National Trends in Housing-India PDF

Page 1
National Trends in Housing-Production Practices

Volume 1: India
Table of Contents
Foreword
I. Changing shelter policies in India
A. India's new shelter strategy
B. Reorganization of the shelter sector

o
1. Development plan allocation and capital formation
2. Shelter-delivery schemes, and methods of financing
a. Renting accommodation from a public agency
b. Ownership through hire-purchase from a public agency
c. Ownership through self-financing schemes (SFSs)
d. Purchasing a house from a private agency
e. Owning a house as a member of a cooperative
f. Construction of houses by owners or contractors
g. Renting a house in the market
3. The legislative framework for housing
C. Land management and provision of infrastructure and basic amenities
D. Scope and scale of the shelter problem in India
II. Housing supply at the national level
A. Actors in the housing sector

o
1. Housing agencies in public and private sectors
a. Central-government agencies
b. Agencies at the state level
c. City-level public agencies
d. Primary cooperative societies
e. Private developers and builders
f. Individuals or households
2. Construction agencies in public and private sectors
3. CBOs and NGOs
4. An overview of the delivery process
Page 2
B. Housing finance
o
1. Actors in the formal housing-finance system
a. Institutions providing housing finance only
i. HUDCO
ii. NHB
b. Private housing-finance institutions
i. HDFC
ii. HFCs
iii. Apex cooperatives at state level and affiliated primary societies
c. General financing institutions providing housing finance
i. Commercial banks and cooperative banks
ii. Life insurance corporations
iii. Cooperative banks
iv. Pension and provident funds (PPF)
2. Informal housing finance
3. Incentives to investment in housing
C. Access and affordability of various income groups
D. Housing production
o
1. An assessment of the changes
III. Bombay
A. Housing scenario and scale of the shelter problem
B. The organizational structure in housing and the shelter-delivery process
IV. Calcutta
V. Delhi
B. Organizational structure in housing and the shelter-delivery process
VI. An overview of shelter strategies in India: Conclusions and recommendations
A. Obstacles to effective housing supply
Page 3
B. Evaluation of shelter schemes with reference to the urban poor
C. Recommendations
Bibliography
Page 4

Volume 1: India
List of Tables
1.
Income groups
2.
Population, households, housing stock and housing shortage, in millions (1961-1981)
3.
Select indicators on the housing situation in India (1961-1981)
4.
Percentage distribution of households, by monthly per capita expenditure class and house type, rural areas
(1983)
5.
Percentage distribution of households, by monthly per capita expenditure class and house type, urban
areas (1983)
6.
Rental characteristics of households, by house type and expenditure class
7.
Percentage distribution of gross household savings at current prices
8.
Composition of assets, urban households in the bottom two asset categories (30 June 1981)
9.
Pattern of debts, urban households in the bottom two asset categories (30 June 1981)
10.
Rent for urban households, bottom five expenditure classes (1983)
11.
Financing pattern under hire-purchase schemes of HUDCO (1989-1990)
12.
Financing pattern under hire-purchase schemes of HUDCO (1992-1993)
13.
Interest rates charged by NHB and other housing-finance institutions
14.
Demographic profiles of Greater Bombay, Calcutta and Delhi
15.
Quality of housing stock and shortages in Greater Bombay, Calcutta and Delhi (1981)
16.
Housing characteristics of Greater Bombay, Calcutta and Delhi (1981)
17.
Percentage of vacant houses in Greater Bombay, Calcutta and Delhi Municipal Corporations
18.
Percentage of households having electricity and toilet facility, Greater Bombay, Calcutta and Delhi (1981)
19.
Housing requirements, Bombay (early 1980s)
20.
Percentage share of different actors in housing production, Bombay
21.
Access to housing in Bombay, by income group
22.
Slum population in Calcutta Metropolitan Development Area (1981)
23.
Access to housing in Calcutta, by income group
24.
Housing activities in Calcutta Metropolitan Development Area
25.
Composition of Delhi's housing stock
26.
Targets and performance of DDA relating to land and housing (mid-1980s)
27.
Planned housing production, Delhi (1961-1981)
Page 5
28.
Access to housing in Delhi, by income group
Page 6
Table 1. Income groups

In com e grou p
Economically Weaker Sections (EWS)
In com e lim its (Rs.)

S e ve n th Plan
Eigh th Plan
< 700
< 1,250
Low-Income Groups (LIG)
701-1,500
Middle-Income Groups (MIG)
1,501-2,500
High-Income Groups (HIG)
>2,501
1,251-2,650
2,651-4,450
>4,451
Source: Kundu, 1993.
Page 7
Table 2. Population, households, housing stock and housing shortage, in millions (1961-1981)
Particu lars
Ru ral
P opulation
360.3
1961
Urba
n
Total
Ru ral
1971
Urba
n
Total
439
78.9 .2
Ru ral
108
.8
438.6
1981
Urba
n
Total
547.4
525.5
No. of households
68.7
14.8
83.5
78.0
19.0
97.0
94.1
30.7 124.8
T otal housing stock
65.2
14.1
79.3
74.5
18.5
93.0
88.7
28.0 116.7
Pucca
8.5
6.5
15.0
14.2
11.8
26.0
18.8
18.1
36.9
Semi-pucca
24.1
4.9
29.0
27.6
4.3
31.9
33.3
6.8
40.1
Serviceable katcha
24.8
Unserviceable katcha
7.8
3.1
39.7
2.8
35.3
23.8
8.9
2.4
35.1
25.7
10.9
Useable housing stock
57.4
11.4
68.8
15.6
16.1
81.7
77.8
Housing shortage
11.6
3.6
15.2
11.6
2.9
14.5
16.3
159 685
.7 .2
24.9 102.7
7.0
23.3
a:
T he figures for population, households and housing stock in 1981 include the estimated values for those states
where the population census could not be conducted. T he number of households in urban areas is obtained after adjusting
for congestion, the number of actual household being 29.3 million.
b:
Usable housing stock = pucca + semi- pucca + serviceable katcha.
c:
Housing shortage = No. of households - usable housing stock.
Source: NBO, 1990.
Page 8
Table 3. Select indicators on the housing situation in India (1961-1981)

1961
Particu lars
Ru ral Urban Total
P opulation/housing stock
5.53
5.64
5.55
a:
1971
Urba
Ru ral
n
Total
5.90 5.88 5.89
1981
Ru ral Urban Total
5.92
5.70 5.87
P opulation/useable housing stock
6.31
7.04
6.43
6.61
6.76
6.64
6.75
6.74
6.75
P ersons per room
2.62
2.62
2.62
2.77
2.78
2.77
2.77
2.53
2.71
Households per housing unit
1.05
1.06
1.05
1.07
1.06
1.07
1.07
1.06
1.07
Size of households
5.24
5.33
5.26
5.62
5.73
5.64
5.58
5.20
5.55
Households in one-room units (percentage) 48.12
47.26 50.10 47.82
44.38
53.05
49.00
Vacant houses (percentage)
5.50
7.23
5.80
6.02
7.47
6.31
Houseless population (percentage)
0.27
0.37
0.29
0.35
0.43
0.36
45.80 44.72
4.99
0.33
6.41
a
6.39
5.33
a
0.34
T hese figures exclude Assam.
Source: Census of India, 1961; 1971; 1981a; NBO, 1990; 1991.
Page 9
Table 4. Percentage distribution of households, by monthly per capita expenditure class and house type, rural
areas (1983)
Mon th ly pe r capita e xpe n ditu re class (Rs.)
85-10 100-1 125-1 150-2 200-2 250-3
Hou se cate gory
0-30 30-40 40-50 50-60 60-70 70-85
0
25
50
00
50
00 300 + Total
Katcha individual house 50.8 55.1 53.9 50.7 47.1 44.2 42.6 37.0 34.3 29.2 24.6 23.5 18.5 39.3
Katcha chawl/bustee
25.5
14.9
11.2
11.1
11.3
10.4
9.4
9.0
7.6
7.9
6.1
6.7
5.4
Katcha flat
3.3
2.0
1.8
1.9
2.2
1.9
2.1
2.0
1.7
1.9
1.2
1.3
1.2
1.9
All katcha houses
79.6
72.0
66.8
63.7
60.6
56.5
54.0
48.0
43.6
39.0
31.9
31.5
25.1
50.6
Semi-pucca individual house
12.5
20.4
22.6
24.9
25.7
27.5
27.4
29.0
28.2
27.8
27.5
27.5
22.7
26.8
Semi-pucca chawl/bustee
2.1
3.1
3.9
4.0
3.8
3.9
4.0
4.5
4.6
4.8
4.3
4.3
3.7
4.2
9.4
Semi-pucca flat
0.8
1.0
1.3
0.8
1.0
1.5
1.6
1.4
1.6
1.8
1.7
1.4
2.2
1.5
All semi- pucca houses
15.3
24.5
27.8
29.7
30.5
32.9
33.0
34.8
34.3
34.3
33.5
33.2
28.5
32.4
Pucca individual house
1.4
2.2
4.0
5.2
6.9
8.5
10.6
14.0
17.6
21.9
27.8
27.5
34.7
13.5
Pucca chawl/bustee
0.8
0.4
0.4
0.3
0.7
0.6
0.7
1.1
1.7
1.7
2.6
2.9
4.4
1.2
Pucca flat
2.5
0.3
0.7
0.7
0.9
1.2
1.3
1.7
2.4
2.7
3.5
4.3
6.7
1.9
All pucca houses
4.7
3.0
5.2
6.2
8.5
10.3
12.6
16.8
21.7
26.3
33.9
34.7
45.8
16.6
Not recorded
0.4
0.6
0.2
0.3
0.4
0.3
0.4
0.4
0.3
0.4
0.7
0.6
0.7
0.4
All cate gorie s 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Source: NSS, 1987.
Page 10
Table 5. Percentage distribution of households, by monthly per capita expenditure class and house type, urban
areas (1983)
85-10 100-1 125-1 150-2 200-2 250-3
Hou se cate gory
0-30 30-40 40-50 50-60 60-70 70-85
0
25
50
00
50
00 300 + Total
Katcha individual house 11.4 25.0 25.8 22.8 18.9 16.0 13.6 11.7
8.4
6.3
4.3
3.9
2.3
8.9
Katcha chawl/bustee
7.9
18.0
13.4
13.1
12.7
11.5
10.3
7.2
6.2
5.0
3.6
3.0
2.0
Katcha flat
0.8
3.6
2.6
2.5
1.9
1.1
1.6
1.7
1.1
1.2
0.9
0.9
0.5
1.2
All katcha houses
20.1
46.6
41.7
38.4
33.6
28.7
25.5
20.6
15.7
12.4
8.9
7.7
4.7
16.4
Semi-pucca individual house
13.1
25.7
20.9
22.4
25.9
23.4
21.5
18.5
16.1
13.2
10.3
8.4
5.7
14.9
Semi-pucca chawl/bustee
8.7
6.3
8.2
9.1
9.2
9.0
8.1
10.3
9.4
8.6
7.9
6.0
5.7
8.3
6.3
Semi-pucca flat
2.3
2.6
6.2
2.2
2.5
3.3
2.5
2.9
3.0
2.5
2.5
2.2
1.4
2.5
All semi- pucca houses
24.2
34.6
35.3
33.7
37.6
35.7
32.1
31.8
28.5
24.3
20.7
16.5
12.9
25.7
Pucca individual house
23.8
10.2
14.4
18.2
19.2
23.7
26.6
29.9
33.3
37.3
36.9
36.6
36.0
32.0
Pucca chawl/bustee
6.7
1.1
2.6
2.8
3.1
4.6
4.7
5.8
7.8
7.6
9.4
9.7
10.5
7.3
Pucca flat
23.6
7.3
5.8
6.6
5.8
6.9
10.3
11.3
14.0
17.8
23.6
28.8
35.3
18.0
All pucca houses
54.1
18.5
22.8
27.7
28.2
35.1
41.7
47.1
55.1
62.7
69.8
75.1
81.8
57.2
Not recorded
1.6
0.3
0.2
0.3
0.7
0.5
0.7
0.6
0.7
0.6
0.6
0.7
0.7
0.6
All cate gorie s 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Source: NSS, 1987.
Page 11
Table 6. Rental characteristics of households, by house type and expenditure class

30-4 40-5 50-6 60-7 70-8 85-1 100- 125- 150- 200- 2500-30
0
0
0
0
5
00 125 150 200 250 300 300 + Total
Hou se cate gory

Katcha houses
P ercentage in rental houses
2.0
9.8
8.6
4.9
5.7
5.4
6.5
4.7
4.1
3.1
2.0
4.1
P er-capita monthly rent (actual) (Rs.)
3.7
3.6
3.7
4.2
4.7
5.4
5.5
5.9
7.5 10.5 13.0 25.2
3.7
2.8
37.3
8.4
P er capita monthly rent (imputed) (Rs.)
3.3
4.9
4.1
5.2
4.8
5.8
7.0
7.6
9.7 12.0 14.1 19.9
24.1
7.9
7.1
9.4
Semi-pucca houses
5.6
2.8
6.0
6.2
7.6
8.9
8.7 10.5 10.8 10.8
3.5
3.6
2.5
4.4
4.3
5.9
6.8
P er capita monthly rent (imputed) (Rs.)
7.3
6.4
6.0
6.9
8.7
9.4
10.2 13.3
14.5 17.7
22.8 30.4
30.8 13.3
3.2
2.1
4.5
4.7
6.5
9.4
12.2 15.6
21.2 25.9
32.8 38.7
44.3 24.1
4.9
2.6
5.5
4.4
5.4
6.7
7.5 10.5 12.2 16.0
P er capita monthly rent (imputed) (Rs.) 12.6 13.3
11.3
7.1
10.4
9.2
8.9 11.8 14.6 16.8
25.6 10.0
Pucca houses
4.4 12.9 13.9
22.9 28.4
49.8 21.6
16.3 21.7
24.9 34.0
43.8 57.3
88.5 35.1
All categories of housing units

27.5 30.8
36.2 40.4
46.0 51.0
53.3 37.6
P ercentage in rental houses 10.8 14.8

8.0
6.8
19.0 12.4
6.4 15.8
8.7 10.0 12.1 16.4
19.7 27.6
37.4 50.9
79.8 17.3
P er-capita monthly rent (imputed) (Rs.)
3.3
4.3
3.8
4.6
7.8
19.8 23.6
5.0
5.5
6.7
7.0
8.2
9.5 11.5 15.3 24.0
Source: NSS, 1987.
Page 12
Table 7. Percentage distribution of gross household savings at current prices

Particu lars
Gross household saving (million Rs.)
1980-1981
21,848
1986-1987
41,638
1989-1990
81,319
1990-1991
97,441
Gross household savings, as percentage of gross

domestic saving
75.9
75.9
80.9
84.0
Savings in physical assets
60.6
44.2
49.4
53.2
Financial savings:
Currency
7.4
7.4
9.4
6.4
Net deposits
13.7
19.4
12.2
11.6
Shares and debentures
2.0
5.6
4.9
5.5
Net claims on government
2.6
6.4
7.3
6.7
Life insurance
3.9
4.8
5.0
5.4
P ension and P rovident Fund
9.7
12.2
11.7
11.2
Source: CSO, 1982; CSO, 1992.
Page 13
Table 8. Composition of assets, urban households in the bottom two asset categories (30 June 1981)
Ite m
P ercentage of all households
Asse t grou ps (Rs.)

< 1,000
1,000-5,000
14.4
17.5
Average value of assets (Rs.)
373
Total
100.0
2,746
40,573
52.9
Households reporting land assets (percentage)
2.3
24.0
Households reporting building assets (percentage)
9.5
31.21
54.9
Land assets per household (Rs.)
286
13,133
Relative value of land assets (percentage)
1.9
10.4
32.4
Building assets per household (Rs.)
32
417
14,459
Relative value of building assets (percentage)
8.6
15.2
35.6
Durable assets per household (Rs.)
277
1,362
6,142
Relative value of other assets (percentage)
74.3
49.6
15.1
Other assets per households (Rs.)
57
681
7,019
Relative value of other assets (percentage)
15.2
24.8
16.9
Source: Based on RBI, 1987.
Page 14
Table 9. Pattern of debts, urban households in the bottom two asset categories (30 June 1981)
Ite m
Amount of cash dues (Rs.)
Asse t grou ps (Rs.)

