’ in Indian (Datta, 2012). On the downside, in the recent past Aamby valley had been entangled with financial crisis and legal dispute. Due to the lack of transparency, these projects often did not attain success.
6. Middle-income housing in Mumbai and role of new towns Mumbai initially began on a cluster of seven islands and after the growth of the cotton textile industry in 19th century it evolved as a major economic node. Greater Mumbai now has an area of 437 km2 and a population base of 12,279,814 (Census 2011). It is a part of the greater Mumbai Metropolitan region, as shown in Fig. 5, area 4355 km2, comprising of eight municipal corporations and nine municipal councils along with more than 1000 villages. The evolution of the MIG population in Mumbai is well connected to the growth of trade and commerce in the city. The rise of administrative jobs in and around the island city area drew the educated class to settle in these surrounding locations (Karandikar, 2010). Though the deindustrialization policy of the 1960s and 1970s jeopardized the MIG employment status, it again revived and gained momentum with the intensification of information technology of the post liberalization period. As pointed out by Nijman (2006), “in Mumbai income groups below INRs 70,000 can be considered ‘poor’; groups with incomes between INRs 70,000–140,000 can be considered ‘low’ to ‘lower- middle’ and those with incomes over INRs 140,000 include a broad range of ‘core- middle’, ‘upper-middle’ and ‘rich’…”. In the initial phases, ‘chawls’ were the primary housing location for the MIG households of Mumbai. These were built in and around the work places to satisfy the housing demands of the employees of the mills and factories. This promoted community living and strengthened the social bonding among its residents. These were mainly rented tenements, which underwent serious deterioration over time, due to overpopulation and lack of maintenance. Presently, it is difficult to draw a line of demarcation between a chawl and a slum. “A report by S.S. Tinaikar Committee and housing authority, MHADA (Maharashtra Housing and Area Development Authority) study showed that living conditions in upgraded slums were better than some of the chawls” (Karandikar, 2010). The advent of the deindustrialization policy led to further decimation of the chawls. 4
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Annual growth rate of prices
25.00%
20.00%
15.00%
10.00%
5.00%
0.00% Less than 2000
2k to 3k
3k to 4k
AGR (2010-11 & 2011-12)
4k to 5k
AGR 2 (2012-12)
5k to 7.5k
7.5k to 10k
AGR 3 (2013-14)
10k to 25k
>25k
AGR 4 (2014-15)
Fig. 6. Annual growth rate of house prices in Mumbai. Source: JLL research (data compiled by authors).
Lack of developable land in the inner city, also called ‘Island city’, drove the developers to the suburbs. As Nijman (2006) has pointed out, since 1998 housing construction in Mumbai has grown by an average 15–20% per year and most of these developments were high rise complexes located in the western and the eastern suburbs. The restriction imposed on the Floor Space Index and the Transferable Development Rights played significant roles in developing the suburban areas. According to Census 2011, 63% of households had one room followed by 15.8% having two dwelling rooms. Only 0.7% households had six or more dwelling rooms. The mean household size of the city is 4.5. The astronomical prices of the housing stocks in Mumbai have kept housing out of the reach of a large part of the population. The price of the smallest unit varies between one to two millions, much beyond the reach of any average MIG household. Though the option of loans is always available, the monthly installments rob the households of their quality of living. However, owing to the additional costs like returns to the builder, infrastructure costs and land costs, the prices rise much beyond those estimated. People are further driven to the slums, which now accommodate nearly half of the population of the city (Census 2011). Fig. 6 indicates the annual growth rate of house prices (INR per sq. ft.) in Mumbai. However, for prices greater than 25,000 INR per sq. ft., the annual growth rate of 2014–15 has been higher. Owing to the substantial number of stocks remaining unsold, the annual growth rates were showing stagnation, but remained out of the reach of MIG. According to Suryavanshi (2017), against a demand of two million houses only 46,000 stocks were sold, as people could not afford to purchase. As a tradeoff, buyers focused on the stocks available in the suburban areas and new towns. The new town of Navi Mumbai, also part of this mega region, was primarily designed to relieve Mumbai of urbanization stress and growing population pressure (Shaw, 2004). It is a city composed of 14 nodes, which are well laid along a longitudinal transport corridor, and it is constructed and maintained by the City and Industrial Development Corporation of Maharashtra Ltd., popularly designated as CIDCO, an autonomous body formed in 1970. The nodal growth of the city also indicates differential patterns. Of all the nodes, Vashi was most sought after owing to the proximity to Mumbai and today it functions as the de facto CBD of Navi Mumbai. The enormous private investment in the new commercial and financial sector of Vashi triggered the land prices near to the prices pertaining in the suburbs of Greater Mumbai. Fig. 7 shows the population of different nodes in Navi Mumbai, based on a socio-economic survey conducted by CIDCO in 2000 and 2011 (CIDCO, 2001, 2011). Based on the level of development of nodes, Navi Mumbai can be
classified into developed and developing regions. The developed region comprises the older nodes like Vashi, Panvel, Kalamboli etc. and is characterized by higher property prices, better administration and better amenities. Navi Mumbai houses around two million population although that is only 50% of its holding capacity. CIDCO has been the prime supplier of affordable houses for the LIG along with some for the MIG and HIG. The focus was to create mixed income residential clusters to achieve social balance. In order to make land affordable for all sections of the population the prices were controlled. Fig. 8 shows the year construction of tenements by CIDCO for different income groups. CIDCO has played an active role in building affordable houses for the LIG and EWS and built about 123,577 housing units by 2010. However, the majority of the houses continue to be occupied by the MIG. The nodal variation shows that Khopar Khairane has the maximum number of LIG houses while CBD Belapur has the least. The ownership pattern indicates an increasing trend in housing self-ownership over tenancy. Currently the new proposed SEZs and the newly proposed new towns of Khopta and NAINA govern the growth of Navi Mumbai. It is expected to create a massive job centre having a pulling force over the working population of Mumbai and to fourfold increase the housing demand in Navi Mumbai. Proper impetus shall be given to provide for low cost and affordable housing in these newly evolving townships so that the allocation of housing stock is equitable without stocks remaining unoccupied and the further growth of slums can be curbed. 7. Middle-income housing in Kolkata and role of new towns Kolkata, owing to its strategic location and economic vibrancy, saw huge numbers of in-migrants between 1947 and 1971. The result was the ever growing demand for housing and the eruption of refugee colonies, slums and squatters. The development in and around the city followed the same footprints. Kolkata Metropolitan Area, Fig. 9, is made up of three municipal corporations, 38 municipalities and 24 rural councils (termed as panchayats), having an area of 1851.41 km2 and a population of 14,112,536. The changing concept of living among the new MIG led to demand for better housing and amenities. As pointed out by Sengupta (2007), “The current average annual housing need is projected to rise to 90,000 units by 2025, which reflects only the magnitude of additional growth assuming that the current housing backlog does not worsen further.” The idea of new town development in Kolkata dates back to the prereform period, when the ‘Basic development plan’ (1966–86) suggested a bimodal strategy for development. As an outcome to that approach Kalyani Township was developed for accommodating a population base 5
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180000
2000 2011
160000
Population
140000
Fig. 7. Node wise population change in Navi Mumbai. Data source: CIDCO (2001, 2011).