< 1,000
1,000-5,000
92
292
Total
1024
Debts taken (percentage)

For household expenditure
81.3
66.0
35.0
From non-institutional sources
94.5
75.1
40.1
With personal and third party security
72.3
61.2
45.3
Without security
20.0
24.7
12.1
At zero per cent interest rate
37.1
24.1
14.1
At more than 20 per cent interest rate
42.9
43.5
31.6
Source: Based on RBI, 1987.
Page 15
Table 10. Rent for urban households, bottom five expenditure classes (1983)
Mon th ly pe r capita e xpe n ditu re classe s (Rs.)
Pe r capita m on th ly re n t
0-60 60-70 70-85 85-100 100-125 125-158 All classe s
Actual rent for all households (Rs.) 0.68
0.93
1.37
1.97
2.60
3.88
5.93
Actual rent for households in rented houses (Rs.)
4.04
4.91
6.16
6.90
8.81
10.82
17.28
Imputed rental value of households in owner occupied houses

(Rs.)
7.38
8.67
9.99
22.10
16.36
19.67
23.98
T otal (actual + imputed) rental value for households (Rs.)
6.87
7.92
9.08
10.67
14.02
23.98
21.46
Rental value (actual + imputed) as part of total expenditure

(percentage)
10.96
10.67
10.54
11.30
11.00
11.95
Source: NSS, 1987.
Page 16
Table 11. Financing pattern under hire-purchase schemes of HUDCO (1989-1990)

Eligibility
crite rion on
in com e
(Rs.)
S ch e m e
Ne t rate of
C ost ce ilin g Exte n t of loan
in te re st
(Rs.)
(pe rce n tage ) (pe rce n tage )
Re paym e n t
pe riod
(ye ars)
Mon th ly
in stalm e n t
on Rs.1,000
(Rs.)
A. Urban Housing
EWS II
< 700
15,000
90
7.0
22
8.10
LIG I
701-1,500
20,000
85
8.5
15
11.13
LIG II
701-1,500
30,000
85
9.0
15
11.43
MIG I
1,501-2,500
60,000
75
11.0
15
12.67
MIG II
1,501-2,500
100,000
75
12.5
15
13.62
HIG
2,500 +
250,000
60
13.5
15
14.27
B. Staff housing
Ownership housing
As under A
As under A
90
12.0
Central Government Employee

Scheme
< 1,700
200,000
90
12.0
20
12.6
20
12.6
C. Co-operative housing
EWS
As under A
As under A
75
7.0
22
8.10
LIG
As under A
As under A
75
8.5/9.0
15
11.13-11.43
MIG
As under A
As under A
60
11.0/12.5
15
12.67-13.62
MIG
As under A
As under A
60
13.5
15
14.27
D. Repairs and additions
As under A
As under A
As under A
As under A
As under A
As under A
Page 17
Table 12. Financing pattern under hire-purchase schemes of HUDCO (1992-1993)

Eligibility
crite rion on
in com e
(Rs.)
S ch e m e
C ost
ce ilin g
(Rs.)
Loan
ce ilin g
(Rs.)
Exte n t of Ne t rate of
Mon th ly
loan
in te re st Re paym e n t in stalm e n t
(pe rce n tag (pe rce n tag
pe riod
on Rs.1,000
e)
e)
(ye ars)
(Rs.)
A. Urban housing
EWS
< 1,050
22,000
19,500
90
8.0
22
8.06
LIG
1,051-2,200
50,000
42,000
85
11.5
15
11.68
MIG I
2,201-3,700
175,000
60,000
75
12.0
15
12.00
MIG II
2,201-3,700
175,000
80,000
75
13.0
15
12.65
MIG III
2,201-3,700
175,000
115,000
75
14.0
15
13.32
HIG I
3,700 +
None
115,000
60
14.0
15
13.32
HIG II
3,700 +
None
150,000
60
15.0
15
14.00
HIG III
3,700 +
None
200,000
60
16.0
15
14.69
B. Staff housing
Company owned -I
115,000
60
14.0
10
15.52
16.13
Company owned -II
150,000
60
15.0
10
Company owned -III
200,000
60
16.0
10
16.75
Employee owned
As under A
As under A
As under A
As under A
As under A
As under A
As under A
C. Co-operative housing
As under A
As under A
As under A
As under A
As under A
As under A
As under A
D. Repairs and additions

EWS
< 1,050
11,000
9,500
90
7.0
10
11.61
LIG
1,051-2,200
25,000
21,000
85
11.5
10
14.06
MIG
2,201-3,700
85,000
30,000
75
12.0
10
14.34
2,201-3,700
85,000
40,000
75
13.0
10
14.93
2,201-3,700
85,000
55,000
75
14.0
10
15.53
3,700 +
55,000
60
14.0
10
15.53
3,700 +
75,000
60
15.0
10
16.13
3,700 +
100,000
60
16.0
10
16.75
HIG
Page 18
Table 13. Interest rates charged by NHB and other housing-finance institutions
Am ou n t of loan (Rs.)
< 7,500
As re vise d du rin g 1990/91

C h arge d by NHB to
C h arge d by ban k s to
ban k s
be n e ficiary
8.0
10.0
As re vise d du rin g 1991/92

C h arge d by NHB to
C h arge d by ban k to
ban k s
be n e ficiary
9.5
11.5
7,500-15,000
9.5
11.5
11.0
13.0
15.000-25,000
10.0
12.0
11.5
13.5
25,000-50,000
12.5
14.0
13.5
15.5
50,000-200,000
14.0
15.0
15.0
16.5
Source: NHB, 1991; NHB, 1992.
Page 19
Table 14. Demographic profiles of Greater Bombay, Calcutta and Delhi

Agglom e ration s/C itie s
Greater Bombay UA
Popu lation growth rate (pe rce n tage )

1951-1961
1961-1971
1971-1981
1981-1991
40.70
45.82
42.94
33.43
a
Popu lation 1991

(th ou san ds)
12,572
a
Greater Bombay MC
39.95
43.80
38.07
20.21
9,909
Kalyan MC
24.76
35.47
36.67
645.35
1,014
Calcutta UA
25.01
22.57
23.90
18.73
10,916
4,388
Calcutta MC
8.48
7.57
11.04
6.33
Haora MC
27.59
16.41
0.89
27.18
947
Delhi UA
64.17
54.57
57.09
46.18
8,375
Delhi MC
84.11
59.47
48.55
42.59
7,175
New Delhi
-5.35
15.39
-9.53
7.73
294
a:
P rovisional.
Note: When a town is merged with an urban agglomeration (UA) or municipal corporation (MC), the population of the former in the
base year is added to the base year population of the agglomeration or the corporation for computing the growth rate. T his is not done
when sorrounding rural area is merged either as an outgrowth or a new town. Such adjustments have, however, not been made in
computing the provisional growth rates for 1981-1991.
Page 20
Table 15. Quality of housing stock and shortages in Greater Bombay, Calcutta and Delhi (1981)
Particu lars
P opulation
Gre ate r Bom bay

8,243,405
C alcu tta
9,194,018
De lh i
5,729,283
Households
1,624,535
1,746,839
1,133,171
Housing stock
1,580,095
1,713,255
1,116,796
Pucca (percentage)
76.49
77.65
88.89
Semi-pucca (percentage)
19.14
20.99
7.34
Serviceable kutcha (percentage)
0.34
0.42
2.11
Unserviceable kutcha (percentage)
4.03
0.93
1.66
Useable housing stock (percentage)
95.97
99.07
98.34
Housing shortage (percentage)
6.84
2.89
3.12
a:
b:
Useable housing stock = Pucca + semi-pucca + serviceable kutcha.

Housing shortage = Number of households - usable housing stock (here expressed as a percentage of total housing stock).
Source: Kundu, 1993 (based on Census of India, 1981).
Page 21
Table 16. Housing characteristics of Greater Bombay, Calcutta and Delhi (1981)
Pe rce n tage of h ou se h olds in
3+ room
C ity
1-room u n its 2-room u n its
u n its
Greater Bombay
67.29
16.53
16.18
Nu m be r of pe rson s pe r
Pe rce n tage
room
of
1-room
popu lation
u n its
2-room u n its in slu m s
4.93
2.68
34.3
Calcutta
55.13
23.64
21.23
4.15
2.90
32.9
Delhi
54.27
25.75
19.98
4.31
3.00
31.4
Source: NBO, 1990.
Page 22
Table 17. Percentage of vacant houses in Greater Bombay, Calcutta and Delhi Municipal Corporations
Mu n icipal C orporation
a:
1961
1971
1981
Greater Bombay
2.41
9.88
Calcutta
4.12
2.58
2.48
5.96
a
Delhi
2.89
4.71
6.24
Urban agglomeration (not MC).
Source: Population Census, 1961; 1971; 1981a.
Page 23
Table 18. Percentage of households having electricity and toilet facility, Greater Bombay, Calcutta and Delhi
(1981)
C ity
Greater Bombay
Ele ctricity
O wn e r-occu
Total
pie d
77.6
72.7
Re n te d
80.3
Toile t
O wn e r-occu
Total
pie d
73.4
70.7
Re n te d
75.1
Calcutta
62.9
59.8
64.9
86.0
83.4
87.6
Delhi
75.1
69.9
80.5
68.2
62.1
74.5
Source: NBO, 1988.
Page 24
Table 19. Housing requirements, Bombay (early 1980s)

Un its
(th ou san ds)
Re qu ire m e n t cate gory

Houseless households
80
Houses in need of improvement
700
Doubled-up households
100
Households needing replacement and those to be displaced as per the Development P lan
830
Demand due to natural increase in population
330
Total
2,040
Page 25
Table 20. Percentage share of different actors in housing production, Bombay

Ye ar
1973/974
Private se ctor
54.3
C oope rative
socie tie s
34.0
Em ploye rs for
e m ploye e s
5.0
Pu blic se ctor
6.8
1974/75
53.6
30.2
4.4
11.7
1975/76
40.2
24.2
3.3
1976/77
60.1
28.8
2.6
1977/78
58.6
26.2
1978/79
66.2
1979/80
55.4
Total
Pe rce n tage
Nu m be r
100.1
14,846
99.9
18,206
32.2
99.9
21.399
8.5
100.0
17,578
3.5
11.6
99.9
15,554
20.9
0.4
12.4
99.9
14,015
29.2
2.1
13.3
100.0
15,598
Source: BMRDA, 1982.
Page 26
Table 21. Access to housing in Bombay, by income group

In com e ran ge
In com e cate gory (Rs. pe r m on th )
EWS
0-495
LIG
Pe rce n tage of all

h ou se h olds
496-810
MIG
MIG I
811-1,270
MIG II
1,271-1,850
HIG
1,851 +
17
23
Acce ss to h ou sin g an d sh e lte r de live ry syste m

T ypical housing provisions are in the squatter settlements and
overcrowded chawls . Environmental improvement/upgrading of
slums and sites and services schemes launched with World Bank
and HUDCO assistance have extended limited housing
opportunities to the EWS. It is proposed to restrict the growth of
squatter settlements in future years.
A few among them have purchased EWS units from the original
allottees; some have been able to get into the formal housing
schemes of HBs or MHADA; many have moved into chawls and
slums.
Many among them have been pushed into overcrowded and

substandard chawls. Some households have purchased housing rights
14
from lower-income groups (when the latter got a house from a
20
public agency at a higher price.
26
Expensive flats, bungalows and terraced houses, built by private

agencies. Supply is smaller than demand.
Source: Kundu, 1993 (based on inform ation from MHADA).
Page 27
Table 22. Slum population in Calcutta Metropolitan Development Area (1981)

Are as
Popu lation (m illion s)

Calcutta
1.35
Haora and Bally
0.45
East Bank (outside Calcutta city)
9.60
West Bank (outside Hoarah and Bally)
0.25
Refugee colonies
0.50
Total
3.15
Source: CMDA, 1981.
Page 28
Table 23. Access to housing in Calcutta, by income group
C ate gory
Natu re of th e sch e m e be n e ficiary
Subsidised rental housing Bulk development by public agencies
for their staff
Location
Salt Lake
Nu m be r of
u n its/are a
10,000
Pu blic
age n cie s
in volve d
HD, P WD,
CP WD
Infilling of vacant land through

houses for industrial workers, low
income households, etc.
Baranagar, Cossipur, Kamarhati,

Budge Budge Road, etc.
Semi-pucca experimental houses for

the poor
Maniktala
1,000
CMP O
Bulk development largely for MIG

and HIG
Salt Lake and Kalyani
6,000
CMDA, HB,
HUDCO
Small scale development largely for

MIG and HIG
T ollygaunge, P atuli, Baishnabaghat,

Kakidaha, Andul, Salt Lake, etc.
10,000
HD, CMDA,
HB, HUDCO
Infilling on vacant land through

houses for all income categories
Baranagar, Maniktala, P aikpara
2,000
HD, HUDCO
Slum rehousing and Slum clearance and alternate formal

City periphery
development cum
housing
renewal Rehousing for slum dwellers displaced Chetla, Kasba, Jadavpur, T ollygaunge,
through urban development projects
Maniktala
1,200
HD
1,000
CIT
Hire purchase ownership
Slum modernisation and

experimental housing
Chetla, Beckbagan, P ark Circus,

Kumartuli, P alam Avenue, Kalighat,
T angra, T opsia, etc.
Housing provided Acquisition of new land allotment to

through
people, co-operatives and agencies
sites-and-services
Baishnabaghat, P atuli Andul,

Kakidaha, etc.
5,000 P &T and other
5,000 CMP O, CMDA
400 acres
HD, CMDA,
HUDCO
Source: Kundu, 1993 (based on unpublished records of CMDA).
Page 29
Table 24. Housing activities in Calcutta Metropolitan Development Area

In com e
In com e ran ge Pe rce n tage of all
cate gory pe r m on th (Rs.)
h ou se h olds
EWS
0-700
45
Acce ss to h ou sin g an d sh e lte r de live ry syste m s

Most people live in bustees and squatter settlements; some in rented tenements
while a large section on pavements. BIP has improved the living environment
marginally.
LIG
701-1,580
26 Many live in bustees and squatter settlements; a small proportion in government

employee's rental housing, government employee's rental housing;, houses build
by public agencies and CMDA's sites and services schemes.
MIG
1,581-2500
25
Some live in bustees ; many live in private rental housing; some own their own
homes; some have public housing or sites and services provisions which they may
have bought from original EWS allottees.
HIG
2,501 +
Most live in owner occupied houses and apartments; some live in high standard
rented houses.
Source: Kundu, 1993 (based on inform ation from CMDA, 1987).
Page 30
Table 25. Composition of Delhi's housing stock

1951
Type of h ou sin g
'000 %
P lotted development including
cooperatives
-
1961
'000 %
59
8.3
DDA flats
0.8
Cooperative group housing flats
Resettlement and squatter units
13
Slum rehousing units
Government housing
13
a:
13
7.0
153 13.3
1991
'000 %
a
2001
'000 %
a
304 16.0
540 20.2
66
5.7
209 11.0
351 13.1
0.1
152
8.0
324 12.1
437 23.0
594 22.2
43
9.1
1.1
1.3
16
1.4
38
2.0
71
2.7
4.5
32
6.8
52
7.3
72
6.3
129
6.8
169
6.3
323 68.4
116 16.3
1981
'000 %
4.5
T raditional area and urban

village housing 248 86.4
Unauthorized and regularized
housing
33
1971
'000 %
285 24.7
389 54.8
367 31.9
361 19.0
357 13.3
4.5
36
7.6
79 11.1
192 16.7
270 14.2
270 10.1
Total 287 99.9
472
100.
0
710 99.9
1,15 100.
2
1
1,90 100.
0
0
2,67 100.
6
0
P rojected data.
Source: Kundu, 1993 (based on data from the Perspective Planning Wing of DDA and Delhi 2001 AD survey).
Page 31
Table 26. Targets and performance of DDA relating to land and housing (mid-1980s)
Area notified for acquisition under Sec. 4 of the Land Acquisition Act
LAND (acre s):