120000 100000 80000 60000 40000 20000 0
main city to the peripheries. Nevertheless, in the era of globalization where the cities are driven by investments, infrastructural growth has become the primary agenda of urban growth. The major urban development policies undertaken involve huge construction works that justify the infrastructural augmentation. As the real estate forces have gained more prominence, urban areas have become the sites for upcoming construction projects. The exponential rise in the income and disposable surplus and aspirations for better living has increased the demand for housing among MIGs and persuaded them that the new towns that offer better housing conditions. They prefer housing that is close to HIG residential areas available at affordable prices. It is evident in the spurt of gated communities and splintering urbanism (Graham & Marvin, 2001). MIG generally opt for prefabricated houses rather than building homes individually. Hence, the developers focus upon building community housing stocks rather than individual units. As pointed out by Shaban and Sattar (2016), “India has fully opened doors for FDI through automated route in new township and housing since 2005” that has led to growth of private new towns and neighbourhoods in the country. The present thrusts are on building smart cities across India based on the increased use of information and technology and planning large-scale affordable houses by 2022 under PMAY. Though initially the affordable housing strategy targeted the LIG and EWS, it has presently expanded its purview to MIG households. In 2017, the government has increased the focus on affordable units, giving 39% higher allocation under the ‘Housing for All 2022’ and also the loans offered under the Credit Subsidy Scheme have been raised to cover the MIG households as well. This can be attributed to the fact that the increased use of information technology in the cities is bound to attract more MIG to the newly developed smart cities that will further stimulate the demand for MIG housing. This indicates the voluntary nature of these urban policies, augmenting large scale construction. Owing to the increased thrust given to the construction of higher and middle-income housing, the new towns are close to becoming residential suburbs to their cities. “Use of property-led development to capture short-term return of investment in new town development in
of 125,000 belonging to LIG and MIG. However, the approach is considered to be a failure following Kalyani's inability to grow into a selfsustaining township. The next project was the development of Salt Lake Township in 1964. Though the project was completed in five years, it took almost 30 years to attract and accommodate the rapidly increasing population of Kolkata. The post reform period is marked by the announcement of the Rajarhat new town project in 1995. The entire project is divided into three phases/action areas of which the first, covering 6655 acres of land, is near completion. As per Census 2011, the total population of Rajarhat was around 0.4 million. In spite of considerable attention being focused on the housing development process, the government has failed to deliver to the needs of the LIG and EWS of the city. Bysack (2004)in his study showed that the land share of different income groups in different new town projects around Kolkata has been uneven (see Table 2). Hence, it is clear that new towns in West Bengal have been mostly engaged in serving the housing interests of the economically affluent. In Rajarhat, only 21% of land has been reserved for the disadvantaged population. As pointed out Sengupta (2010), Kolkata has emerged as the second most expensive city, after Mumbai, in terms of construction cost indices. All these factors have together played massive role in keeping the residential sector out of the reach of the poor. Besides Rajarhat, there are other projects like West International City (presently terminated) and Dankuni as well but with limited success. 8. New towns and housing
Fig. 8. Construction of tenements by CIDCO. Data source: CIDCO (2011).
40000 35000 30000 25000 20000 15000 10000 5000 0
HIG MIG
2000-2010
1996-2000
1991-1995
1986-1990
1981-1985
EWS/LIG upto 1980
Number of tenements
The new towns are chiefly manifestations of policies to control the local urbanization process. They absorb the excess population of the major cities and hence relieve the infrastructural stress. Their economies generate additional employment opportunities that accelerate the regional growth process. For example, a large number of government offices were shifted to Salt Lake City from Kolkata CBD, The initiation of Navi Mumbai was meant to replace the industries from the Mumbai
6
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Fig. 9. Location of new towns around Kolkata. Source: Compiled by authors from Maps of Kolkata Metropolitan Development Authority.
Kalyani
Dankuni New Town Rajarhat
Kolkata West International City
Bidhannagar (Salt Lake)
environmental repercussions. In other words, it is giving more impetus to labelling of places as cities. As more and more cities are created to mirror the economic prosperity of a nation, infrastructural growth outpaces the population growth. As such new urban areas remain unpopulated or under populated, they are giving rise to a new connotation called ghost towns and cities (Banerji & Jackson, 2012). New towns do ease out pressure on affordable housing, but are susceptible to being influenced by investor driven purchases, soon making them follow the same trend of price rises seen in their parent cities. We argue that the ability of the new towns to cater to the demands of the emerging new MIG (essentially the first time homebuyers among last two generations) shall inhibit these fringe markets. As the new towns generate new employment opportunity, more so in service sector, it might be difficult to discern Navi Mumbai and Rajarhat's role towards MIG housing. Whether it can be attributed to their new town identify or peripheral town characteristic can be a matter of debate. Ideally, the new towns are designed to absorb the MIG, LIG while countering urbanization stress from the city core but examples and experience shows that they are often reduced to super rich suburbs such as Salt Lake City Kolkata. Well-designed and planned network of new towns have the potential to address the housing crisis in India. Subsequently the new towns are expected to address and mitigate the skewed urban structure and spatial distribution of all socio economic classes. Otherwise, the new towns will only reinforce the lopsided urban structure in India and add to the crisis instead of mitigation. Often the infrastructural base is better than parent cities. New towns have the potentials to be important policy instruments for urban development, but failure to attract economic activities might render them to remain as satellite towns.
Table 2 Share of land in new towns. Source: adapted from Bysack (2004). New town project
Kalyani Salt Lake Rajarhat
Percentage share of land Economically weaker section (EWS)
Lower income group (LIG)
Middle income group (MIG)
Higher income group (HIG)
3.11 0.4 4
14.4 9.75 17
38.8 24.14 35
43.7 65.71 44
India exhibits globalization impact that reshapes the landscape, social relationship, and resource allocation of megacities' suburbs” (Wang et al., 2010). The over emphasis on creating new townships without creating infrastructure for the residents cannot help in solving the housing problem of the country. The demographic growth of Navi Mumbai has been slower than planned. As per the original development plan, the population of Navi Mumbai should have reached two millions by 2001 and even CIDCO estimated the population to be two million by 2011, but Census 2011 reveals it to be 1.1 million. Similar cases of failure are evident surrounding new developments around Kolkata. In Rajarhat new town there are complexes laying unoccupied or with a scanty population. Moreover, both these new towns have been selected to be upgraded to smart cities. Rajarhat has been further declared to be developed as a ‘green city’. This indicates towards the portrayal of advanced urbanization at the backdrop of low urban growth. Such an approach may not be coterminous with objective of sustainability. According to Sorace and Hurst (2016), phantom urbanization is the process whereby constructing the aesthetic form of the urban is more important to local state actors than the economic, demographic or 7
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90000
30
Percentage change
78446
80000
No. of Units
70000 60000 50000
32995
40000
23.7
24
22.2
20 15
9.7
10
7
6.5
5 0
27592
30000
26.4
25
20000 10000
4324
6086 Fig. 11. Percentage change in apartment size in major Indian cities. Source: Adapted from JLL research.
0
2011-12 2012-13 2013-14 2014-15 2015-16 Fig. 10. MIG housing stocks constructed by HUDCO. Source: HUDCO.
size was registered in Mumbai region followed by Bengaluru, Kolkata and Chennai. This has made housing more acceptable than affordable for MIG, without reducing the prices of the housing stocks.
9. Discussion: India's housing future for the MIG 9.5. Suggestive measures Some probable factors that might be affecting the persistence of high prices in the MIG housing markets of the urban areas are as follows.
a) Policy based implication- In order to bring down the demand supply gap in the housing sector, the policies must focus on controlling the speculative purchase of housing stocks. A ceiling must be imposed on housing stock ownership, in order to prevent the formation of more latent stocks. b) Government initiatives- The importance of new towns in providing affordable housing must be highlighted into new policies such as PMAY. The new policies must designate the new towns as potential sites for affordable housing development to minimize the excess strain these policies might put on the existing metropolitan cities. c) Private initiatives- Planning for the new towns shall include mandatory designation of a certain percentage of stocks in the affordable range by the private realtors in lieu of building high end luxury housing stocks. This might put a check on unnecessary building of luxury stocks that go vacant and unoccupied in the long run. d) Public private partnership model- The housing development authorities can work in association with the private realtors for developing more affordable housing stocks. The Maharashtra Housing and Area Development Authority has already announced such scheme where if developers possessing a minimum of 2000 m2 plot area transfer their land to MHADA, then the latter will get higher ‘Floor Space Index’ in respect of schemes in Mumbai and other regions in Maharashtra. This is expected to create affordable housing stock in these regions. Although the success of the PPP model in India has been very limited, if properly implemented it can play significant role in curbing the gap that the housing authorities fail to fill.
9.1. Existing large cities
• The availability of land is limited in the large metropolitan cities, • •
therefore, the developers usually pay a high premium to acquire those. Therefore, even if the construction cost is minimized to provide basic amenities in the built up area, the overall cost still remains high. Affordable housing stocks developed by the ‘housing development authority’ are limited in terms of quantity (see Fig. 10), Therefore the basic demand for housing remains high. The dominance of investors and builders in the real estate sector is a major factor of price rise in the housing sector. The holding capacity of the large real estate companies allows them not to sell below a certain price. This have two aspects, 1) to maintain the investor driven market and 2) to force end-users to spend beyond their capacity.
9.2. New townships
• In new townships, it has been observed that the plotted lands are
usually auctioned. Major share of these developed lands are grabbed by the realty companies at astronomical prices. Therefore, even though the new townships have the potential to generate affordable housing, it is overtaken. Therefore, prices remain beyond the reach of MIG.
10. Conclusion 9.3. Market dynamics The housing crisis of urban India is mostly driven by the inclination of the suppliers towards market-based demands. These mainly cater to the HIG and UMIG sections of the population. The rise of consumerism of the exploding MIG, after the liberalization period, has made housing more of an ‘investment opportunity yielding higher returns’ than a necessity. The inability to define the MIG throughout the country has hindered the formulation of a viable housing policy targeting them. Easy availability of loans and credit-based purchasing power has made MIG housing more profitable for the construction companies. However, current pricing patterns in the major metro cities still makes the available housing stocks beyond their reach. As the return on investment is tending to decrease, we observe stocks remaining unsold and unoccupied, while gaps in affordable housing remained unaddressed. With the unavailability of land and high prices of the available stocks in existing metro cities, developers tend to focus on hinterlands or
• The prevalence of unaccounted- for money in the Indian market is a significant factor leading to high prices in housing market in India. As such, it becomes difficult for the middle class to afford house as the loans cover only the accountable part of the transaction and the entire unaccounted transaction is arranged by the buyer themselves. Therefore, the stocks remain expensive for the MIG.
9.4. Recent trends However, in recent past, builders in order to lure the MIG, have reduced the average size of the units keeping the price (price per square feet) same (see Fig. 11). This has made housing more attractive to the MIG. During the period 2010–2015, the maximum decline in apartment 8
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Datta, A. (2012). India's ecocity? Environment, urbanisation, and mobility in the making of Lavasa. Environment and Planning. C, Government & Policy, 30(6), 982–996. Government of India, Ministry of Housing and Urban Poverty Alleviation, National Building Organization (2012). Report of the technical group on urban housing shortage (TG-12) (2012–17). Graham, S., & Marvin, S. (2001). Splintering urbanism: Networked infrastructures, technological mobilities and the urban condition. Psychology Press. Karandikar, P. N. (2010). Chawls: Analysis of a middle class housing type in Mumbai, India. National Housing Bank (2016). Annual report (July 2015–June 2016). National Housing Bank. Nijman, J. A. N. (2006). Mumbai's mysterious middle class. International Journal of Urban and Regional Research, 30(4), 758–775. http://dx.doi.org/10.1111/j.1468-2427. 2006.00694.x. Planning Commission (2002). 10th five year plan (2002–2007). Schindler, S., & Kishore, B. (2015). Why Delhi cannot plan its ‘new towns’: The case of solid waste management in Noida. Geoforum, 60, 33–42. http://dx.doi.org/10.1016/ j.geoforum.2015.01.008. Sengupta, U. (2007). Housing reform in Kolkata: Changes and challenges. Housing Studies, 22(6), 965–979. http://dx.doi.org/10.1080/02673030701608217. Sengupta, U. (2010). The hindered self-help: Housing policies, politics and poverty in Kolkata, India. Habitat International, 34(3), 323–331. http://dx.doi.org/10.1016/j. habitatint.2009.11.009. Shaban, A. L., & Sattar, S. A. T. A. (2016). Critical Reflection on Contemporary Urbanization in India. SHELTER, 31. Shaw, A. (2004). The making of Navi Mumbai. Orient Blackswan. Shukla, R. (2010). How India earns, spends and saves: Unmasking the real India. India: SAGE Publications. Singh, C., Kumar, L., & Prasad, H. A. C. (2014). Housing market in India. Smets, P. (1999). Housing finance trapped in a dilemma of perceptions: Affordability criteria for the urban poor in India questioned. Housing Studies, 14(6), 821–838. http://dx.doi.org/10.1080/02673039982560. Sorace, C., & Hurst, W. (2016). China's phantom urbanisation and the pathology of ghost cities. Journal of Contemporary Asia, 46(2), 304–322. http://dx.doi.org/10.1080/ 00472336.2015.1115532. Suryavanshi, S. (2017). No takers for over 1.5 lakh houses in Mumbai. In UDRI (Vol. Ed.), Mumbai reader. 17. Mumbai: UDRI. Tiwari, P., & Rao, J. (2016). Housing markets and housing policies in India. Wakefield, C. (2016). Housing demand estimated at 4.2 million for top 8 cities in the next 5 years. Wang, L., Kundu, R., & Chen, X. (2010). Building for what and whom? New town development as planned suburbanization in China and India. Suburbanization in global society (pp. 319–345). Emerald Group Publishing Limited. Yin, H., & Yi, F. (2013). Peri- Beijing-Tianjin_Hebei cross-boundary mega-region planning towards sustainability in urbanization China. (Paper presented at the 49th ISOCARP Congress).