74,373
Area finally acquired
40,050
Area actually taken possession of
38,310
Area handed over to DDA
29,800
Master P lan stipulation for development of residential purposes
30,000
Area developed or in the process off development for residential purposes
16,000
Area developed by DDA
6,000
Area under development by DDA
5,000
Area under DDA's group housing schemes
1,500
Area with co-operative societies
3,500
Area under unauthorised colonies
7,500
Houses to be constructed as per the Master P lan
HO US ING:
750,000 units
Houses actually constructed by DDA and other public and private agencies
370,000 units
PO PULATIO N O F DELHI:
As projected in the Master P lan
4.6 million
As estimated in 1981
6.2 million
Page 32
Table 27. Planned housing production, Delhi (1961-1981)

Pe riod
Nu m be r of hou se s
1961-1966
125,000
1966-1971
150,000
1971-1976
190,000
1976-1981
250,000
Total
Source: Kundu, 1993 (citing the 1961 Master Plan).
715,000
Page 33
Table 28. Access to housing in Delhi, by income group

In com e
In com e ran ge Pe rce n tage of all
grou p
pe r m on th (Rs.)
h ou se h olds
EWS
0-700
25
Acce ss to h ou sin g an d sh e lte r de live ry syste m

Most live in slums, shanties and resettlement colonies; a small percentage live on
pavements and night shelters. A few have got land title in recent years and have
built their houses with government and community help.
LIG
701-1,580
30
Generally reside in slums; a few in resettlement colonies after buying the units
from original allottee. Some live in urban villages and peripheries; a few have
bought LIG & EWS flats from DDA.
MIG
1,581-2500
33
Many purchased EWS and LIG flats or DDA. Some live in their own or
government houses in the old city and urban villages; some commute to Delhi.
HIG
2501 +
12
Mostly purchased flats from DDA directly or through cooperatives; some live in
private (rented or owned) houses; a few in government flats. Some have built
houses using a builder/architect.
Source: Kundu, 1993 (based on inform ation provided by HUDCO and DDA).
Page 34

Volume 1: India
BBRRB
BDP
BIP
BMC
BMRDA
BUDP
CBO
CIDCO
CIT
CMDA
CMPO
CPWD
CSO
CUDP
DDA
DIT
DMC
EWS
GDP
GIC
HB
HD
HDFC
HFC
HIG
HLA
HPS
HUDCO
IBRD
IDSMT
ISHS
LAA
LDSP
LIC
LIG
MHADA
MIG
MMDA
MNP
MUDP
NBCC
NBO
NCR
NDMC
NG0
NHB
NSS
PHA
PPF
PR
PWD
RBI
SC & ST
SFS
SIP
List of acronyms
Bombay Building Repairs and Reconstruction Board
Bustee Development Plan
Bustee Improvement Programme (Calcutta)
Bombay Municipal Corporation
Bombay Metropolitan Regional Development Authority
Bombay Urban Development Project
Community-based organization
City and Industrial Development Corporation of Maharashtra Ltd.
Calcutta Improvement Trust
Calcutta Metropolitan Development Authority
Calcutta Metropolitan Planning Organization
Central Public Works Department
Central Statistical Organisation
Calcutta Urban Development Projects
Delhi Development Authority
Delhi Improvement Trust
Delhi Municipal Corporation
Economically weaker sections
Gross domestic product
General Insurance Corporation
Housing Board
Housing Directorate
Housing Development and Financing Corporation
Housing-finance company
High-income group
Home loan account
Hire-purchase scheme
Housing and Urban Development Corporation
International Bank for Reconstruction and Development (the World Bank)
Integrated Development of Small and Medium Towns
Integrated Subsidised Housing Scheme
Land Acquisition Act
Land Development and Shelter Projects
Life Insurance Corporation
Low-income group
Maharashtra Housing and Area Development Authority
Middle-income group
Madras Metropolitan Development Authority
Minimum Needs Programme
Madras Urban Development Project
National Building Construction Company
National Building Organization
National Capital Region
New Delhi Municipal Corporation
Non-governmental organization
National Housing Bank
National Sample Survey
Public Housing Agency
Pension and Provident Fund
Plot Reconstruction
Public Works Department
Reserve Bank of India
Scheduled Castes and Scheduled Tribes
Self-financing scheme
Slum Improvement Programme
Page 35
SLR
SPARC
SUP
UCD
ULCRA
UT
UTI
Statutory liquidity
Society for the Promotion of Area Research
Slum Upgradation Programme
Urban Community Development
Urban Land Ceiling (and Regulation) Act
Union Territory
Unit Trust of India
Page 36

Volume 1: India
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Page 39

Volume 1: India
Notes
1.. #09;The thrust of the shelter programmes for the poor shifted from formal housing to slum upgrading and
environment based on self- help and community participation in the Sixth Five Year Plan (1980-1985). The
budgetary support to state-level housing boards was also significantly reduced in the early 1980s.
2.
Due to changes in the inter-sectoral classification in the presentation of the location figures, strict comparison
over the different plans is not possible.
3.
Certain castes have been identified by the Government of India as socially, educationally and culturally
backward due to their social discrimination, i.e., untouchability. Similarly, a few tribes have been identified
based on the criterion of backwardness and territorial isolation. These have been placed in a government
schedule, entitling them to a few privileges.
4.
This happened in Gujarat in particular, e.g., the Parswanwth Housing Company.
5.
In Maharashtra, an act was passed in 1975. It was then used by the state to evict a number of slums from public
and private land.
6.
The Delhi Municipal Corporation Act (1957), Building Bye Laws (1983), Delhi Urban Arts Commission Act
(1973), Delhi Fire Prevention and Fire Safety Act (1986), Builders Obligation under Apartment Ownership Act
(1986) etc., have together created a confused legal environment which is responsible for the inconveniences
and harassment of households and small builders in Delhi.
7.
Maharashtra and Gujarat were both parts of Bombay Province until 1960.
8.
Capital formation in housing as a percentage of total domestic capital formation has declined at current prices
from 13.4 per cent to 12.8 per cent. Similarly, the contribution of housing in national income has gone down
from 3.7 per cent in 1970-1971 to 3.1 per cent in 1980-1981.
9.
Total housing stock reported by the Census of 1951 was 64.3 million.
10.
The data on housing stock from the Population Census of 1991 were not available at the time of writing.
11.
chawls are old multi-storeyed row tenements (approximate size being 100 square feet) mostly very old and
extremely congested, offering a low level of basic amenities.
12.
The Works and Housing Department of the Government of Nagaland, the Local Administration Department in
Mizoram, the Planning and Development Authority in Manipur and the Housing and Urban Development Unit
of the Public Works Department in Arunachal Pradesh are the agencies responsible for public housing in the
north-eastern states.
13.
Examples are the Slum Wing of Delhi Development Authority (DDA), the bustee Unnayan wing of Calcutta
Metropolitan Development Authority (CMDA) etc.
14.
These are Kerala State Development Corporation for Scheduled Castes and Tribes, Kerala School Teachers and
Non-teaching Staff Welfare Corporation Limited and Kerala State Development Corporation for Christian
Converts from Scheduled Castes and Recommended Community Limited.
15.
Andhra Pradesh Health and Medical Housing Infrastructure Development Corporation and Tamil Nadu
Handloom Weavers' Co-operative Society Limited are other examples of this.
16.
In Jaipur and Ahmedabd cooperatives are in fact created by, or backed up by private builders.
17.
Vaidya (1988) categorizes the contractors taking up housing work of more than Rs.80,000 in Baroda as large.
18.
The gross saving rate is only 20.4 per cent. The revised figure, estimated by adjusting for the change in base
year, is comparable with the projected figure.
Page 40
19.
According to the recommendations of the working group, loans of up to 50 per cent of the total house cost
could be given to an individual at a l2-per cent interest rate with on 0.5-per cent rebate for regular payments.
The loan period was seven years, extendable another three years in exceptional cases. The EWS, LIG and SC &
ST could, however, get 80 per cent of the project cost as loan. The SC & ST could get loans at 4 per cent
interest if the loan amount was less than Rs. 2,500. In case of builders, banks would advance loans at
commercial rates of up to 40 per cent of the project cost. In exceptional cases, the amount could be raised to 50
per cent.
20.
LIC is trying to increase its urban clientele by introducing a new scheme, i.e., Bima Niwas Yojana in the
metropolitan cities. This would also contribute to an increase in their housing stock.
21.
Second proviso to sub-section 1 of Section 23 of ITA.
22.
Under section 80 L (1) (X), footnote 3, of the ITA.
23.
Under section 80 (L) of ITA.
24.
For rural landless labourers the upper limit of loan is Rs. 11,430 only to be provided at 7.5 per cent rate of
interest.
25.
Under the scheme, called the Indira Awas Yojana, grants of Rs. 12,700 for plain areas and Rs. 14,500 for hill
areas per household are provided to state governments, by the central Ministry of Rural Development, for
housing and infrastructural development (see Planning Commission, 1992).
26.
Under the scheme, a subsidy of Rs. 1,000 and a loan of Rs. 3,000 have been made available to individual
households. The loan is provided by HUDCO at 6.25 per cent rate of interest. The progress in its
implementation was slow since the municipalities, in a large number of slum colonies, could not ensure security
of tenure for the stipulated period of 20 years.
27.
Sundaram (1989) has computed the growth in the number of one and two room tenements during the period
1921-51 to be 46 per cent. This is significantly below the corresponding growth rate of population (181 per
cent).
28.
Rent recovery was very poor as the procedures for eviction in case of default were extremely complicated, and
because political pressures and the judiciary often came in between.
29.
The reason for its becoming the second largest metropolis is, however, not its slow growth but the forming of
Bombay Urban Agglomeration, combining Kalyan and Thane with Greater Bombay.
30.
In 1961, there were on average, 23 people per hutment. This figure rose to 39 in 1981. Rents increased three-fold,
the average rate of inflation being about 6 per cent annually during this period.
31.
It is difficult to obtain separate figures for unauthorized and (subsequently) regularized dwelling units, using
official statistics.
32.
barsati is a small room on the terrace.
33.
"According to unofficial government statements, the estimated level of displacement in all slums improved
under MUDP-I is about 25-30 per cent" (Brost, 1990).
Page 41
ABOUT
National Trends in Housing-Production
Practices
Volume 4: India
HS/310/93 E
ISBNE 92-1-131501-8 (electronic version)
Text source: UNCHS (Habitat) printed publication: ISBN 92-1-131235-3 (published in 1993).
This electronic publication was designed/created by Inge Jensen.
This version was compiled on 2 January 2006.
Copyright 2001 UNCHS (Habitat); 2002-2006 UN-HABITAT.
All rights reserved.
This electronic publication has been scanned from the original text, without formal editing by the United Nations.
The designations employed and the presentation of the material in this publication do not imply the expression of any
opinion whatsoever on the part of the United Nations Secretariat concerning the legal status of any country, territory,
city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries.
Reference to names of firms and commercial products and processes does not imply their endorsement by the United
Nations, and a failure to mention a particular firm, commercial product or process is not a sign of disapproval.
Excerpts from the text may be reproduced without authorisation, on condition that the source is indicated.
UN-HABITAT publications can be obtained from UN-HABITAT's Regional Offices or directly from:
UN-HABITAT,
Information Services Section,
G.P.O. Box 30030,
Nairobi 00100, KENYA
Fax: (254) 20-7623477 or (7624266/7)
E-mail: Habitat.Publications@unhabitat.org
Web-site: http://www.unhabitat.org/
Page 42

Volume 1: India
Foreword
In most developing countries today, the provision of shelter is grossly inadequate. This is so despite several
decades of direct government intervention in the shelter sector. The adoption by the United Nations General
Assembly of the Global Strategy for Shelter to the Year 2000 (GSS) in 1988 implied a global recognition of the severity
of the housing problem. Since the public sector has shown itself unable to meet the increasing housing demand, the
GSS calls for the adoption of new roles and responsibilities of the various actors in the shelter-delivery process. It
does not, however, propose that governments should withdraw from housing. On the contrary, the GSS places
significant responsibilities on the public-sector agencies for creating an enabling environment and ensuring the
availability of shelter for all. By emphasizing the need for flexibility and local initiative ill designing the new housing
policy, it recognizes that the response of government in various countries may differ, depending on their respective
housing conditions and the state of administrative and regulative system.
That is the point of departure for this publication, which is a series of four volumes on national trends in
housing-production practices in India, Indonesia, Mexico and Nigeria, respectively. All four countries have recently
adopted new national housing policies that incorporate the enabling approach advocated in the GSS. These
publications identify problems encountered and lessons learned during the process of initiating enabling shelter
strategies. Yet, because the experiences in different countries in many ways are unique, it is necessary to discuss the
experiences gathered against the background of a more comprehensive discussion of the shelter-delivery process in
the individual countries. None of the four publications in this series thus attempts to compare the experiences of
different countries. That has been done - with a particular focus on the lowest-income groups - in a separate
publication entitled National Experiences with Shelter Delivery for the Poorest Groups.
The four volumes take a close look at the implementation of the GSS at the national level. They also review
lessons at the sub-national level, by presenting the experience of the cities of Bombay, Calcutta and Delhi in India;
Jakarta and Bandung in Indonesia; Mexico City, Ciudad Obregon and Jalapa in Mexico; and Lagos in Nigeria. A
particular emphasis of all four publications is the presentation of data documenting the performance of the shelter
sector at large and of the various actors involved therein.
Each of the four volumes consists of four main parts. The first part takes a close look at the development of
national shelter policies and strategies in the light of the introduction of enabling shelter strategies. It also describes
the scope and scale of the shelter problem in each of the four countries. The second part analyses the changing roles
and responsibilities of the various actors in the shelter-delivery process, including relevant financial institutions and
instruments. It also provides figures on actual housing production at the national level. The third part takes a closer
look at the above issues at the city level. The fourth and concluding part, is just that, a conclusion to the above
discussion. The chapter highlights obstacles to an effective housing supply, as well as particular innovative
approaches towards alleviating the housing problem in the country.
The main conclusion that can be drawn from these studies is that the shelter problem today in most developing
countries is worse than it was before massive public-sector interventions were initiated two to three decades ago. The
example of Indonesia can serve as a good illustration of the rather limited success of two decades of direct shelter
provision by the public sector. Total public-sector housing supply during the entire 1974-1991 period is less than the
annual housing need created by population growth alone. Furthermore, there are signs in all four countries that
public-sector involvement in housing is being reduced, i.e., while the volume of units produced is increasing,
public-sector investments in housing are decreasing. This indicates a trend where the focus of formal-sector housing
production is turning away from the production of ready-to-move-in units and towards the provision of a wide menu
of actions that lead to the construction of a dwelling unit. This results in a situation in which more units (although
qualitatively different) can be produced with the same amount of funds. Yet, if the total formal-sector investment is
reduced, this may indicate the beginning of a trend where the importance of shelter is being reduced rather than
strengthened.
However, the picture is not altogether bleak. The four publications also show examples of how the shelter
problems can be effectively addressed. We should, nevertheless, keep in mind that in any market, choice is a positive
function of income. The consequence is that in a situation of housing shortage, the poor have no choice in housing at
all. Any strategy to alleviate the shelter problem should keep this in mind. Unless housing supply is fully able to meet
the need, direct interventions are required if the needs of the poorest groups are to be addressed.
We gratefully acknowledge the contribution of Professor Amitabh Kundu for the preparation of the case study
on which this publication is based.
Page 43
Dr. Wally N'Dow

Assistant-Secretary-General,
United Nations Centre for Human Settlements (Habitat)
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Volume 1: India
Chapter I. Changing shelter policies in India
The housing scenario in India has, in recent years, seen significant changes in terms of roles and functioning of
the concerned agencies in the public and private sectors and their production practices. It may, however, be difficult to
attribute all these changes to the impact of the GSS on the policies and programmes in India. The genesis of these
changes goes back to the early 1980s when certain important measures were adopted to curb the subsidies in the
housing sector and make the agencies financially accountable, if not self-sufficient. The pace of such changes,
however, has been rapid in the past four to five years. The discussion of these changes constitutes the bulk of this
report. This first two chapters present a broad overview of the housing scenario, organizational structure, financing
system and production practices at the macro level. Chapters III, IV and V analyse the situations prevailing in Greater
Bombay, Calcutta and Delhi, respectively. The chapters observe, in some detail, the functioning of the concerned
organizations and implementation of the shelter programmes.
(1)
The population size, the large economic base, the enormity of the housing problem, the efforts to tackle these
through public interventions etc., constitute the broad similarities and provide a basis for comparison of the three
metropolitan cities. The cities present striking contrasts in terms of the roles and responsibilities of the actors in the
housing scene and the nature of their functioning. Delhi - being the national capital - has enjoyed massive government
support in its housing and infrastructural development. Private builders have been prohibited from undertaking land
development and house construction within the city limits through legislative measures. Yet, outside the city, a few
developers have taken up massive housing projects. In contrast, Greater Bombay has seen a much smaller role of
public agencies and large builders. The public agencies have often tried to get the local communities involved in slum
relocation and upgrading projects. The municipal administration has sometimes adopted strong measures to clear
unauthorized occupation by slum dwellers on plots of land for undertaking governmental or private projects. A small
builder putting up a multi-storeyed apartment over apiece of land - or on an old building - has been an important mode
of house construction. In Calcutta, the Government's activities have been even less, and largely restricted to
middle-income housing, apart from an effective programme for slum upgrading. Eviction of people for developmental
projects has been rare. People have generally built houses by engaging a contractor, an engineer or a builder
individually, or by forming a cooperative. The poor have survived in the city owing to the slum
upgrading/improvement schemes and provision of basic amenities by the local (public) agencies.
Given the diversity of the housing situation and shelter strategies, the three case studies provide useful
insights into the functioning of three different types of housing markets at the macro level.
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Volume 1: India
A. India's new shelter strategy
Confidence in the effectiveness of government intervention in housing and urban development was very high
during the 1950s - the initial years of planning. The Second Five Year Plan document notes:
"in the first place, municipal bye laws must be enforced with utmost strictness. ..enforcing (city level) Master Plans,
local authorities should have the requisite powers to implement zoning schemes, control the use of land and prevent
ribbon development. Whenever, necessary, new authorities must be set up" (Planning Commission, 1955).
The policy documents emerging in the early 1980s, however, strike a different note. The Task Forces on
Housing and Urban Development set up by the Planning Commission in 1982 observe that the "plan schemes have. ..
made a marginal contribution " to the overall housing scene, and that the Slum Area Act "read along with the planning
legislations in various states and Master Plans/zonal plans/developmental plans notified thereunder pose problems to
any programme of improving housing conditions of the urban poor" (Planning Commission, 1982). The Seventh Plan
(1985-1990) emphasises "the need for a radical reorientation of all policies relating to housing" and urges that the
"major responsibility of house construction would have to be left to the private sector, in particular the household
sector." It further argues that the Government should be involved in housing "not so much to build but to promote
housing activity" (Planning Commission, 1985).
The National Housing Policy - announced in May 1992 - which tries to incorporate the spirit and principles of
the GSS has already been accepted by the Cabinet of the Central Government. The basic objective of the new policy is
to create an "enabling environment for housing activity" and to assist people to secure for themselves affordable
shelter, restricting thereby the Government's role to that of a facilitator in providing access to developed land, building
materials, finance and technology (Ministry of Urban Development, 1992).
The Eighth Plan (1992-1997) put forward the same viewpoint even more directly. It accepts "housing essentially
as a private activity" but recognizes the need for state intervention "to meet the housing requirements of a majority of
vulnerable sections as well as to create an enabling environment for accomplishing the goal of "Shelter for All" on a
self-sustaining basis" (Planning Commission, 1992).
The objectives of the new shelter policy, being articulated through various policy documents as noted above,
may be identified as follows:
Setting-up of an institutional structure for mobilization of resources at a reasonable cost and for the
disbursal of funds for the housing sector.
Provision for housing loans as a financial service based on the principle of affordability, recoverability and
profitability.
Restructuring the public agencies for taking up the development of housing sites, particularly for the poor,
instead of building dwelling units on a large scale.
Ensuring accountability and efficiency in the public housing agencies by making them increasingly
dependent on institutional funds (made available at reasonable rates of interest) rather than on budgetary
support and reducing thereby the component of subsidy.
Providing subsidized housing for segments of rural and urban poor through direct house construction by
public agencies and indirectly by helping them organize community participation in this venture.
Removal of legislative and administrative hurdles impeding the efficient functioning of the land and housing
markets.
Increase the supply of critical building materials by facilitating their production and distribution.
Helping the development and promotion of appropriate building technologies that can be adopted by
households according to their income levels.
It may be noted that several of the above objectives are identical to those found in the GSS (UNCHS,
1990:1991b), while others fit in well within its framework. Evidently, the new shelter strategy necessitates significant
improvements of the existing organizational structure and the financing system. Several changes have already been
Page 46
initiated in recent years in this direction. These are discussed in the following sections.
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Volume 1: India
1. Development plan allocation and capital formation
An assessment of the changes in the inter-sectoral distribution of plan funds requires an analysis of the
long-term trend. Consequently, the allocation pattern during the entire post-Independence period has been covered in
this sub-section. It may be observed that housing activities were at a low key during the post-Independence period.
Only meagre investments were made in housing during the colonial period, resulting in a serious housing shortage in
most large cities. After Independence in 1947, partition aggravated the problem as it dislocated people and brought a
large number of them into a few metropolitan cities, particularly Calcutta and Delhi. To meet this crisis, a major
rehabilitation programme was launched along with various housing schemes in the First Five Year Plan (1950-1955).
The total expenditure on rehabilitation and housing accounted for about 8 per cent of the public sector outlay
(planning Commission, 1950). In the Second Plan (1956-1960), housing constituted 2.5 per cent of the outlay (the actual
expenditure however was much less) which was higher than the corresponding figure of 2.1 per cent in the First Plan,
although the expenditure on rehabilitation was brought down from about 6 per cent to just 1 per cent (Planning
Commission, 1955).
The Third Plan (1960-1965) allocated 2.72 per cent of the public-sector outlay to housing and urban
development, including water supply and sanitation, which was much less than the corresponding figures in the
previous Plans. The allocation for housing worked out to roughly 1.8 per cent only. The planners did note the
problem of inadequate funds, but suggested that "in view of the limited resources, towns and cities with population of
one lakh (100,000] or more should receive priority" (Planning Commission, 1960).
(2)
The three annual plans that followed during 1966-1969 saw a further decline in expenditure in this combined
sector, the figure coming down to 2.42 per cent. In the Fourth Plan (1969-1974), the outlay for housing, as a proportion
of the total, remained at the same low level if the figure is computed after excluding the funds allocated to the Housing
and Urban Development Corporation (HUDCO), and a few large (basically urban development) projects. The allocation
in the Fifth Plan too was very low, (1.5 per cent) although it had set poverty eradication as an important objective. The
Sixth Plan (1980-1985) allocation for housing in relation to total public-sector outlay was reduced further but the
expenditure on water supply and sanitation increased because India adopted the United Nations International Decade
for Water Supply and Sanitation.
The Seventh Plan (1985-1990) stipulated that the responsibility of house construction would gradually shift
from the public to the private sector. It restricted social housing activities to the Minimum Needs Programme (MNP),
for artisans and landless labourers only. The Plan allocation for housing was barely 1.3 per cent. However, a special
central sector scheme, called Indira Awas Yojna for the scheduled caste/ tribe population, claimed over 15 per cent of
the total allocation (planning Commission, 1985). The Eighth Plan (1992-1997) approved 1.47 per cent of the outlay for
housing. Here again, targeting of the funds was sought to be achieved by resorting to the MNP and reserving about
20 per cent of it for Indira Awas Yojna (Planning Commission, 1992).
(3)
Capital formation in the housing sector was about 30 per cent of the total during the 1950s which came down to
13 per cent in the 1970s at current prices. The figure was at its lowest in 1975-1976 (10 per cent), but it stabilised
subsequently at 13 per cent. Investment in housing, covering both the public and the private sectors, was as high as
34 per cent in the First Plan which declined gradually to less than 10 per cent in the Seventh and the Eighth (proposed)
Plans. Income from housing as a percentage of gross domestic product (GDP) also declined from 3.7 in the early 1970s
to 3.0 in the 1980s. Furthermore, the share of public agencies in housing investment (to total investment in this sector)
has gone down from over 28 per cent to less than 10 per cent over the past 40 years.
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Volume 1: India
It would be appropriate to discuss the present methods of shelter delivery before analysing the changes in
them. It has been pointed out that some of these changes that are in tune with the GSS were introduced in India a few
years before its adoption by the United Nations. The following sections take a closer look at the seven different ways
in which an individual can obtain a house for habitation: i.e., accommodation from a public agency,
ownership through a hire-purchase system introduced by a public agency, ownership through self-finance from
a public agency, purchasing from a private agency with or without a government/institutional loan, securing a house
as a member of a Cooperative Group Housing Society, construction of a house by the owner himself/herself or through
contractors with or without an institutional loan, and renting a house in the market.
During the last few years there has been a gradual but perceptible change in the housing scenario, as the
Government and public agencies have encouraged people to shift from the first few modes to the latter ones. The
sections below suggests that in urban areas renting in the market and buying a house from a public or private agency
through self-financing, are more common today than they were in the 1960s and 1970s.
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Volume 1: India
a. Renting accommodation from a public agency
During the 1950s and 1960s the Government constructed a large number of houses under various schemes, to
be given to the targeted groups of the population for a nominal rent. The Subsidised Industrial Housing scheme, the
Integrated Subsidised Housing Scheme (ISHS), the Slum Clearance Scheme, the Dock Labour Housing Scheme, the
Night Shelter Scheme for Pavement Dwellers etc. belong to this category. Some of these continue still. The Night
Shelter Scheme has been given greater importance in recent years. Local bodies and development authorities in several
large cities have, with budgetary support from the Central Government as well as institutional loans, constructed large
dormitories (with bedding and toilet facilities) in recent years. These are used largely by the urban poor, particularly
during the winter months.
Central and state governments and a few large public and private undertakings, have also provided rental
accommodation for their employees in lieu of a small percentage of the basic salary (generally 10 per cent) charged as
rent. Although this reduces pressure on the housing market, it is not the type of rental housing recommended under
the GSS. This in effect fragments the market and places highly subsidized dwelling units at the disposal of the
employees in the public sector that generally belong to the top 10 per cent of the population.
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Volume 1: India
b. Ow nership through hire-purchase from a public agency
During the 1950s and 1960s, several public housing agencies introduced hire-purchase systems under which
people in the low- and middle-income groups could acquire houses. This facility was, however, available to a few only.
With the setting-up of HUDCO in 1972 - which lends to these agencies - this became the predominant mode of
providing houses in the public sector. Under this system, a household could obtain a house from a Housing Board (
HB) or a Development Authority on payment of a small part of the cost of the house. The balance was payable in
equal monthly instalments over a long stipulated period at a low rate of interest.
The hire-purchase system which was (also currently) implemented by public agencies during the 1980s was
financed largely by HUDCO and, in a few cases, by central and state governments. Some private developers as well
started to sell houses on a hire-purchase basis, to middle- and high-income households, using, partially, HUDCO
funds at 14-16 per cent rate of interest. Due to the non-recovery of costs this initiative could not become successful.
(4)
HUDCO imposes conditions on the eligibility, design, structure and costs of the house to be built under
different schemes for different sections of the population. According to the stipulations and official statistics, 55 per
cent of the total funds are sanctioned to EWS and LIG households. About 80 per cent of the houses constructed with
HUDCO financing are meant for these two categories (the income limits for eligibility under different income categories
in the Seventh Plan was revised in the Eighth Plan as shown in table 1 ).
Due to cost escalations, the inflexibility of HUDCO norms and other procedural requirements, some public
housing agencies and cooperatives have found it difficult to borrow from HUDCO. Agencies in the most developed
states or in large cities in particular find it difficult to comply with HUDCO's standards and cost ceilings. This has
affected not only the disbursal of funds to low-income households but also the quality of construction and the level of
basic amenities.
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Volume 1: India
c. Ow nership through self-financing schemes (SFSs)
Public housing agencies have gradually shifted their thrust towards SFS, especially since the 1980s. Under it,
the allottee (buyer) is required to pay the cost of the unit at different stages of its construction. The entire cost of the
unit is, thus, recovered by "the agency before it gives possession to the allottee.
Like the hire-purchase schemes, SFSs are designed for people in different income categories - as specified by
HUDCO - except the EWS. An amount of subsidy is generally built into the schemes for all income categories since
finance and, sometimes, land are made available to public housing agencies at concessional rates. Also, the profits
charged by these agencies, even from high-income categories, are generally lower than those of the private builders. It
may be noted that the prices of houses for the higher-income brackets cross-subsidize the LIG units. Yet, since the
total price is to be paid within a very short time, people in low-income brackets are often not able to take advantage of
it.
A new model of SFS has been introduced by some development authorities wherein the households are
required to deposit certain sums with the authority for a stipulated period, generally for 10 and 15 years, before they
can apply for a house. The balance is to be given as a down-payment at the time of taking possession. The Kalpataru
and Kuber schemes floated by the Jaipur Development Authority are examples in this category.
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Volume 1: India
d. Purchasing a house from a private agency
A person can purchase a house or a plot on the open market, i.e., from a private developer/builder, individual
house owner, etc. The buyer may get a loan for this purpose from a public financing agency or a commercial bank. In
this case, the person does not get the benefit of a subsidized housing scheme floated by a public housing agency but
has access to cheap institutional finance. The objective of providing the loan is to shift the responsibility of
house-building to the private sector. This also takes the task of long term loan management away from the housing
agencies and places it on banks or employers, that are better equipped to cope with it.
The buying of a house from a private builder works the same way as under an SFS. The only difference is that
under the former, the costs are higher, instalments for repayments of loans are larger and the period of payment is
shorter. Normally, the developer insists on the total payment being made in one or two instalments.
The housing loan schemes for employees in government, public and private enterprises, those for the general
population and for socially and economically weaker sections offered by commercial banks (though to very few people
until recently), those of the Housing Development and Financing Corporation (HDFC) as well as the cash loan scheme
introduced in the late 1980s by HUDCO may be considered in this context. Apart from a few large private organizations
providing loans to their staff, HDFC was, until recently, the only major agency lending to individuals or groups of
individuals. A large number of private housing-finance companies (HFCs) have been established with direct and
indirect support of the National Housing Bank (NHB), which was established in 1988. The commercial banks' share of
total housing advances has also improved during this period. This is basically due to the directive from the Reserve
Bank of India (RBI) to invest certain stipulated amounts in housing bonds and increased lending to individuals for
housing.
The individual house loan system is undergoing significant changes with the introduction of the Home Loan
Account (HLA) Scheme by NHB. Under this scheme, a person is required to save a certain amount of money on a
regular basis with a financing agency, in order to become eligible for a loan to be re-financed by NHB. Similar schemes
are being operated by the Life Insurance Corporation (LIC) and HDFC as well, but NHB is supposed to playa dominant
role in this regard.
It may be observed that NHB tries to help the low-income households. It stipulates that at least 75 per cent of
all plots in a scheme must be of the smallest size category (60 m or less) before a housing agency can get a loan.
Similarly, 75 per cent of the houses built must have a covered area of no more than 40 m .
2
In the unorganized sector, some "slum lords" organize squatting or sell hutments to the urban poor with some
amount of administrative protection at the local level. This type of activity may also be placed in this category.
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Volume 1: India
e. Ow ning a house as a member of a cooperative
People can build houses through housing cooperatives, the number of which has gone up phenomenally in
recent years. The reason for their popularity is that individuals feel more secure with cooperatives than with private
builders. This is due to governmental controls on the former and the concessions from the Government that are passed
down to the members. In some states cooperatives do not pay stamp duties while in a few others they receive lands
and loans at concessional rates.
It has been argued that it is only the people in the organized sector, and mainly the better-off sections among
them, that are able to form cooperatives or obtain subsidies through them. Also, due to laxity in the regulative system,
private builders have begun to function with the front of a cooperative, enjoying thereby numerous benefits in a
semi-protected market. The business of cooperatives has thrived in Gujarat, Maharashtra and Rajasthan, among
others.
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Volume 1: India
f. Construction of houses by ow ners or contractors
House-building in India is primarily done by individual residents, about 90 per cent of the investment and 70
per cent of the housing stock being in the private sector (USAID, 1989). Construction is done largely by small
contractors in formal residential colonies. Here the responsibility of land purchase/development, planning, designing
and house construction is that of the individual concerned who undertakes this generally by engaging an architect,
engineer, labour contractor, plumber, electrician etc. The owner may be able to get a loan from his/her employer or
financial institutions depending on creditworthiness.
Besides this formal housing, various informal and sometimes even illegal methods of land acquisition and
construction are resorted to to acquire shelter, specifically in slums and in squatter settlements. This phenomenon is
quite common in the large cities.
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g. Renting a house in the market
A person can rent a house from a private individual or agency at a pre-determined rent with or without making a
fixed deposit. Evicting a tenant is extremely difficult, due to various legal and administrative stipulations. As a result,
the deposit money has come to a huge amount in large cities, sometimes equal to the market price of the house.
Owners unwilling to take the risk of renting out their houses are extremely selective about their tenants and make the
latter give personally or through his/ her employer a legal undertaking to vacate the premises after a stipulated period,
or on demand. All these have hindered the smooth functioning of the rental market and increased the incidence of
vacant houses in large cities. People working in government and semi-government organizations and undertakings and
a few large private companies are entitled to a certain percentage of their basic salary as a rent allowance. The amount
in large cities is much less than the actual rent paid by the households for reasonable accommodation hired in the
open market.
Rental accommodation has become common in informal settlements as well. The rent is paid to "slum lords"
owning a number of hutments, or to individuals who reside elsewhere or share the unit with the tenant.
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3. The legislative framew ork for housing
The housing sector in India lacks the support of a strong and appropriate legal system. Much legislation has
been passed from time to time and amendments carried out therein that have affected the shelter-delivery process and
made an impact on the housing scene. Since urban development is a state responsibility, legislation varies
considerably across the states. The lead, however, has often been provided by the Central Government or by a state or
union territory (UT) administration, like that of Maharashtra or Delhi, by passing an Act that has been adopted by the
other states with certain modifications.
The most important legislative intervention has been for controlling the spiralling rental values in urban
centres, particularly in large cities with the intent of ensuring access of the common people to shelter. Almost all the
states and UTs have passed laws protecting tenants against eviction and inflationary increases in rent. These laws
also specify the procedure for determining "the standard rent" in case of dispute. The procedure is, however, quite
cumbersome and generally takes a very long time. This has discouraged tenants from seeking legal redress of their
grievances.
The legislation pertaining to rent control passed by state governments has had a strong negative impact on the
rental housing market. Instead of enabling the prospective tenants to procure accommodation at reasonable rates, it
has virtually frozen free transactions and tended to convert tenancy into ownership. The legal hurdles and the delays
in court decisions have resulted in a system of cash-down payment at the time of hiring a house. The procedures for
getting it back are cumbersome and time-consuming. An increasing percentage of houses in large cities thus remains
vacant. Physical violence has been frequently used to get the premises vacated. In the case of old buildings, actual
rents are often not enough to meet maintenance expenditures. This has rendered investments in housing and house
repairs totally uneconomical. The rental acts have thus effectively paralysed the rental market in housing.
During the past five to seven years, the state and UT administrations have taken the initiative to modify the
concerned acts to allow periodic revisions in rent. According to the recent modification of the Act in Delhi, rents
above a certain limit are beyond the scope of the Act. Also, for the first few years after the construction of a house,
rents are allowed to be determined in the free market. The procedures for getting the standard rent fixed, for
determining the rents of old buildings, for having the premises vacated etc. have been simplified in many states. In
Maharashtra, for example, the Rent Restrictions Act has been modified permitting landlords to charge higher rents
after carrying out repairs, renovations, special additions, etc. Tenants, on the other hand, can also incur large
expenditures for structural preservation or to provide basic amenities, and then deduct it from the rent, if the landlord
refuses to undertake the responsibility. Similar modifications have been brought about in several other states.
A few central acts have been used by the state governments (often bypassing additional state legislation) for
increasing the supply of developed land and having adequate land for priority sectors and social use. It may be noted
that Article 19 (l)f of the Indian Constitution confers the right to property on individuals. The state, however, has the
power to restrict this right in the public interest under the provision of Article 19(5). All central, state and local laws
and regulations relating to land and land use become operational only due to this provision.
The jurisdiction of the Urban Land Ceiling (and Regulation) Act (ULCRA) of 1974, however, was not restricted
to land in excess of the ceiling but extended to all vacant land and property in urban areas. Under section 26 and 27 of
the Act, no vacant land or property could change hands without the permission of a competent authority. The Act
thus dampened transactions in the urban land market and resulted in exorbitant prices. This automatically excluded
low- and the middle-income people and genuine housing cooperatives from purchasing land, unless they were
fortunate enough to obtain subsidized land from public agencies.
One major area of concern of governments at the central, state and local levels has been the growing slum
population and the inadequate power of the public agencies to obtain land and ameliorate the situation. To enable
government to acquire slum land and undertake housing and urban development projects, the Slum Areas
(Improvement and Clearance) Act was passed in 1956. Several state governments also passed similar acts, for example
Maharashtra State Act on Eviction of Unauthorised Occupants (from public land) of 1962. These were used
extensively during the 1950s and early 1960s for clearing public places, including pavements and congested business
areas, where the physical structure or living environment was considered to be damaging to public health. The
displaced slum populations were rehoused at alternate sites with minimum basic amenities, mostly located in the
peripheries. The acts were also used for removing slums (after giving notice of 15 to 30 days) and acquiring the land
Page 57
for alternative public purposes.