upcoming new towns. Nevertheless, due to the distant location from the major workplaces and the weaker economic pull of the newly formed townships, these housing stocks mostly remain less attractive for the buyers. Although allied to the two major metropolises of the country, Navi Mumbai and Rajarhat new towns have not satisfactorily achieved their expected growths as new developments. As such it will be impossible to bring down the demand supply gap in the housing sector. Acknowledgement The material presented in this manuscript is based in part upon work supported by the CUSE R & D project (grant number 14INHPCU006) and Ministry of Human Resource Development, Government of India (MHRD-GoI) FAST project (grant number 14MHRD005). Any opinion, finding, and conclusion or recommendation expressed in this material are those of the authors and do not necessarily reflect the views of MHRD and/or the GoI. We also like to acknowledge Prof. Andrew Kirby and the reviewers who have encouraged and supported us with their constructive comments and valuable suggestions. A special thanks to Mr. Ashutosh Limaye, Head Research & REIS, JLL India for valuable insights. References Ananthakrishnan, M. (1998). The urban social patterns of Navi Mumbai, India. Banerji, R., & Jackson, P. (2012). China's ghost towns and phantom malls. BBC News. Bardhan, R., Sarkar, S., Jana, A., & Velaga, N. R. (2015). Mumbai slums since independence: Evaluating the policy outcomes. Habitat International, 50, 1–11. http:// dx.doi.org/10.1016/j.habitatint.2015.07.009. Beinhocker, E. D., Diana, F., & Zainulbhai, A. S. (2007). Tracking the growth of India's middle class. The McKinsey Quarterly, 3(3), 51–61. Bhattacharya, R., & Sanyal, K. (2011). Bypassing the squalor: New towns, immaterial labour and exclusion in post-colonial urbanisation. Economic and Political Weekly, 46(31), 41–48. Bysack, R. (2004). Housing development in the new towns around Kolkata (Masters thesis). School of Planning and Architecture (Unpublished thesis). CIDCO (2001). Socio economic survey of households in planned nodes in Navi Mumbai - 2000. CIDCO (2011). Socio economic profile of households in planned nodes in Navi Mumbai - 2010.
9
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Cities journal homepage: www.elsevier.com/locate/cities
Disparate housing strategies and practices of public and private enterprises in India: Analysis of middle class housing and new towns Arnab Jana⁎, Sayantani Sarkar Centre for Urban Science and Engineering, Indian Institute of Technology Bombay, Powai, Mumbai 400076, India
A R T I C L E I N F O
A B S T R A C T
Keywords: Affordable housing New towns Real estate Middle-income group Urbanization
This paper focuses on housing provision in the context of Indian New Town policy (with special emphasis on new towns such as Rajarhat and Navi Mumbai) and the upsurge of the middle-income group (MIG) and its access to housing. It argues that alternative schemes for housing the growing middle income population should be promoted and—if planned inclusively—new towns can contribute to solving the housing crisis. New policies for housing the middle income groups (such as “Pradhan Mantry Awas Yojna”) are unlikely to affect MIG housing, as in spite of the subsidies offered, the market price of housing stock continues to be beyond the reach of the MIG. Unless policy measures to boost the housing stock for MIG is formulated while controlling the pricing and incentivising the developers, it is unlikely that gaps in terms of demand would reduce substantially.
1. Introduction
HIG demands than the needs of the LIG and EWS. Therefore, housing in urban areas remains a major challenge for the government, and, of course, for consumers. The economic reform of the country after 1990 period marked the onset of the UMIG owing to the better paid jobs in the emerging service sector. Simultaneously with the onset of economic liberalization policies, the Indian market was flooded with newly available consumer items. The steady growth of income and credit-based consumption patterns augmented mass consumption among the MIG, who had previously been constrained by incomes and savings. As such, the market forces were transformed and the focus shifted from the luxury-based items serving the high-income groups, to that of affordable goods for the MIG population. The housing market, following a similar trend, also underwent transformation. In this paper, we focus our attention on the housing issue of the MIG, in the context of two major cities of India, Mumbai and Kolkata. Both have continued to play the role of economic magnets, in the western and eastern parts of the country respectively. They have their long colonial histories and a massive pull factor has led to tremendous population growth in both cities. The demand for housing has continued to exert pressure on the city structures and the infrastructural arrangements have been compromised. In order to relieve this excessive pressure, decongestion of the cities was undertaken through the building of new towns, including Navi Mumbai and Rajarhat. Of the many objectives discussed, one was to solve the housing crisis. In this paper, we attempt to assess the role of Navi Mumbai and Rajarhat in solving the specific problem of housing in Mumbai and Kolkata. Fig. 1
The post 1990s period is marked by a housing revolution, owing to the liberal approach of Indian governments towards the economy and the housing demands of the expanding middle income group (MIG). Much of this demand is attributed to factors like a rise in urban immigration, disintegration of the joint family structure, congested living conditions and higher expectation of the new middle class. The incapacity of the government to provide adequate living spaces for the increased urban population has led to the breakdown of infrastructure and crowding within cities. A persistent gap between supply and demand for housing is evident in the steady growth of informal settlements in Indian cities. The slum population rose to 93 million in 2011 (from 75 million in 2001), a clear demonstration that. Indian urbanization is associated with a housing crisis and poverty. Presently, the urban housing shortage is around 20 million dwellings (Government of India, 2012) and it mainly affects the lower income group (LIG) and economically weaker section (EWS) of the growing urban population. As per Census 2011, the total number of houses in the urban areas was around 112 million, of which around 12 million were unused. The total residential housing stock was around 79 million (including purely residential and residential-cum-commercial: Census 2011). From 2001 to 2011, the number of homes went up by around 81 million, yet this could not diminish the housing crisis. It has been observed that private builders are more inclined towards serving the market-based demands for housing, mainly catering to the UMIG and ⁎
Corresponding author. E-mail address: [email protected] (A. Jana).
http://dx.doi.org/10.1016/j.cities.2017.09.010 Received 11 April 2017; Received in revised form 23 September 2017; Accepted 24 September 2017 0264-2751/ © 2017 Published by Elsevier Ltd.
Please cite this article as: Jana, A., Cities (2017), http://dx.doi.org/10.1016/j.cities.2017.09.010
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Housing components in millions
120
driven the poor to informal settlements. There have been mixed attempts by government to solve the housing shortage. In the early periods (1960–80s), full attention was given to house construction and slum improvement, while the 1990s was slack. The construction process again gained momentum from the mid-2000s when the focus was once more on house construction. ‘Valmiki Ambedkar Awas Yojna’ (VAMBAY) was launched in 2001 to improve the condition of urban slum dwellers through construction and upgradation of dwelling units and provision of community toilets. The Jawaharlal Nehru National Urban Renewal Mission (JNNURM) that ran from 2005 to 2014 had elements of housing provision added under Basic Services for Urban Poor (BUSP). Another similar programme was Integrated Housing and Slum Development Plan (IHSDP), launched in 2005, aimed at combining the objectives of VAMBAY and National Slum Development Programme (NSDP). However, the performance of these projects is unimpressive. In 2012, ‘Rajiv Awas Yojna’ (RAY) was launched with the objectives of (1) bringing existing slums within the formal system and enabling them to obtain the same level of basic amenities, 2) redressing the failures of the formal system that lie behind the creation of slums; and (3) tackling the shortage of urban land that keeps shelter out of the reach of the urban poor and forces them to resort to extra-legal solutions in a bid to retain their sources of livelihood and employment. The most recent scheme launched by the government is ‘Pradhan Manti Awas Yojna’ (PMAY) better known as ‘Housing for All 2022’. It aims to create about twenty million housing units for rehabilitation, promotion of subsidized affordable housing for the weaker section, affordable housing based on public private partnerships and subsidized beneficiary-led individual house construction. Around 82,000 houses have been created through March 2017 and around 62,000 have been occupied. Most of these dwellings have been constructed in Gujarat, Karnataka, Tamil Nadu and Maharashtra. The easy availability of loans for those working in the organized sector, relaxed taxation norms and easy flow of money through foreign direct investments (FDI) in the post-liberalization period contributed to the growth of the housing sector. According to Nijman (2006), “Prior to about 1990, the housing finance industry in India was virtually nonexistent. It started slowly in the early 1990s, accelerated a bit around 1996 and then took off rapidly near the end of the decade.” Similarly, in a study on the Indian housing market (Singh, Kumar, & Prasad, 2014), it has been shown that the housing loans by the Scheduled Commercial
Urban houisng shortage Urban housing stock Urban Households
100 80 60 40 20 0 1971
1981
1991
2001
2011
Fig. 1. Urban housing scenario in India. Source adapted from (Tiwari & Rao, 2016).