The emphasis of public policy shifted from slum clearance to slum upgrading in the early 1970s. Accordingly,
several state governments passed acts to reflect the changed perspective. Delhi had already passed an act in 1957
permitting the local body to take up in situ development and collect betterment charges from the beneficiaries. The
Slum Area Improvement Clearance and Development Act (1971) and Slum Improvement Board Act (1973) were passed
by the government of Maharashtra to facilitate slum-upgrading programmes. The acts were, however, mainly used by
private landowners in Bombay to evict slum dwellers from their land.
These legislative acts could not be used on a large scale for rehabilitating slum populations, due to
administrative difficulties and the long time required in acquiring land through the legal process. Once a community
inhabiting private land is declared a slum, the owner of the land had the right of appeal to a Tribunal. This delayed the
procedures. In Bombay, only 23 slum pockets out of about 800 could be provided with improved facilities during the
1971-1980 period. Furthermore, state laws had no jurisdiction over central-government land, under the Central
Government Properties Act. Due to the legal hindrances, the scope and coverage of the slum-clearance and -upgrading
programmes had, therefore, to be restricted to certain localities only.
Almost a11 the states have Town and Country Planning Acts under which they prepare their city or regional
development plans. Also, they have passed Town Planning and Improvement Trusts Acts for the purpose of setting
up the necessary planning bodies or preparing urban development plans and schemes. The Master Plan and Town
Planning Schemes, Urban Development Authorities Acts etc. belong to this category of state legislation. Some of the
states have passed Vacant Lands Acts to prohibit unauthorized occupation of vacant land and provide for their
summary eviction.
(5)
Besides the acts pertaining to land there are regulations (basically municipal enactments) for ensuring public
health, safety and the provision of certain amenities to the population. These include zoning rules, sub-division rules,
restrictions on ribbon development, periphery control acts, building bye-laws, floor space index restrictions, housing
codes and fire safety regulations, among others. In most cases, these laws and the multiplicity of agencies
administering them, have dampened house-construction activities and encouraged corruption, particularly in the large
cities. The standards set by state town planning departments or local authorities for land use or house construction
are often extremely stringent and unrealistic. More importantly, the objective and scope of codes and bye-laws are not
very clearly defined. This often makes their interpretation subjective and amenable to political and other influences.
(6)
The Central Government, through the Town and Country Planning Organisation, brought out model acts
pertaining to land use and zoning in 1970 and 1975. Most state governments are yet to take the initiative of simplifying
their existing legal system by adopting these model acts.
Transactions of land and houses are governed by a complex and stringent set of legislative and administrative
stipulations. These necessitate a huge tax or a large percentage of the incremental value of the property to be given to
the state. Since the legal system is rather soft, and not backed by a very strong administrative system, people have
found ingenious ways of circumventing the law. Several states and UT governments have of late reduced the stamp
and other duties and taken effective measures to cut down bureaucratic formalities, in the hope that this may lead to
greater compliance. However, as people realize that no great risk is involved in non-compliance, they have adopted
various formal and informal methods - like transferring the property under power of attorney or bribing the officials to
get their building plans (for construction, renovation, alteration etc.) passed - and thus escaped paying even the
reduced amount.
Finally, the legal system relating to mortgages, enabling financial institutions to give loans or create a
secondary mortgage market for mobilizing resources for housing, is extremely underdeveloped and cumbersome. In the
absence of an appropriate system of mortgage insurance, the process of foreclosure tends to be time-consuming.
Some modifications of the legal system have been brought about during the past couple of years. These have helped
the development of the secondary mortgage market. The declaration that housing is an industry has also attracted
institutional finance for entrepreneurs venturing into housing as a commercial proposition.
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C. Land management and provision of infrastructure and basic amenities
In a mixed economy, with the responsibility of providing key infrastructure and basic amenities vested in the
government, the system for controlling land use and land prices becomes extremely important. An attempt has been
made in India to use it for directing urban growth, ensuring appropriate utilization of urban space and are adequate
supply of land for community use.
Three different systems of public intervention in the urban land market are currently being tried out, with limited
success. The first is acquisition and disposal of land by public agencies. This was adopted in the Delhi UT in a very
ambitious manner, banning all private transactions of vacant land within the urban limits. In other states, private
developers were allowed to operate but with certain restrictions, and the option of public acquisition of land was
exercised selectively. The second is the Plot Reconstitution (PR) system used for land consolidation, readjustment and
planned development by public agencies without acquiring the title to the land. These agencies took temporary
possession of the land of a large number of plot owners, prepared layout plans, provided infrastructure and amenities
and then returned back a certain percentage of the land to the owners. Under the third system, public agencies enter
into an agreement with private builders for land acquisition, development and disposal with or without the dwelling
units being constructed by the latter. Various modes under the system are currently being tried out in different states
of the country.
With a vision of a "socialistic pattern of society", the urban planners in India, backed up by a somewhat
unsatisfactory legal apparatus attempted to direct urban growth in and around the large urban centres during the early
1960s. Using the Land Acquisition Act (LAA) of 1894, several state governments and UT administrations acquired
land in rural peripheries, particularly around large cities. They also sought to take possession of vacant land in excess
of ceilings (that varied depending on the city size) using ULCRA. Unfortunately, enormous legal, administrative and
financial difficulties cropped up in land acquisition under both these Acts. Since a realistic assessment of land prices
(or the compensation to be paid to land owners) could not be made under LAA and as the legal and administrative
procedures turned out to be long-drawn, not much land could be released to public housing agencies, or to the market.
The failure of the Government in land acquisition was largely due to the exemptions granted under ULCRA. Of
the 44,000 hectares exempted, only 10 per cent was under 'Section 21 of the Act for constructing EWS houses by the
owners, while the remaining was under Section 20 - for social, religious and industrial purposes. The land exempted
under Section 20 remained almost totally with the owner or family members, instead of being used for the so-called the
"socio-religious purposes" that were not clearly defined. The land exempted for the purpose of building EWS houses
went to higher income categories. This may be inferred from the fact that the standards of construction were far above
the stipulated norms and the affordability of the poor. According to the Interim Report of the National Commission on
Urbanisation, only 8.8 per cent of the excess vacant land could be acquired by the Government. Physical possession
has, however, only been obtained for 2.3 per cent of the excess land. Actual house construction has taken place only
in 16 per cent of the land under possession.
The PR system has been implemented in a big way in the states of Maharashtra and Gujarat, both of which
had a strong tradition of urban planning. Maharashtra implemented various PR schemes using the Bombay Town
Planning Act of 1915. It subsequently passed two new Acts (in 1954 and 1966) for this purpose. Gujarat used the
Bombay Town Planning Act of 1954 for implementing the schemes until 1976, when it enacted more comprehensive
legislation, the Gujarat Town Planning and Urban Development Act. In both states, the schemes are being operated in
a self-sufficient manner, the costs being met out of the betterment contributions made by the plot owners, while
compensation is paid to them for any portion of the land being acquired for public purposes (including EWS housing).
The compensation was provided on the basis of the prevailing market price of land, but without a solatium. Similar
schemes are being tried out in Madhya Pradesh and Karnataka.
(7)
The major problems encountered in the implementation of the system are long delays in clearing various
administrative and legal formalities (taking 5 to 15 years), and the lack of adequate control in the use of public space.
The plots reserved for EWS often went to higher-income households, through co-operatives. Finally, the schemes
could not be implemented on a large scale, even in Maharashtra and Gujarat, because the public authorities only could
launch them, and not a private builder or a cooperative.
Private agencies have been used in housing by public agencies since the 1950s, but only for house
construction on a contractual basis. The trend in the 1980s, however, was to involve them in the acquisition and
development of land besides house construction. Under different public-private participatory systems, private builders
Page 59
are encouraged to take the responsibility for providing physical infrastructure like roads, water supply, sewerage
system, electricity etc.; maintenance of social amenities like schools, dispensaries, community centres etc.; and
sometimes the development of entire townships. The responsibility is parcelled out to private agencies, and the nature
of government control - through stipulated norms, the methods of disposal of the dwelling units etc. - vary from
scheme to scheme.
In Gurgaon district in Haryana (adjacent to Delhi), five private developers were assigned almost total
responsibility for developing a township. They were required to deposit the capital cost of trunk lines and
township-level facilities with the Haryana Urban Development Authority and to furnish a bank guarantee for 25 per
cent of the internal cost to ensure proper development. Thirty per cent of the sale deeds were also to be deposited in a
separate bank account for meeting the costs of internal development. Most importantly, 20 per cent of the plots (of
approximately 55 m each) were to be reserved for sale to EWS households at subsidized rates, and another 25 per cent,
at a no-loss no-profit basis.
2
A similar scheme has been launched by the Madras Metropolitan Development Authority (MMDA) in Tamil
Nadu. Here, too, private developers have been permitted to assemble land from farmers and get their schemes
approved by MMDA. Under the stipulations, a certain percentage of plots or houses is to be reserved for EWS and all
units are to be sold at predetermined prices. Any developer that accepted these conditions was given exemption from
the land ceiling under section 21 of ULCRA. The response of the developers, however, was not very enthusiastic as
only two proposals were received. The Uttar Pradesh government has also taken up a joint-sector scheme with the
important difference that here the land is given to the developers by the Lucknow Development Authority.
The joint-sector experience is too recent and inadequate to make an evaluation. Nonetheless, several
complaints have been raised regarding delays by public agencies in clearing the schemes or in providing
township-level facilities, despite the cost being borne by private entrepreneurs. The level and quality of internal
services provided by the private builders, however, have left much to be desired. In the absence of an appropriate
system of control and monitoring of a project - sometimes even necessary information - the allocation of a certain
percentage of units to EWS and LIG and restricting the profit margin for MIG and HIG seem to have remained wishful
thinking on the part of the state governments.
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D. Scope and scale of the shelter problem in India
The provision of housing to a growing population, particularly in the large urban centres, poses a major
planning problem in India. The problem has become quite serious over the years, at least in absolute terms. Although
the housing stock seems to have grown more or less at the same rate as population or households, formal capital
formation in the housing sector has been less than that in other sectors, particularly during the 1970s. Inequality in
the investment pattern and access to housing have led to acute shortage of dwelling units.
(8)
Table 2 presents the existing housing scenario in rural and urban areas, using data from the Population Census.
It may be noted that the increase in housing stock during the 1961-1971 period was 13.7 million as against 14.9 million
during 1951-1961. This evidently has to be explained in terms of mass housing programmes launched in the
post-Independence period. The schemes for rehabilitating displaced persons (due to the partition), for industrial
workers and dock labourers etc., led to a large-scale construction of row houses. The expenditure on public-sector
housing declined during the 1961-1971 period, as discussed above. As a result, a smaller number of dwelling units was
built during the period.
(9)
The growth rate of housing stock during the 1970s was 26 per cent - an absolute increase of 23.8 million units which is higher than that of the 1960s or even the 1950s, 17.3 per cent and 23.1 per cent, respectively. This marginally
reduced the pressure on housing as may be inferred from the slight decline in the values of indicators like persons per
house, persons per room, household per house etc. in table 3 . The growth of the housing stock has been faster in
urban than in rural areas. As a result, the number of households per house did not increase during the 1971-1981
period. This was despite the rapid demographic growth in urban areas and a decline in the size of (urban) households
(implying a faster growth in the number of households than of population). The high growth of the 1970s was
maintained in the 1980s as well, as may be inferred from the housing stock figures, as projected
by the National
Building Organization (NBO). The housing stock in 1991 has been projected to be 92.9 million in rural and 36.7 million
in urban areas. This gives the overall growth rate during the 1980s as 28 per cent, the corresponding figure for rural
and urban areas being 19 per cent and 55 per cent, respectively.
(10)
The rapid increase of housing stock during the 1970s and 1980s on the face of a declining public-sector
investment in housing (in relation to other sectors) as noted above, must be explained in terms of the growth of
informal-sector housing and changes in production practices. The pace of urbanization during 1971-1981 forced
people, particularly those in large cities, to look towards the informal market for solutions. This is corroborated by the
high growth in the number of semi-permanent houses in urban areas - much faster than the total housing stock during
the 1970s.
Tables 4 and 5 present the distribution of households over different types of houses in different expenditure
classes in urban and rural areas for the year 1983. It may be noted that most of the data generated on the quality of
housing by the national data-collection agencies are for the households in different consumption brackets. The public
policies and programmes pertaining to housing, on the other hand, are based on income categories. It is not very easy
to derive household income from the expenditure data. It would be erroneous to assume that income and expenditure
are not very different even for the bottom 30 per cent of the households. They have significant positive (or negative)
savings in certain weeks or months of the year on account of fluctuations in income. The derivation of income for
consumption data for different categories by making assumptions regarding their saving behaviour may not, therefore,
be a fruitful exercise. Also, estimation of household income through primary surveys is fraught with problems due to
biases of the enumerator and respondent and possibilities of double counting, especially of durable assets. Instead,
one may use the classification based on consumption expenditure and draw inferences regarding say, the bottom,
middle or higher deciles of population and assume that such generalizations would be valid for the corresponding
income categories as well, at least at the aggregative level.
A comparison of the figures in tables 4 and 5 reveals that a significantly larger percentage of households
resides in mud (katcha) houses in rural areas as compared with towns, the two figures being 51 and 16, respectively.
The percentage of households residing in semi-permanent (semi-pucca) houses, however, is 31 in rural and 26 in urban
areas. A large number of these houses in rural areas are, however, serviceable and may satisfy the minimum norms
stipulated by planners. This, however, is not so in urban areas.
The percentage of concrete (pucca) houses goes up with the level of consumption expenditure. It is
nonetheless surprising that about 25 per cent of households in rural areas in the highest consumption bracket (Rs. 300
monthly per capita at 1983 prices) live in mud houses and another 8 per cent in (semi-permanent or permanent)
Page 61
slum-like structures (chawls and bustees). Researchers working in rural areas estimate that 40 per cent of the mud
houses in rural areas require improvement. The percentage of households living in these may be added to those
inhabiting slum-like structures, in order to obtain a rough estimate of the households that require their shelter to be
upgraded, bringing the total to 28 per cent in rural areas.
(11)
The situation in urban areas is not much better, particularly in the lower consumption brackets. The average
percentage of households living in permanent structures in urban areas (57 per cent) is higher than that in rural areas
(17 per cent). This can be explained in terms of differences in life-style, availability of building materials etc., and not
merely as a qualitative difference in levels of living. The percentage of permanent houses goes up from 54 per cent for
the lowest consumption fractile to 82 per cent for the highest. However, even in the top fractile, 5 per cent of the
households live in katcha structures while another 16 per cent live in slum-like structures, i.e., chawls and bustees.
This is because the housing scarcity has pushed several households from the middle and upper classes to seek refuge
in these sub-standard shelters. Fifty-four per cent of the households in the lowest consumption class live in pucca
houses, as opposed to less than 30 per cent in three subsequent higher classes. This could be due to the domestic
servants (in the lowest class) living in the houses of their masters. If all units with chawl/bustee structures and all mud
houses in urban areas are counted, a total of 32 per cent of all houses in urban areas require upgrading.
Table 6 shows the percentage distribution of urban households in different expenditure classes along with