shows the urban housing scenario of India. 2. Methodology The paper illustrates its arguments through various case studies. Initially, an overview of the housing scenario in India has been presented. The housing issue is classified into policy driven and market driven scenarios. Policy driven housing caters to the needs of the LIG and EWS in the form of ‘affordable housing’. The market driven housing caters to the demands of the HIG. This study focuses on the MIG and their related housing issues. Further, the study focuses upon the role of new towns in ameliorating the housing crisis, with special reference to the selected case studies of Navi Mumbai and Rajarhat. Fig. 2 illustrates the methodology in detail. 3. Housing scenarios in India “Provision of affordable housing has emerged as a primary concern for the Indian government to deal with the issues related to overpricing of housing stocks and lack of housing for middle and lower income groups including the economically weaker sections.” (Bardhan, Sarkar, Jana, & Velaga, 2015) The rise in house prices and less favourable access to loans have
Fig. 2. Methodology.
Demand Side
Economically weaker section
Policy driven housing
Housing issue in India
Lower Income groups
Middle income groups Market Driven housing Higher income groups
Supply side
New Towns in India Navi Mumbai Ghost Towns?
Case Studies Rajarhat New Town
Possible fate of new towns
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is expected to rise to 41% of the population by 2025 dominating major cities of the country. Shukla (2010), in his study reveals this number to be 153 million people in 2009. Within the MIG, there is wide variation between those who have already gained access to better living condition and those who were new to this class, manifested in the distinction between upper MIG and lower MIG. The National Council has put a similar classification between seekers and strivers forward for Advanced Economic Research (NCAER), where the former has annual income between INR 200,000 and 500,000 and the latter has annual income between INR 500,000 and one million. This growing MIG population has accelerated the demand for housing in the urban areas. According to a report by released by Cushman and Wakefield (Wakefield, 2016), the supply gap among the MIG in eight major cities of the country between 2016 and 2020 is predicted to be around 810,000. Better employment and income has driven the aspirations for better living conditions among the MIG. They are no longer satisfied by the savings-driven attitude towards the purchase of homes. The ease of access to housing loans extended on a longterm basis and the newly launched projects advertising affordability have added momentum to the housing sector. As pointed out by Nijman (2006), “Housing is generally considered the single biggest consumption item for any household, and India's ‘consumer led revolution’ is therefore closely associated with these watershed changes in the housing market across the major urban areas”. This has also hastened the growth of the ancillary industries associated with housing, like paints, cement, and building materials.
Table 1 Disbursement made under Urban Housing Fund. Source: (National Housing Bank, 2016). Year
Allotment
2013–14 2014–15 2015–16 Total
2000 4000 6000
Utilization HFCs
SCBs
RRBs
Total
148 883 94 1125
1852 1661 1256 4769
000 30 33 63
2000 2574 1383 5957
120000
Number of units
99049 100000 80000 60000
45660 28251
40000 20000 0
2013-14
2014-15
2015-16
Fig. 3. Units financed under Urban Housing Fund year wise. Source: (National Housing Bank, 2016).
Banks (SCBs) rose from INR 15,317 million on 31st March 2001 to INR 464,372 million [use standard metrics] on 31st March 2013 and a large proportion of this was lent on long term basis. The housing loans by the housing finance companies (HFCs) rose from INR 33,250 million at the end of March 2001 to 290,427 million in March 2013, also extended on a long-term basis. Smets (1999) has pointed out that long term housing loans suit the housing construction practices and perception of the MIG and HIG as they can afford to build complete housing units, unlike the lower income groups who choose incremental building processes based on short and medium term loans. The scheme of urban housing funds was announced in 2013 to provide refinance assistance in respect of housing loans extended by PLIs in urban areas for the construction/up gradation of dwelling units, repairs/renovations/up gradation of dwelling units and for incremental housing. The loans size under this scheme is INR 1,000,000 disbursed on or after April 01, 2013. The eligible floor area does not exceed 60 m2 or the house cost does not exceed INR 1,600,000. The households with annual income not exceeding INR 400,000 are the targeted beneficiaries of this scheme. Table 1 shows the disbursement made under the scheme and Fig. 3 shows the units financed by the scheme.
5. New towns in India Initially new towns were created in sparsely populated areas with a target to diffuse urbanization as proclaimed by the then central government's “vision of national modernism” (Schindler & Kishore, 2015). Later it changed, to plan new towns around the peripheries of the major cities with the aim to decongest the inner cities and to provide uniform housing opportunities to all sections of the population. A significant factor associated with this strategy is the growth of cities along new transport corridors or pivoting around upcoming new airports on the city outskirts. “Within the housing reform context, as well as supplying land for an emerging real estate boom, the new townships are expected to provide land for low income housing” (Sengupta, 2007). Fig. 4 shows the temporal growth of new towns in India. New towns started with the setting up of urban residential areas in order to accommodate the excess population that migrated to India after partition. Towns like Faridabad in Uttar Pradesh and Ashoknagar in West Bengal were originally planned as refugee settlements. These towns have developed as thriving urban centres, around the major cities of Delhi and Kolkata respectively. With the initiation of the second Five Year plan, an impetus was provided to strengthen the industrial base of the country, especially in the less-developed regions. Owing to the abundance of raw materials like coal and iron ore, as well as the newly erected multipurpose river projects, the tribal areas of the peninsular plateau became the focal points of industrial growth. This was
4. The MIG population and affordable housing in India After the introduction of the liberalization policy of the 1990s the growth of the MIG in India accelerated. According to a report by McKinsey (Beinhocker, Diana, & Zainulbhai, 2007), the MIG population
Fig. 4. Phases of growth of new towns in India. Source: compiled by authors.
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The sixth phase is characterized by the growth of townships along the major transport corridors, such as high speed rail and industrial corridors. For example, the Delhi Mumbai Industrial Corridor, the industrial development project planned across seven states along the 1500 km Western Dedicated freight corridor, aimed to develop several new industrial cities like Dholera Special Investment Region (SIR) in Gujarat, to accelerate the economic activity in the region. The current phase of new town growth is directed towards increased use of information and communication technology in urbanization processes through smart cities. The government declared its plans to develop 100 new smart cities in the form of satellite towns around the major cities in 2015. This involves creation of new towns as well as upgradation of the existing low tier cities through provision of infrastructure and basic services. This involves the creation and improvement of water supply, sewerage, solid waste management and storm water discharge under the Atal Mission for Rejuvenation and Urban Transformation (AMRUT). Special impetus is provided for strategic and planned development of the heritage cities like Varanasi and Kanchipuram under the ‘Heritage City Development and Augmentation Yojna’ (HRIDAY). With these policies in the backdrop, the real estate sector has flourished and augmented the construction practices in the urban areas. The lack of developable lands in the city cores has diverted attentions to the peripheral areas. Bhattacharya and Sanyal (2011) pointed out, “the development of new towns and integrated townships close to existing metropolises in India is partly due to a vibrant political society that that resists large scale gentrification of the existing cities”. On the grounds of the relation between the steady growth of MIG households in the country and the impetus given to the growth of new towns, it can be argued that the latter are being created to cater to the housing needs of the growing MIG population (Yin & Yi, 2013).