certain characteristics related to renting. The percentage of households living in rental accommodation is an increasing
function of consumption expenditure, the former going up from 11 to 53 along the expenditure classes. This positive
relationship emerges sharply in the case of permanent houses as compared with semi-permanent houses. For the mud
houses, however, renting does not show any relationship with expenditure. Furthermore, permanent houses are more
frequently rented out than mud houses.
Interestingly, the average imputed rent for owner-occupied houses is higher than the actual rent paid by people
in rental accommodation, within the same consumption bracket. This implies that the people who reside in their own
houses, perhaps due to inheritance or their early arrival in their localities, are slightly better-off in terms of the quality
of housing.
Average per-capita floor area varies sharply from 3.3 m for the lowest expenditure class to 15.5 m for the
highest class. There is, however, not much difference in the floor area for households residing in mud houses
(generally located in urban peripheries) as the average space in all expenditure classes here is low. The demand for
space with respect to expenditure is inelastic as the coefficient of elasticity works out to be less than unity.
2
The magnitudes of the housing shortage estimated by various agencies differ widely due to the differences in
the methodologies adopted by them. NBO had estimated the shortage to be 23.3 million in 1981 (16.5 million being in
rural and 4.8 million in urban areas). Based on these figures, The Seventh Plan had projected the shortage to be 24.7
million (18.8 million in rural and 5.9 million in urban areas) in 1985. Using certain normative standards, some research
organizations placed the shortage at an even higher level (NBO, 1990). The Birla Institute of Scientific Research, for
example, estimated the shortage to be 126.4 million in 1981 (104.3 million in rural and 22.1 million in urban areas. The
Indian Institute of Management in Ahmedabad had arrived at figures of 32.8 million in rural and 6.6 million in urban
areas for 1981.
The lowest estimate of the shortage can be obtained from the Population Census which has placed the figure
for houseless population at 2.3 million in 1981. Assuming an average household size of five for the houseless
population, the housing shortage in India would then be less than half a million. The estimate of NBO on the other
hand, is on a slightly higher side. It has excluded the unserviceable mud houses from the housing stock in computing
the magnitude of shortage. A part of these katcha houses can be improved and made habitable through governmental
support, community participation and individual initiative. Schemes of slum upgrading are being envisaged on a large
scale providing land titles to the people. It may therefore be appropriate to consider some of these "unserviceable
structures" as apart of the housing stock.
One can find faults with the above estimates as these are based on normative criteria - dwelling units meeting
certain standards only, are considered apart of the housing stock. The standards set by the planners may not be
acceptable to the people or to the Government, given their current socio-economic conditions.
The change from a norm-based to demand-based approach in estimating housing shortage would bring the
figure down to a very low level. This is because people give a low priority to housing, and currently less than 4.0 per
cent of total capital formation is taking place in this sector. The figure, however, underestimates the actual capital
formation, since it does not satisfactorily count the investments within the households, and since it does not cover the
"illegal" investments. Nonetheless, the effective demand for housing would be less than the norm-based assessment,
discussed above.
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The National Sample Survey (NSS) data indicate that the average per-capita expenditure on rent for households
in rented dwellings is Rs. 17, while the imputed rental value for owner-occupied premises is Rs. 24. The average rent for
all households is Rs. 21 only. This is 12 per cent of the total expenditure. If one assumes that 20 per cent of total
expenditure is going to housing, as is normatively being envisaged by a section of planners, the total housing would
only be about 30 per cent higher than the present level.
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Chapter II. Housing supply at the national level
a. Central-government agencies
The central Ministry of Urban Development is the apex policy-making body for urban development, including
housing activities. It overviews the state-level programmes, lays down policy perspectives and builds up data systems
for the entire country, besides launching projects for the benefit of certain targeted sections of population.
The Central Government has taken upon itself a small share of the direct responsibility in the housing sector.
Through its Public Works Department, it undertakes housing schemes for its employees in all UTs. Other central
ministries and establishments, which construct houses or create housing estates for their employees in different cities,
towns and villages, for instance, are: the Railways, Post and Telegraph Services, Port Trust Authorities, Radio and
Telecommunications, Defence Services, Reserve Bank of India, and public-sector undertakings such as commercial
banks, LICs, etc.
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b. Agencies at the state level
Public-sector housing is basically the responsibility of the state governments. Each of the state governments
has created a state-level HB for this purpose. In Maharashtra, however, the Maharashtra Housing and Area
Developing Authority (MHADA) functions like a state-level HB and has five Regional and Area Development Boards.
There is also another state-level agency in Maharashtra, the City and Industrial Development Corporation of
Maharashtra Ltd. (CIDCO), which has the development responsibility for new towns and industrial estates, and has
housing projects as one of its major activities (see Verma, 1985). In Orissa, there are six Regional Improvement Trusts
that undertake land development and house construction work, besides the state's HB. In Punjab, the Estate
Department as well as the HB undertakes housing projects. In the smaller states of north-eastern India, housing
activities are the responsibility of the government departments, and no separate board has been created for this
purpose.
(12)
Special agencies, like Slum Clearance Boards, have been set up in several states (such as Gujarat, Karnataka,
Madhya Pradesh and Tamil Nadu) for the purpose of rehabilitating slum dwellers. In some larger cities, the slum wings
within the development authorities undertake this responsibility,
while in many other cities (such as Bombay,
Calcutta, Ahmedabad, Hyderabad etc.), the municipal corporations have slum wings that take up construction of
shelter for the poor. However, with the shift of emphasis in the mid-1960s from slum clearance to slum upgrading, these
boards and slum wings are taking up schemes only to improve the living environment - or the quality of basic services
- in slums and other low-income colonies. In addition to these, some states have created special organizations to
provide housing to the economically and socially weaker sections of the population. In Andhra Pradesh, for example,
the State Housing Corporation undertakes housing schemes for the weaker sections. In Kerala, there are several
state-level housing agencies for different economically vulnerable sections of the population.
(13)
(14)
A few other types of state level agencies implement housing schemes for specific occupational groups. For
example, state-level Industrial Development Corporations have been set up to undertake projects for industrial
workers, both for public sector as well as private enterprises. Housing corporations exist for the employees of the
Police Department in Andhra Pradesh, Punjab, Gujarat and Maharashtra. Finally, the state governments themselves
take up housing schemes for their employees through their Public Works Departments (FWD). Most of the state
public-sector undertakings, such as the State Electricity Boards, State Transport Corporations etc., construct houses
for their staff.
(15)
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c. City-level public agencies
In large cities, development authorities take the major responsibility for designing and executing housing
programmes, besides the state HBs. In some of these, Improvement Trusts undertake this task more or less as a
development authority, particularly in Rajasthan and Punjab. In such states as Gujarat and Madhya Pradesh, a few
municipal corporations also undertake housing projects. In new towns and townships, various agencies are created to
undertake housing programmes, as for example the Notified Area Committee (Rourkela) and the Special Area
Development Authority (Korba). UTs comprising one city only - like Chandigarh and Pondicherry - have HBs whereas
in Dadra-Nagar Haveli and Andaman-Nicobar Islands, housing has been left to cooperative housing societies. In the
towns and townships, attached to large public-sector projects like those of the Steel Authority of India Limited (SAIL),
Bharat Heavy Electricals Limited and other similar organizations, residential colonies for employees are created by the
public-sector authorities themselves. Similar provision for housing has been made by a few large private companies
such as Tata, Birla, Modi and so forth.
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d. Primary cooperative societies
A certain minimum number of people can form a cooperative and register it at the office of the Registrar of
Co-operative Societies as per the Co-operative Housing Society Acts of the state or UT. The importance of such
primary cooperative societies in providing housing has been increasing over the years, particularly in large cities.
Although public agencies at central, state and city levels have been undertaking housing schemes directly, they have,
at the same time, been encouraging cooperative housing activities. In recent years, it has become difficult to acquire
land or subsidized finance through individual effort. Cooperatives in several states receive preferential treatment in the
allotment of land and finance from government agencies, particularly in cities where the Development Authorities
enjoy considerable control over land (as in Delhi). Due to the shortage of land, public authorities in many states have
given land only to cooperatives and not to individuals. Of late, even that has become rare and the cooperatives are
being obliged to procure land on their own.
There are mainly two types of cooperative housing societies. The first is the individual ownership type, where
each individual member becomes the owner of the plot and the dwelling unit, once the loan is repaid. The purpose of
forming such a cooperative is to obtain a housing loan, and at times land and building materials at concessional rates.
However, such cooperative societies are no longer being registered. The second type, the co-ownership or tenant
co-partnership societies, are quite common today. The members of these societies reside as tenants of their own
societies and consequently no member can legally sell his or her plot individually. Initially, 25 to 40 per cent of the total
cost is collected from the members as share capital while the remaining amount is raised through loans.
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e. Private developers and builders
The number of real estate developers who purchase plots within the cities or in outlying areas, and develop and
build houses on these for selling in the market is increasing, particularly in the large cities. They can buy land from
private people more easily and sometimes at cheaper rates, than the public agencies due to the former's flexible
approach and informal tactics. This is despite the existence of acts for compulsory land acquisition by public agencies
in most of the states. The relative importance of private builders varies from city to city, depending on the statutory
provisions, availability of land, norms and traditions. Due to certain advantages enjoyed by the cooperatives in the
acquisition of land, payment of stamp duty, provision of land and finance at concessional (to cooperatives) rates in
certain states, private builders often find it convenient and profitable to function as cooperatives, as is the case in
Bombay and Calcutta.
(16)
The builders, whether functioning as a company or a cooperative, register clients/members and take money
from them in different stages of land acquisition and building construction and thus construct houses on a
self-financing basis without making much of their own investment.
Large builders function mostly in the peripheries of the cities or in the surrounding rural areas where vacant
land is still available. For example, they are successfully operating around Delhi. They have been forced into the
peripheries also because no private builder is permitted to buy land within Delhi's urban limits. Small builders often
succeed in acquiring plots in the heart of the city by entering into agreements with slum dwellers or residents of old
buildings. The affected people are either paid in cash or promised a flat in the building to be constructed. The builders
often identify a promoter from among these people and help him/her to mobilize others for forming a cooperative and
enter into a contractual agreement with them. Sometimes, the builders approach a few prominent and influential citizens
to become members which might help them in getting the administrative procedures cleared quickly and in having
certain bye-laws relaxed informally. The membership of the cooperatives can be changed easily, permitting
transactions of property almost as easily as in a free market. The legislative system being permissive and land being
scarce, such builders are having a field day in Calcutta, Bombay, Ahmedabad, Baroda, Jaipur and other cities.
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f. Individuals or households
Housing in India is primarily the responsibility of individuals or households. Small-scale private development is
the dominant mode of house construction even in the formal residential colonies, except in a few large cities. In rural
areas where housing designs are less complicated and investments are smaller, it is the prospective owner who
constructs the house using family and (some) hired labour. Here, only the rich build houses using hired labourers,
engineers and contractors. The responsibility for purchasing land, arranging labour and finance, and management in
all these cases rests on the individual or household.
The poor, on the other hand, resort to various informal methods for acquiring shelter, particularly in the large
cities. The houses built by them are generally sub-standard and unhygienic. Of late, even the middle-income
households are being pushed into these units due to the scarcity of land and increasing rentals of formal houses.
In several cities, slum dwellers have organized themselves into cooperatives and build shelter for themselves
through community efforts. Some grants, loans and technical support have become available under various
programmes, launched by state and local governments, as discussed in the previous chapter. Often government has
played an important role in organizing the community efforts or by getting non-governmental organizations (NGOs)
involved in the venture. The roles of NGOs and community-based organizations (CBOs) as actors in the
housing-delivery system are discussed later in this chapter.
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2. Construction agencies in public and private sectors
The organizations and government departments, discussed above, with their overlapping jurisdictions are
responsible for planning, procuring funds, and designing housing units/projects. It is important to note that besides
individuals (or households), these, in general, do not undertake actual construction work. In most instances the job is
contracted out to private firms. There are, however, a few HBs that take up such work through their own engineering
wings.
The Central Public Works Department (CPWD) is a government department which undertakes, among other
tasks, house construction on behalf of the Central Government and other central establishments. The National
Building Construction Company (NBCC) is a public-sector company which undertakes construction jobs for HBs,
cooperative societies and so on. There are also construction cooperatives at the state level that implement large-scale
house-construction projects on behalf of the government, the public sector and private-sector organizations.
Construction enterprises in the private sector are characterized by extreme diversity. These can be placed in
three categories, based on their size, organizational structure, nature of projects undertaken and relationship with their
clients. These are (a) hut makers and mistries; (b) small-scale contractors; and (c) large-scale contractors.
The hut makers possess special skills to build mud walls, thatched roofs and shanty structures. They are
popular in the large urban centres of India's southern states. In other states, huts or shanties are self-built by the
owner with the help of family members, friends, neighbours and sometimes a few hired (unskilled) labourers. mistries or
small jobbers, however, exist in all urban centres, taking up construction of small dwelling units and renovations/repair
work. These are people mostly without formal education who work along with their labourers as skilled masons. They
undertake the responsibility of organizing labourers and building materials as well.
The small-scale contractors operate as individuals or firms for providing, besides supervision of construction
work, architectural and engineering services. They take responsibility for designing a house and getting the plan
approved by the local authority. A few of them only provide architectural and engineering consultancy in the initial
phase, their responsibility ending with the clearance of the plan. In recent years, architects and engineers have gone in
for the total contract, including that of supervision even in large cities. Some of them try to get government contracts
by registering themselves with public agencies.
Most of these contractors organize the supply of labour and thus act as labour sub-contractors as well. They
generally enjoy credit facilities with the supplier of materials and equipments. Most of the equipment used by them,
however, is taken on rent. Thus, they are not required to make much capital investment. A few of them get
sub-contracted jobs from large contractors as well.
Entry into the construction market (as a contractor) is easy as it does not require technical qualification or even
obtaining a licence. This results in unhealthy competition which reduces prices and consequently the quality of work.
Due to informality of arrangements, disputes crop up very often that delay the construction. Absence of proper
registration, accountability through formal contracts and a legal system for resolving conflicts speedily have got in the
way of a healthy growth of the small contracting system.
The engaging of a small contractor is the dominant mode of private house construction in urban areas, except
in a few large cities. Only a few buy flats or houses from large or small builders by registering with them and making
payment in a few instalments. This is more common in the metropolitan cities.
The large contractors can be identified by their annual turn-over, size (cost) of the projects they normally
undertake, the number of permanent employees etc. The criteria for identifying them would vary across cities and
states as house-production practices are rather heterogeneous. In the city of Delhi, for example, entrepreneurs