Fig. 5. Location of Mumbai and Navi Mumbai. Source: Ananthakrishnan (1998).
accompanied by the construction of industrial towns, like Durgapur, Bhillai and Raurkella in a second phase of new town growth. The third phase of planned urbanization was marked by the growth of several planned towns. Chandigarh was the first planned city of India developed as a new capital for the newly partitioned Punjab state. Later, owing to the unprecedented growth of ‘colonial’ big cities, in the 1970s and 1980s, the central government funded projects with the objective of decongestion by developing counter magnets or satellite townships while simultaneously limiting densities in the cities through the Urban Land Ceiling Act of 1976 (Wang, Kundu, & Chen, 2010). New townships like Navi Mumbai (near Mumbai), Kalyani (near Kolkata) and Salt Lake (adjoining Kolkata) were engineered to serve this purpose. The urbanization process underwent considerable reform following the economic liberalization policy of 1991. The open market policy of the government promoted large-scale foreign investment, as high as 100% in the infrastructure sector that allowed direct investment in urban service provision (Planning Commission, 2002; Sengupta, 2007). Subsequently, the urban areas of the country witnessed a massive spurt in construction-based development projects. The new towns planned in this period (like Rajarhat in West Bengal) have also followed the same course. This can be demarcated as the fourth phase of new town development, in which the growth decelerated as the focus was shifted back to the big cities, undertaken by JNNURM in 2005. This was also the period of growth of private townships, an idea slowly getting traction in India. For example, new private townships like ‘Lavasa’ and ‘Aamby Valley city’ both developed in Maharashtra, are in the vicinity of Mumbai and Pune. Lavasa was planned for a population of 200,000, to offer diverse work possibilities, mainly hospitality and tourism, and has paved the way for the idea of ‘new urbanism’ in Indian (Datta, 2012). On the downside, in the recent past Aamby valley had been entangled with financial crisis and legal dispute. Due to the lack of transparency, these projects often did not attain success.
6. Middle-income housing in Mumbai and role of new towns Mumbai initially began on a cluster of seven islands and after the growth of the cotton textile industry in 19th century it evolved as a major economic node. Greater Mumbai now has an area of 437 km2 and a population base of 12,279,814 (Census 2011). It is a part of the greater Mumbai Metropolitan region, as shown in Fig. 5, area 4355 km2, comprising of eight municipal corporations and nine municipal councils along with more than 1000 villages. The evolution of the MIG population in Mumbai is well connected to the growth of trade and commerce in the city. The rise of administrative jobs in and around the island city area drew the educated class to settle in these surrounding locations (Karandikar, 2010). Though the deindustrialization policy of the 1960s and 1970s jeopardized the MIG employment status, it again revived and gained momentum with the intensification of information technology of the post liberalization period. As pointed out by Nijman (2006), “in Mumbai income groups below INRs 70,000 can be considered ‘poor’; groups with incomes between INRs 70,000–140,000 can be considered ‘low’ to ‘lower- middle’ and those with incomes over INRs 140,000 include a broad range of ‘core- middle’, ‘upper-middle’ and ‘rich’…”. In the initial phases, ‘chawls’ were the primary housing location for the MIG households of Mumbai. These were built in and around the work places to satisfy the housing demands of the employees of the mills and factories. This promoted community living and strengthened the social bonding among its residents. These were mainly rented tenements, which underwent serious deterioration over time, due to overpopulation and lack of maintenance. Presently, it is difficult to draw a line of demarcation between a chawl and a slum. “A report by S.S. Tinaikar Committee and housing authority, MHADA (Maharashtra Housing and Area Development Authority) study showed that living conditions in upgraded slums were better than some of the chawls” (Karandikar, 2010). The advent of the deindustrialization policy led to further decimation of the chawls. 4
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Annual growth rate of prices
25.00%
20.00%
15.00%
10.00%
5.00%
0.00% Less than 2000
2k to 3k
3k to 4k
AGR (2010-11 & 2011-12)
4k to 5k
AGR 2 (2012-12)
5k to 7.5k
7.5k to 10k
AGR 3 (2013-14)
10k to 25k
>25k
AGR 4 (2014-15)
Fig. 6. Annual growth rate of house prices in Mumbai. Source: JLL research (data compiled by authors).
Lack of developable land in the inner city, also called ‘Island city’, drove the developers to the suburbs. As Nijman (2006) has pointed out, since 1998 housing construction in Mumbai has grown by an average 15–20% per year and most of these developments were high rise complexes located in the western and the eastern suburbs. The restriction imposed on the Floor Space Index and the Transferable Development Rights played significant roles in developing the suburban areas. According to Census 2011, 63% of households had one room followed by 15.8% having two dwelling rooms. Only 0.7% households had six or more dwelling rooms. The mean household size of the city is 4.5. The astronomical prices of the housing stocks in Mumbai have kept housing out of the reach of a large part of the population. The price of the smallest unit varies between one to two millions, much beyond the reach of any average MIG household. Though the option of loans is always available, the monthly installments rob the households of their quality of living. However, owing to the additional costs like returns to the builder, infrastructure costs and land costs, the prices rise much beyond those estimated. People are further driven to the slums, which now accommodate nearly half of the population of the city (Census 2011). Fig. 6 indicates the annual growth rate of house prices (INR per sq. ft.) in Mumbai. However, for prices greater than 25,000 INR per sq. ft., the annual growth rate of 2014–15 has been higher. Owing to the substantial number of stocks remaining unsold, the annual growth rates were showing stagnation, but remained out of the reach of MIG. According to Suryavanshi (2017), against a demand of two million houses only 46,000 stocks were sold, as people could not afford to purchase. As a tradeoff, buyers focused on the stocks available in the suburban areas and new towns. The new town of Navi Mumbai, also part of this mega region, was primarily designed to relieve Mumbai of urbanization stress and growing population pressure (Shaw, 2004). It is a city composed of 14 nodes, which are well laid along a longitudinal transport corridor, and it is constructed and maintained by the City and Industrial Development Corporation of Maharashtra Ltd., popularly designated as CIDCO, an autonomous body formed in 1970. The nodal growth of the city also indicates differential patterns. Of all the nodes, Vashi was most sought after owing to the proximity to Mumbai and today it functions as the de facto CBD of Navi Mumbai. The enormous private investment in the new commercial and financial sector of Vashi triggered the land prices near to the prices pertaining in the suburbs of Greater Mumbai. Fig. 7 shows the population of different nodes in Navi Mumbai, based on a socio-economic survey conducted by CIDCO in 2000 and 2011 (CIDCO, 2001, 2011). Based on the level of development of nodes, Navi Mumbai can be
classified into developed and developing regions. The developed region comprises the older nodes like Vashi, Panvel, Kalamboli etc. and is characterized by higher property prices, better administration and better amenities. Navi Mumbai houses around two million population although that is only 50% of its holding capacity. CIDCO has been the prime supplier of affordable houses for the LIG along with some for the MIG and HIG. The focus was to create mixed income residential clusters to achieve social balance. In order to make land affordable for all sections of the population the prices were controlled. Fig. 8 shows the year construction of tenements by CIDCO for different income groups. CIDCO has played an active role in building affordable houses for the LIG and EWS and built about 123,577 housing units by 2010. However, the majority of the houses continue to be occupied by the MIG. The nodal variation shows that Khopar Khairane has the maximum number of LIG houses while CBD Belapur has the least. The ownership pattern indicates an increasing trend in housing self-ownership over tenancy. Currently the new proposed SEZs and the newly proposed new towns of Khopta and NAINA govern the growth of Navi Mumbai. It is expected to create a massive job centre having a pulling force over the working population of Mumbai and to fourfold increase the housing demand in Navi Mumbai. Proper impetus shall be given to provide for low cost and affordable housing in these newly evolving townships so that the allocation of housing stock is equitable without stocks remaining unoccupied and the further growth of slums can be curbed. 7. Middle-income housing in Kolkata and role of new towns Kolkata, owing to its strategic location and economic vibrancy, saw huge numbers of in-migrants between 1947 and 1971. The result was the ever growing demand for housing and the eruption of refugee colonies, slums and squatters. The development in and around the city followed the same footprints. Kolkata Metropolitan Area, Fig. 9, is made up of three municipal corporations, 38 municipalities and 24 rural councils (termed as panchayats), having an area of 1851.41 km2 and a population of 14,112,536. The changing concept of living among the new MIG led to demand for better housing and amenities. As pointed out by Sengupta (2007), “The current average annual housing need is projected to rise to 90,000 units by 2025, which reflects only the magnitude of additional growth assuming that the current housing backlog does not worsen further.” The idea of new town development in Kolkata dates back to the prereform period, when the ‘Basic development plan’ (1966–86) suggested a bimodal strategy for development. As an outcome to that approach Kalyani Township was developed for accommodating a population base 5
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180000
2000 2011
160000
Population
140000
Fig. 7. Node wise population change in Navi Mumbai. Data source: CIDCO (2001, 2011).
120000 100000 80000 60000 40000 20000 0
main city to the peripheries. Nevertheless, in the era of globalization where the cities are driven by investments, infrastructural growth has become the primary agenda of urban growth. The major urban development policies undertaken involve huge construction works that justify the infrastructural augmentation. As the real estate forces have gained more prominence, urban areas have become the sites for upcoming construction projects. The exponential rise in the income and disposable surplus and aspirations for better living has increased the demand for housing among MIGs and persuaded them that the new towns that offer better housing conditions. They prefer housing that is close to HIG residential areas available at affordable prices. It is evident in the spurt of gated communities and splintering urbanism (Graham & Marvin, 2001). MIG generally opt for prefabricated houses rather than building homes individually. Hence, the developers focus upon building community housing stocks rather than individual units. As pointed out by Shaban and Sattar (2016), “India has fully opened doors for FDI through automated route in new township and housing since 2005” that has led to growth of private new towns and neighbourhoods in the country. The present thrusts are on building smart cities across India based on the increased use of information and technology and planning large-scale affordable houses by 2022 under PMAY. Though initially the affordable housing strategy targeted the LIG and EWS, it has presently expanded its purview to MIG households. In 2017, the government has increased the focus on affordable units, giving 39% higher allocation under the ‘Housing for All 2022’ and also the loans offered under the Credit Subsidy Scheme have been raised to cover the MIG households as well. This can be attributed to the fact that the increased use of information technology in the cities is bound to attract more MIG to the newly developed smart cities that will further stimulate the demand for MIG housing. This indicates the voluntary nature of these urban policies, augmenting large scale construction. Owing to the increased thrust given to the construction of higher and middle-income housing, the new towns are close to becoming residential suburbs to their cities. “Use of property-led development to capture short-term return of investment in new town development in
of 125,000 belonging to LIG and MIG. However, the approach is considered to be a failure following Kalyani's inability to grow into a selfsustaining township. The next project was the development of Salt Lake Township in 1964. Though the project was completed in five years, it took almost 30 years to attract and accommodate the rapidly increasing population of Kolkata. The post reform period is marked by the announcement of the Rajarhat new town project in 1995. The entire project is divided into three phases/action areas of which the first, covering 6655 acres of land, is near completion. As per Census 2011, the total population of Rajarhat was around 0.4 million. In spite of considerable attention being focused on the housing development process, the government has failed to deliver to the needs of the LIG and EWS of the city. Bysack (2004)in his study showed that the land share of different income groups in different new town projects around Kolkata has been uneven (see Table 2). Hence, it is clear that new towns in West Bengal have been mostly engaged in serving the housing interests of the economically affluent. In Rajarhat, only 21% of land has been reserved for the disadvantaged population. As pointed out Sengupta (2010), Kolkata has emerged as the second most expensive city, after Mumbai, in terms of construction cost indices. All these factors have together played massive role in keeping the residential sector out of the reach of the poor. Besides Rajarhat, there are other projects like West International City (presently terminated) and Dankuni as well but with limited success. 8. New towns and housing
Fig. 8. Construction of tenements by CIDCO. Data source: CIDCO (2011).
40000 35000 30000 25000 20000 15000 10000 5000 0
HIG MIG
2000-2010
1996-2000
1991-1995
1986-1990
1981-1985
EWS/LIG upto 1980
Number of tenements
The new towns are chiefly manifestations of policies to control the local urbanization process. They absorb the excess population of the major cities and hence relieve the infrastructural stress. Their economies generate additional employment opportunities that accelerate the regional growth process. For example, a large number of government offices were shifted to Salt Lake City from Kolkata CBD, The initiation of Navi Mumbai was meant to replace the industries from the Mumbai
6
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Fig. 9. Location of new towns around Kolkata. Source: Compiled by authors from Maps of Kolkata Metropolitan Development Authority.
Kalyani
Dankuni New Town Rajarhat
Kolkata West International City
Bidhannagar (Salt Lake)
environmental repercussions. In other words, it is giving more impetus to labelling of places as cities. As more and more cities are created to mirror the economic prosperity of a nation, infrastructural growth outpaces the population growth. As such new urban areas remain unpopulated or under populated, they are giving rise to a new connotation called ghost towns and cities (Banerji & Jackson, 2012). New towns do ease out pressure on affordable housing, but are susceptible to being influenced by investor driven purchases, soon making them follow the same trend of price rises seen in their parent cities. We argue that the ability of the new towns to cater to the demands of the emerging new MIG (essentially the first time homebuyers among last two generations) shall inhibit these fringe markets. As the new towns generate new employment opportunity, more so in service sector, it might be difficult to discern Navi Mumbai and Rajarhat's role towards MIG housing. Whether it can be attributed to their new town identify or peripheral town characteristic can be a matter of debate. Ideally, the new towns are designed to absorb the MIG, LIG while countering urbanization stress from the city core but examples and experience shows that they are often reduced to super rich suburbs such as Salt Lake City Kolkata. Well-designed and planned network of new towns have the potential to address the housing crisis in India. Subsequently the new towns are expected to address and mitigate the skewed urban structure and spatial distribution of all socio economic classes. Otherwise, the new towns will only reinforce the lopsided urban structure in India and add to the crisis instead of mitigation. Often the infrastructural base is better than parent cities. New towns have the potentials to be important policy instruments for urban development, but failure to attract economic activities might render them to remain as satellite towns.