undertaking projects (building one or several dwelling units) worth 2 million rupees or more, are considered to be large
contractors. They undertake business for rich individuals, cooperatives, private developers and public agencies. In
Bombay or Calcutta, there will be only a handful of contractors in this category and the firms taking up jobs of 1 million
rupees or more are described as large contracting houses.
Planning, design, organization of labour and building
materials etc. are all organized by these contractors.
(17)
It is important to note that although there are many individual contractors and firms that take on housing jobs
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only, this cannot be said of any of the above categories as a whole. Many enterprises take up jobs of building public
utilities such as schools, community centres, offices, shopping plaza etc. The subcontracting of parts of the job, or
hiring of specialized services is quite common with all contractors, except those in the lowest category. The initiators
of the construction work are the prospective owners of the houses, cooperatives, private builders and public agencies
undertaking housing projects.
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3. CBOs and NGOs
Slum communities in India are, in general, extremely heterogeneous, and characterized by many conflicting
interests. It is the competition among people for employment and basic amenities that creates this antagonism.
Attempts to use them as "vote banks" and other similar purposes by different political parties sharpen the antagonism.
The need to create a community feeling through an organization of their own or by involving an NGO cannot,
therefore, be overemphasised.
Slum communities often have one or a few leaders who are either elected or nominated by some political parties.
Having such group leaders, however, is not enough to organize the community for a house-construction project. Only
in a very few slum localities does there exist a cooperative or a formal organization that can be used in implementing a
shelter project.
Cooperatives or any other community organization are created by the slum population in times of exigency or to
achieve a definite purpose. CBOs often come to exist to protest against possible eviction or to fight a legal battle.
Many have sprung up during the past decade or so in response to the necessity of implementing a government slum
improvement programme. They have undertaken the responsibility of, say, levelling land, building local roads,
maintaining the facilities that were created under the programme, mobilization of small savings, repayment of loans etc.
Community participation tends to be informal and mostly does not lead to the setting-up of a formal organization, such
as a cooperative or a registered society.
In accordance with the stipulations in certain governmental schemes, setting-up a cooperative becomes an
administrative necessity. Under the Slum Upgradation Programme (SUP), for example, lease-cum-sale agreements
bestowing the land title are signed with cooperatives and not with individuals. The joint land tenure provides the
community with a collateral against which housing loans can be obtained. Government grants can also be channelled
through these cooperatives. The slum communities created in Bombay through the initiative of MHADA, and in
Vishakhapatnam for implementing the Community Development Project (the shelter component) are examples in this
category.
The involvement of NGOs has also been of varying intensity and with different objectives. A few of them are
operating at the national level, trying to intervene to change certain macro policies or restructure the existing system.
Their functioning is often guided by a philosophy and a vision of development which mayor may not be acceptable to
the incumbent government. As a result, many of these come into conflict with public policies and programmes and
consequently resort to movements or campaigns against them. They thus provide a critique of the government's model
of development and offer alternative viewpoints. The Federation of Slum Dwellers, National Campaign for Housing
Rights, Development Alternative etc. belong to this category. They regard housing as a part of a "social process" and
propose strategies for altering it. Most of these organizations in India, operating at the policy level in the shelter
sector, believe that slums are the necessary products of the economic system and the people therein should live in the
city, preferably near their place of work, as a matter of their right. It is indeed true that some of these organizations
receive funds directly or indirectly from organizations within or outside India and to that extent their capacity to take
independent decisions becomes restricted.
Most NGOs in the shelter sector operate at the grass-roots level. They can be placed in three categories,
depending on the nature of their involvement and models of functioning. In the first category fall those that act only in
an advisory capacity or as facilitators in house construction or slum upgrading. They assist in motivating and
organizing people, mobilizing their savings, putting them in contact with the concerned officials, getting legal and
administrative formalities cleared etc. They do not become agents in the shelter-delivery process by taking upon
themselves any responsibility of actual house construction.
There are many NGOs that, besides motivating and organizing the people, also undertake the task of providing
specialized inputs like technical knowledge, concessional finance, legal services etc., with or without government
support. These would belong to the second category. The Self-Employed Women's Association which provides
banking facilities for housing (and also for other needs) for women workers in the unorganized sector, the Community
Savings and Loan Association set up by Baroda Citizen's Council for developing saving habits and financing small
loans, belong to this category.
The third category comprises NGOs involved in the entire shelter production and delivery process, and often
Page 72
remain on the scene even after the construction phase is over. The 800 voluntary agencies in Kerala that participated
in the Aided Self Help Housing Scheme for EWS launched by Kerala State HB would largely belong to this category.
The Delhi Development Authority (DDA) has also given priority to land-improvement projects through community
organizations and has invited a few NGOs to cooperate. All these belong to the third category.
It is indeed true that most NGOs at the grass-roots level are merely assisting in the implementation of state
policies and programmes, and therefore, enjoy finance and/or administrative support from various public agencies.
Some among these are created at the instance of the government. There are, however, only a few that project an
independent philosophy, and accept funds from government or other sources only when the task assigned to them fits
within their development perspective. Many of the NGOs operating at the micro level have their roots also in a city and
are involved in anti-eviction or slum-improvement activities at the policy level as well. Similarly, an NGO directly
involved in the shelter production process may also provide certain critical inputs such as legal assistance, finance
etc. to the community. The classification of the NGOs in the above-mentioned categories is, therefore, not very clear
cut.
It is plain from the above discussion that NGOs or CBOs cannot be considered strictly as construction
agencies, although several of them are involved in planning, design and building activities. There are many others that
provide only technical and managerial assistance, finance and other critical inputs, or that intervene at the policy level
only. Consequently, these have been shown as a category separate from the other two categories of actors, discussed
above.
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4. An overview of the delivery process
In the context of the role and responsibility of the various actors in the housing scene, it is evident that the
poor, both in rural and urban areas, build their houses with their own labour, using the services of friends and a few
hired (unskilled) workers. Sometimes they use the services of a mason, carpenter, electrician etc. For many among
them, house-building is a continuous activity, since the temporary or semi-permanent structures where they live
require regular maintenance. Sometimes they live on a marshy plot of land and through a process of living and
upgrading, they reclaim and develop the plot and make it habitable. In the southern states, however, hiring a hut maker
is common among the urban poor. This is particularly so in Tamil Nadu and Karnataka, where the level of abject
poverty is low. A section of the poor have been able to acquire free or concessional land, a grant and/or a loan at a
subsidized rate under various governmental programmes, to build or upgrade their dwelling units. In recent years, this
is often done through community effort or by involving an NGO.
The politically and economically powerful sections in the country have succeeded in cornering much of the
benefits from the public housing agencies. Government servants, professionals, businessmen, media persons etc. have
been the major beneficiaries of the formal housing programmes of the Government concentrated largely in urban areas.
It may be noted that even the EWS and LIG flats have been taken up by households belonging to the MIG or HIG
groups instead. This is basically due to the various stipulations of the programmes, i.e. large initial payment and
prohibitive monthly instalments, complicated procedures of registration etc. Indeed, the public agencies have made no
serious attempt to reach out to the poor by ensuring a proper identification of beneficiaries. People in
very-high-income brackets have also taken advantage of this subsidized housing market by purchasing several
houses under different names. They have then sold them at market prices and built luxurious houses for themselves
for the profit. Some have taken the subsidized houses provided by the public agencies and then redesigned and
altered the interior by investing substantial sums of money (often using their "black" money) by employing a small
contractor.
The large-scale private builders operate in large cities or in metropolitan peripheries where land is still available.
They float schemes like any public housing agency and invite applications for registration. Because profitability is
higher (and less risky) in upper-income housing, most of their activities are targeted towards the urban rich. Besides
the high cost, the poor are also deterred by the distance of the project sites from the business/industrial centres. The
better-off sections, on the other hand, can buy plots or houses even in far-flung areas as they have no problem of
mobility and take these up as investment propositions.
The small- and large-scale builders play an important role in providing housing to the middle and upper
segments of the urban population. They are able to mobilize funds, for construction of units and even for buying the
land, from their clients. Sometimes they acquire a plot in the heart of the city by entering into an agreement with slum
dwellers or people residing in old buildings. Land is scarce in cities like Calcutta and Bombay, yet, they have a massive
stock of old houses and a number of slums located on marginal lands within the city. In these cities this method of
land acquisition has become quite popular. The builders, however, often find it profitable to operate under the name of
a cooperative society for the reasons discussed above. In Delhi this is yet to happen on a large scale.
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B. Housing finance
There have been changes in the rate and composition of household saving in recent years that have significant
implications for the housing sector. Gross domestic saving increased from 10 per cent of GDP in the early 1950s to
about 20 per cent in the late 1980s. The (revised) savings rate during 1985-1990 was only 22.0 per cent. This is less
than the projected figure of 24.3 per cent in the Seventh Plan. More than 80 per cent of these savings are in the
household sector. There has been a marginal increase in this share during the late 1980s and early 1990s while the
savings of public enterprises have declined in relative terms.
(18)
Table 7 outlines the changes in the composition of household savings during the 1980s. It may be noted that
the share of household savings being used for the creation of physical assets has gone down over the years. An
analysis of the National Income Statistics shows that the physical component of the household saving was 75 per cent
during 1966-1972 which declined to only 50 per cent during 1982-1989. This implies that the direct investment by
households in house construction has declined in recent years. A boom in the capital market and certain fiscal
measures initiated by the Government are responsible for the trend. Based on the assumption that this trend and the
governmental policies would not change drastically in the future years, household savings have been projected at Rs.
3,714, 700,000,000 during the Eighth Plan period.
It is evident that only a small percentage of the total household savings goes to the creation of physical assets
that include housing. A substantial part of this savings is mobilized through formal institutions of which a fraction is
made available, in bulk or retail form, to the various actors in the housing scene, including the households, as
discussed above. Thus, only a small part of housing finance, approximately 25 per cent, comes from formal sources,
the remaining through informal channels.
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B. Housing finance
There are three formal sources of housing finance. These are: (a) public and private institutions that have been
set up specifically to finance housing activities; (b) institutions catering to housing as well as to other sectors, such as
scheduled commercial banks, LIC, General Insurance Corporation (GIC), cooperative banks, land development banks
etc.; and (c) government, public and private agencies offering Provident Fund loans to their employees.
Many among the public-sector agencies obtain funds through bulk credit allocations from apex institutions or
budgetary provisions of the Government. Their efforts to mobilize resources from the household sector or from the
capital market have been marginal. Some of these do not advance loans to individuals and undertake mostly
refinancing responsibilities, as discussed below. Significant changes have been brought about in their resource
mobilization and credit disbursal policies in recent years that need to be discussed in some more detail.
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B. Housing finance
i. HUDCO
HUDCO was established in 1970 and is the largest housing-finance agency in India. Its specific objective is to
improve the housing conditions of the low-income and houseless population. It provides financial support to public
agencies like HBs, development authorities, slum-clearance boards, municipalities, cooperatives etc., and not to
individual borrowers. Funds have been advanced for infrastructure and urban development projects as well, but these
constitute a small fraction of its total advances. Apart from the equity support of the Central Government received
every year and its own earnings, HUDCO has been receiving concessional funds from GIC, Unit Trust of India (UTI)
and NHB and some international agencies like the KFW (Germany), ODA (United Kingdom), OECF (Japan), the World
Bank etc. through the Government. It has received funds from LICs as well, until the early 1980s. The loans from UTI,
however, carries the market rate of interest. HUDCO has been borrowing in the capital market through bonds, i.e.,
public issue and private placement issue. It also mobilizes resources from commercial banks through the statutory
liquidity (SLR) bonds, in accordance with the stipulations of RBI.
The major involvement of HUDCO has been in the financing of specific projects of public housing agencies,
undertaken on hire-purchase basis. The rate of interest, period of repayment and the amount of loan advanced by it
vary from scheme to scheme, depending on the income level of the beneficiaries. Recently, the thrust of HUDCO
funding, and as a result, of public housing agencies, has shifted from hire-purchase to a self-financing system wherein
the beneficiaries pay the full cost of the unit before, or at the time of occupation. The cooperative housing schemes
under which individual savings are mobilized on a large scale have also been encouraged. It has also initiated a few
schemes to support private housing agencies.
The lending activities of HUDCO during the Eighth Plan are expected to be primarily for land and infrastructural
development and for EWS housing schemes. The enhancement of equity support from the Government and renewal of
LIC funding for HUDCO are under active consideration by the Government. It may, however, be pointed out that the
tax holiday enjoyed by HUDCO for the initial 20 years is over and that it is paying taxes before announcing dividends.
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B. Housing finance
ii. NHB
NHB was established in 1988 as an apex institution with financial, regulatory and development functions. It has
received equity capital from RBI and concessional funds from LIC. Long-term operational funds were been made
available to it by RBI until 1991, at a highly subsidized rate. Being a statutory financial institution, it has raised
resources directly from international agencies. Funds have also been mobilized from the commercial banks through the
SLR bonds. Issue of capital bonds which was yet another source of financing has been discontinued since 1991.
NHB functions as an apex institutional agency, providing financial assistance in the form of equity support and
refinancing of loans to HFC, and not as a primary lender to individual borrowers. It extends its refinancing facility to
commercial and cooperative banks and subscribes to the bonds and debentures of state land-development banks. It
facilitates housing activities by providing short-term loans to housing agencies largely for "development and supply
of land" and by facilitating the provision of long-term loans to "individuals for buying a developed plot or undertaking
house construction".
NHB has floated a contractual deposit scheme called HLA to mobilize resources from the household sector as
was done by HDFC and a few state HBs in the country. As envisaged by NHB, an individual is required to open an
HLA at a scheduled bank or a housing-finance company which takes the responsibility of dealing with him or her on
behalf of NHB. This would make the person eligible for a housing loan after three years. Savings, thus mobilized,
would be transferred to NHB, which the latter would use for advancing loans to public housing agencies, contributing
to equity capital of industries manufacturing building materials and re-financing the loans to individuals.
Consequently, such individuals can purchase a house or developed plot generally from a public agency on cash
payment.
Under directions of NHB, loans are given to individuals by commercial banks and HFC for a maximum period of
15 years at rates of interest depending on the loan amounts. The rates determined at the time when NHB was
established varied from a minimum of 10.5 per cent to a maximum of 14.5 per cent. The rate of interest to public
agencies varied from 13 per cent to 15 per cent and a higher rate is proposed for time and cost overruns.
In accordance with its stipulations, NHB gives preference to agencies undertaking housing projects in rural
areas and small and medium towns. The public agencies are required to formulate projects by earmarking at least 50 per
cent of the developed land and 75 per cent of the plots, for small-size plots, i.e., 60 m or less. They are also required to