Table 2 Share of land in new towns. Source: adapted from Bysack (2004). New town project
Kalyani Salt Lake Rajarhat
Percentage share of land Economically weaker section (EWS)
Lower income group (LIG)
Middle income group (MIG)
Higher income group (HIG)
3.11 0.4 4
14.4 9.75 17
38.8 24.14 35
43.7 65.71 44
India exhibits globalization impact that reshapes the landscape, social relationship, and resource allocation of megacities' suburbs” (Wang et al., 2010). The over emphasis on creating new townships without creating infrastructure for the residents cannot help in solving the housing problem of the country. The demographic growth of Navi Mumbai has been slower than planned. As per the original development plan, the population of Navi Mumbai should have reached two millions by 2001 and even CIDCO estimated the population to be two million by 2011, but Census 2011 reveals it to be 1.1 million. Similar cases of failure are evident surrounding new developments around Kolkata. In Rajarhat new town there are complexes laying unoccupied or with a scanty population. Moreover, both these new towns have been selected to be upgraded to smart cities. Rajarhat has been further declared to be developed as a ‘green city’. This indicates towards the portrayal of advanced urbanization at the backdrop of low urban growth. Such an approach may not be coterminous with objective of sustainability. According to Sorace and Hurst (2016), phantom urbanization is the process whereby constructing the aesthetic form of the urban is more important to local state actors than the economic, demographic or 7
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90000
30
Percentage change
78446
80000
No. of Units
70000 60000 50000
32995
40000
23.7
24
22.2
20 15
9.7
10
7
6.5
5 0
27592
30000
26.4
25
20000 10000
4324
6086 Fig. 11. Percentage change in apartment size in major Indian cities. Source: Adapted from JLL research.
0
2011-12 2012-13 2013-14 2014-15 2015-16 Fig. 10. MIG housing stocks constructed by HUDCO. Source: HUDCO.
size was registered in Mumbai region followed by Bengaluru, Kolkata and Chennai. This has made housing more acceptable than affordable for MIG, without reducing the prices of the housing stocks.
9. Discussion: India's housing future for the MIG 9.5. Suggestive measures Some probable factors that might be affecting the persistence of high prices in the MIG housing markets of the urban areas are as follows.
a) Policy based implication- In order to bring down the demand supply gap in the housing sector, the policies must focus on controlling the speculative purchase of housing stocks. A ceiling must be imposed on housing stock ownership, in order to prevent the formation of more latent stocks. b) Government initiatives- The importance of new towns in providing affordable housing must be highlighted into new policies such as PMAY. The new policies must designate the new towns as potential sites for affordable housing development to minimize the excess strain these policies might put on the existing metropolitan cities. c) Private initiatives- Planning for the new towns shall include mandatory designation of a certain percentage of stocks in the affordable range by the private realtors in lieu of building high end luxury housing stocks. This might put a check on unnecessary building of luxury stocks that go vacant and unoccupied in the long run. d) Public private partnership model- The housing development authorities can work in association with the private realtors for developing more affordable housing stocks. The Maharashtra Housing and Area Development Authority has already announced such scheme where if developers possessing a minimum of 2000 m2 plot area transfer their land to MHADA, then the latter will get higher ‘Floor Space Index’ in respect of schemes in Mumbai and other regions in Maharashtra. This is expected to create affordable housing stock in these regions. Although the success of the PPP model in India has been very limited, if properly implemented it can play significant role in curbing the gap that the housing authorities fail to fill.
9.1. Existing large cities
• The availability of land is limited in the large metropolitan cities, • •
therefore, the developers usually pay a high premium to acquire those. Therefore, even if the construction cost is minimized to provide basic amenities in the built up area, the overall cost still remains high. Affordable housing stocks developed by the ‘housing development authority’ are limited in terms of quantity (see Fig. 10), Therefore the basic demand for housing remains high. The dominance of investors and builders in the real estate sector is a major factor of price rise in the housing sector. The holding capacity of the large real estate companies allows them not to sell below a certain price. This have two aspects, 1) to maintain the investor driven market and 2) to force end-users to spend beyond their capacity.
9.2. New townships
• In new townships, it has been observed that the plotted lands are
usually auctioned. Major share of these developed lands are grabbed by the realty companies at astronomical prices. Therefore, even though the new townships have the potential to generate affordable housing, it is overtaken. Therefore, prices remain beyond the reach of MIG.
10. Conclusion 9.3. Market dynamics The housing crisis of urban India is mostly driven by the inclination of the suppliers towards market-based demands. These mainly cater to the HIG and UMIG sections of the population. The rise of consumerism of the exploding MIG, after the liberalization period, has made housing more of an ‘investment opportunity yielding higher returns’ than a necessity. The inability to define the MIG throughout the country has hindered the formulation of a viable housing policy targeting them. Easy availability of loans and credit-based purchasing power has made MIG housing more profitable for the construction companies. However, current pricing patterns in the major metro cities still makes the available housing stocks beyond their reach. As the return on investment is tending to decrease, we observe stocks remaining unsold and unoccupied, while gaps in affordable housing remained unaddressed. With the unavailability of land and high prices of the available stocks in existing metro cities, developers tend to focus on hinterlands or
• The prevalence of unaccounted- for money in the Indian market is a significant factor leading to high prices in housing market in India. As such, it becomes difficult for the middle class to afford house as the loans cover only the accountable part of the transaction and the entire unaccounted transaction is arranged by the buyer themselves. Therefore, the stocks remain expensive for the MIG.
9.4. Recent trends However, in recent past, builders in order to lure the MIG, have reduced the average size of the units keeping the price (price per square feet) same (see Fig. 11). This has made housing more attractive to the MIG. During the period 2010–2015, the maximum decline in apartment 8
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upcoming new towns. Nevertheless, due to the distant location from the major workplaces and the weaker economic pull of the newly formed townships, these housing stocks mostly remain less attractive for the buyers. Although allied to the two major metropolises of the country, Navi Mumbai and Rajarhat new towns have not satisfactorily achieved their expected growths as new developments. As such it will be impossible to bring down the demand supply gap in the housing sector. Acknowledgement The material presented in this manuscript is based in part upon work supported by the CUSE R & D project (grant number 14INHPCU006) and Ministry of Human Resource Development, Government of India (MHRD-GoI) FAST project (grant number 14MHRD005). Any opinion, finding, and conclusion or recommendation expressed in this material are those of the authors and do not necessarily reflect the views of MHRD and/or the GoI. We also like to acknowledge Prof. Andrew Kirby and the reviewers who have encouraged and supported us with their constructive comments and valuable suggestions. A special thanks to Mr. Ashutosh Limaye, Head Research & REIS, JLL India for valuable insights. References Ananthakrishnan, M. (1998). The urban social patterns of Navi Mumbai, India. Banerji, R., & Jackson, P. (2012). China's ghost towns and phantom malls. BBC News. Bardhan, R., Sarkar, S., Jana, A., & Velaga, N. R. (2015). Mumbai slums since independence: Evaluating the policy outcomes. Habitat International, 50, 1–11. http:// dx.doi.org/10.1016/j.habitatint.2015.07.009. Beinhocker, E. D., Diana, F., & Zainulbhai, A. S. (2007). Tracking the growth of India's middle class. The McKinsey Quarterly, 3(3), 51–61. Bhattacharya, R., & Sanyal, K. (2011). Bypassing the squalor: New towns, immaterial labour and exclusion in post-colonial urbanisation. Economic and Political Weekly, 46(31), 41–48. Bysack, R. (2004). Housing development in the new towns around Kolkata (Masters thesis). School of Planning and Architecture (Unpublished thesis). CIDCO (2001). Socio economic survey of households in planned nodes in Navi Mumbai - 2000. CIDCO (2011). Socio economic profile of households in planned nodes in Navi Mumbai - 2010.
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