reserve at least 75 per cent of built-up accommodation for housing units of 40 m or less. The maximum plot size and
built-up accommodation permitted are 200 m and 120 m respectively. The housing agencies give preference to HLA
holders when allotting units or plots. The account holders can borrow under the NHB scheme even when they are not
registered with any public agency under a housing scheme.
2
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B. Housing finance
i. HDFC
HDFC was set up in 1976, to channel household savings - as well as funds from the capital market - into the
housing sector. It has promoted ownership housing in urban areas through its retail lending policy. HDFC has actively
promoted new institutions for housing finance, namely, the Gujarat Rural Housing Finance Corporation Limited (with
support from the International Finance Corporation, Washington, the Aga Khan Fund for Economic Development,
Geneva, the Housing Promotion and Finance Corporation Limited (with support from the State Bank of India and
capital markets), Infrastructure Leasing and Financial Services Limited (supported by the Central Bank of India and
UTI) and Can-Fin Homes Limited (supported by Canara Bank and UTI). In the case of the last three institutions, HDFC
holds 20 per cent of their shares.
About 60 per cent of HDFC funds come from household deposits. These savings are mobilized through
different deposit schemes, namely, the Loan Linked Deposit Scheme (currently not in operation), Certificate for
Deposit Scheme, Cumulative Interest Scheme, Home Savings Plan etc. HDFC, like HUDCO, borrows from other
financial institutions as well. However, unlike HUDCO a large part of its resources comes from the capital market
through issue of bonds and shares. Like NHB, it borrows directly in the international market. These two, however, are
required to pay a higher interest rate than HUDCO, although the former are covered against exchange rate fluctuations.
HDFC - which is the largest primary lending agency in the private sector - makes loans under various schemes
to individuals, association of individuals, groups of individuals and individual members of cooperative societies. The
rate of interest charged depends on to the loan amount which, in turn, is determined by the repayment capacity of the
borrower. In determining the repayment capacity, factors such as age, income, qualifications, number of dependents,
spouse's income, assets, liabilities, stability and continuity of income, and savings history of the borrower are taken
into consideration. The principle generally adopted is that the instalment should not exceed 30 per cent of the monthly
household income. The borrower can choose a repayment period in the range of 5 to 20 years, not exceeding the age of
retirement of the loanee.
It is important to note that HDFC finances the construction of new residential units by an individual who or
whose immediate family members do not own any dwelling unit. The security, which is the first mortgage of the
property to be financed, is normally executed by way of deposit of title deed which is essential for the loan. In case of
property under construction, collateral or interim security is required, in terms of a bank guarantee; surrender of a life
insurance policy the value of which is at least equal to the loan amount; guarantee from a sound and solvent
guarantor; pledge of shares; and such other investments that are deemed acceptable by HDFC. The title of the
property should be clear, marketable and free from all encumbrances. The insistence on security for the loan has been
the major hurdle in the low-income household benefitting from the schemes.
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B. Housing finance
ii. HFCs
A large number of HFCs that provide loans to both individuals and state agencies have been established
during the past four to six years. Many among these have, in fact, been promoted and supported by NHB and HDFC.
It is important to mention that the advances made by them do not represent a net addition to housing funds as they
are refinanced by other institutions. The number of HFCs and their contribution to resource mobilization and disposal
is likely to grow in future years.
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B. Housing finance
iii. Apex cooperatives at state level and affiliated primary societies
Most states and UTs have apex cooperative housing federations. These mobilize resources from LIC, HUDCO,
NHB and commercial banks as loans and from their affiliated primary societies and state governments as share capital.
These basically finance the primary societies coming under their jurisdiction against first mortgage of the land or
house. The prerequisite of a loan from an apex cooperative society is, therefore, possession of land.
It is not mandatory for the primary cooperative societies to approach an apex cooperative federation for funds.
They can approach private financial institutions such as HDFC or the employing agency (in case of a cooperative of
the employees) for a loan. When a primary cooperative society borrows from a public-sector institution such as
HUDCO, the loan amount is channelled through the apex cooperative housing-finance society which stands as a
guarantor. The first mortgage document in that case lies with the apex society.
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B. Housing finance
i. Commercial banks and cooperative banks
These banks mobilize over 40 per cent of the household-sector saving. They provide housing loans (along with
other loans) to individuals on terms fixed by RBI. The commercial banks, the primary lending institutions, disbursed a
negligible amount to the housing sector prior to their nationalisation in 1966. After nationalization a savings-linked
housing-loan scheme was introduced. This unfortunately did not make much impact on the housing scene and
remained basically as a deposit mobilization scheme. The main reason was difficulties in advancing loans against the
mortgage of immovable property. It was legally difficult for the banks to realise the loan amount in case of default.
Acting upon the recommendations of a working group set up by itself, RBI made certain new provisions to increase
the loan amount disbursed for housing by the commercial banks in 1978. However, despite the new RBI stipulations,
the allocation of funds for housing did not exceed 0.26 per cent during 1985-1987, against the working group projection
of 0.5 per cent. This is largely due to the high risk and low volume of business in the housing sector.
(19)
In 1989, the RBI stipulations were revised and the commercial banks were required to allocate 1.5 per cent of
their incremental deposits in the previous year to housing. RBI also ordained that 30 per cent of this allocation would
be for direct lending, half of which should be reserved for rural or semi-urban areas. Another 30 per cent would be for
indirect lending, and the remaining for buying government-guaranteed bonds and debentures of HUDCO and NHB.
The linking of allocation for housing with the growth in bank deposits led, in the initial years, to a substantial
rise in the loan amount. The growth could not be maintained as the bank deposits became a casualty in the 1990s. The
percentage of bank deposits to total financial saving in the household sector declined from 45 in 1987-1988 to 39 in
1990-1991, since funds were attracted to more lucrative investments in the capital market.
Currently, the Government is considering the proposal to increase the allocation of incremental deposit for
housing from 1.5 per cent to 3.0 per cent. A suitable insurance mechanism to protect the banks and HFCs against
default in their long-term lending for housing is also being envisaged. Restrictions on the loan-disbursal pattern are
also being liberalized to increase the commercial viability of the financial institutions.
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B. Housing finance
ii. Life insurance corporations
LIC is the largest single lending institution for housing. It mobilizes about 10 per cent of all household saving.
Its activities comprise direct lending to individuals, bulk loans, assistance to state-level apex cooperative bodies and
loans to its own housing-finance subsidiaries. It is statutorily obliged to invest 25 per cent of its net additional
resources to socially-oriented sectors like housing, electrification, water supply, sewerage, road transport etc. The
share of housing in its total investments has gone up from 13 per cent in the mid-1960s to over 16 per cent in the early
1990s.
There was a slight decline in the resources mobilized by LIC from its urban clientele due to the boost in the
capital market in the late 1980s. This was, however, largely made up by the growth of membership and deposits in the
rural areas. It is expected that LIC will maintain its share of total household savings and that it will advance the same
proportion of its funds for housing during the next few years.
(20)
GIC earmarks 35 per cent of its annual accretion as loans to state governments for village housing and EWS
schemes, and to HUDCO. In recent years its advances to the housing sector have been less than 10 per cent of those
of LIC. The advances have grown by 10 per cent annually, and this growth is likely to be maintained in the future.
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Volume 1: India
B. Housing finance
iii. Cooperative banks
Currently there exists a three-tier system of cooperative banks, i.e., state, district (including urban cooperative
banks) and village (primary affiliated credit societies). The cooperative banks in the rural areas have a wide network
and can become excellent intermediaries for loan disbursal. Urban cooperatives can bridge the gap between the formal
and informal finance markets and thus improve the access of the poor to finance, including that for housing. It may be
noted that the state-level apex banks are eligible for concessional finance from LIC.
In a similar fashion, the land development banks also have their apex unit at the state level and affiliated primary
land development (mortgage) banks at the taluka level. These have expertise in evaluating and providing mortgage
finance and they assist the rural housing programmes.
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Volume 1: India
B. Housing finance
iv. Pension and provident funds (PPF)
About 11 per cent of all household financial savings go to PPF. Currently a good portion of these funds are
being utilized as budgetary resources of the Government through the regulatory provisions governing its investment.
The contribution of PPF to housing is currently by way of loans to its members. Since very few members avail
themselves of these loans for housing, only a small percentage of the total funds go to the housing sector. The
percentage share of housing loans to PPF collection has increased from 11 to 15 during 1983-1989. It fell sharply to 12
per cent due to the boom in the capital market, as noted above, but increased to 16 per cent in 1990-1991.
The Government is seriously considering the proposal to allocate 5 per cent of net accretion under PPF for
giving loans to and for buying securities of NHB/HFCs at the same interest rate as offered by the Government under
the Special Deposit Scheme.
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Volume 1: India
B. Housing finance
2. Informal housing finance
It was observed above that much of the funds for house construction come from informal sources that include
cash savings by households, loans and gifts from relatives, moneylenders, shopkeepers, landlords etc. The All India
Debt and Investment Survey conducted by the National Sample Survey Organization - at the request of RBI - in its
37th round has brought out useful information on the asset and debt structure of households in different asset
categories as of 30 June 1981. A few important characteristics of the urban households belonging to the bottom two
categories and for urban India as a whole are presented in tables 8 and 9. It may be seen that the poorest 14.4 percent
of the households (with maximum assets of Rs. 1,000) own, on average, assets worth Rs. 373, of which only 10 per cent
is in the form of land and building. The average figure for the next higher category (with assets of Rs. 1,000-5,000 and
comprising 17.5 per cent of the urban households) is Rs. 2,746, of which 25 per cent is in land and building. The
average figure for all urban households is Rs. 40,573, of which 68 per cent is in land and building.
The average debt per urban household is Rs. 1,024 while that for the bottom two categories is only Rs. 92 and
Rs. 292 respectively. Most of the loans taken by the households in these two categories are for household
expenditure. The average percentage of urban household loans used for housing is 60, as opposed to 15 and 30 for the
bottom two categories, as may be seen in the detailed results of the NSS. As much as 95 per cent of all loans taken by
the households in the lowest asset category comes from informal sources. The corresponding percentage for the next
higher category is 75, as compared with the national (urban) figure of 40 only. About 43 per cent of the households in
the bottom two asset categories pay an interest rate of more than 20 per cent. The corresponding figure for all urban
households is only 31 per cent. Borrowing from friends and relatives without any formal security is quite common in
the lowest categories. A very high percentage of these households also borrow money at zero interest rate. Such loans
are often obtained from shopkeepers, moneylenders and landlords. Here, the implicit rate of interest turns out to be
generally quite high because of the high prices charged from the borrowers for the commodities purchased,
contractual obligations to be met, or free labour to be provided by them. All these practices can be attributed to the
inadequacies of the existing formal financing system.
There is no doubt that the availability of formal institutional finance augments the investment in housing
significantly. A recent study by Mehta and Mehta (1992) shows that those households having access to formal
sources invest 45 per cent more than others. The figure is much higher for the low-income groups (120 per cent) than
for the upper income groups (20 per cent).
The ownership pattern of the assets and the nature of borrowings, particularly for the lower asset and income
categories, make it clear that bringing much of the housing finance into the formal system would require a massive
effort at bridging the present gap between the formal and informal institutions.
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Volume 1: India
B. Housing finance
3. Incentives to investment in housing
Different public and private-sector agencies etc. have designed policies and programmes for mobilizing
household savings, constituting the major part of domestic savings in the country. Schemes have been initiated by the
government to encourage the flow of resources into the priority sectors of the economy. The intersectoral allocation of
resources, therefore, depends on the success of these policies and schemes. The Central Government has allowed
special tax reliefs to encourage financial flows into housing that are discussed here in some detail.
Until recently, house-owners were allowed a deduction of Rs. 3,600 from the annual value of their house for five
years after its construction under the Income Tax Act.
An additional deduction, up to Rs. 3000 on interest or
dividend earned from companies engaged in providing long-term finance for construction or purchase of houses, was
also permitted. Furthermore, interest paid on debts incurred in acquiring, constructing, repairing and renovating the
property was deductible from income. When the income from property was less than the interest payment, the balance
could be adjusted against income from any other source. Any capital gain arising out of the sale of a residential unit
was also exempt from tax under section 53 of the Income Tax Act when the value was less than Rs. 200,000. In case the
value exceeded the limit, a proportional exemption was allowed. All these benefits were, however, withdrawn in the
Union budget for the year 1992-1993. This may hamper the tempo of housing activities.
(21)
(22)
The argument that some of the benefits have been restored by certain other changes in the budget itself does
not hold much ground. Indeed, a relief on interest or dividend earnings up to Rs. 7,000 has been allowed independent
of its source. This, in effect, implies withdrawal of the preferential treatment provided earlier to companies involved
in long-term financing in the housing sector. Similarly, the provision of carrying forward the negative income from
property to the subsequent years for setting-off against housing incomes (and not against income, from other sources
in the current year) puts house-owners at a tremendous disadvantage as they may have to wait for more than 10 years.
This would definitely reduce the loan-repayment capacity of the borrower.
(23)
Encouragement to private investment in housing given through the provision of land, capital etc., at
concessional rates, grants, management support etc., under various governmental programmes, have already been
discussed above. It may be worthwhile to note here that, at present, the HFCs do not stand at par with other financial
institutions. Under section 194-A of the Income Tax Act, HFCs are obliged to deduct taxes at source from any interest
payment exceeding Rs. 2,500 in a financial year. This is not the case with other institutions like commercial banks,
mutual funds, UTI etc. Similarly, no HFC can accept deposits for periods less than 24 months. There are, however,
several companies offering the same interest rate with a shorter maturity period. Finally, the advertisement facility of
the HFC is restricted under section 55 A of the Companies Act and Chapter V of the NHB Act. These oblige the HFC
to refer to a statutory advertisement (for encouraging deposit habits in general) at the top before presenting their own
case. All these discriminatory practices adversely affect the resource mobilisation efforts by HFCs.
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Volume 1: India
C. Access and affordability of various income groups
An overview of the existing organizational structure in the housing sector reveals that it does not take into
consideration the demand pattern and affordability of different sections of population, particularly those in the lower
income strata. Many agencies have, by their administrative and financial stipulations, excluded the poor from the
purview of their activities.
It was mentioned above that direct house construction by public agencies began during the 1950s on a large
scale for the targeted sections of the population, i.e., refugees, slum dwellers, relatively under-privileged categories of
industrial workers, scheduled castes/tribes etc. Due to the meagre government funds allotted to these agencies today
this is continuing at only a very low key today. Furthermore, due to the absence of political will and administrative
mechanism to recover even a part of the cost, these activities could not continue on a self-sustaining basis. The only
housing programmes that have been maintained over the years, although at a reduced scale, are for the employees of
government and certain public agencies. Most of them belong to the top 10 per cent of the population in terms of
consumption expenditure.
The dependence of the public housing agencies on state funds has declined over the years. They have,
however, obtained concessional finance from agencies such as HUDCO, LIC, GIC and now the commercial banks. GIC
loans carry 14 per cent rate of interest while LIC charges between 7.5 per cent and 12 per cent, depending on the
purpose of the loan. Evidently only the middle- and the upper-income classes have been able to secure loans from
them directly and indirectly (through state-level housing agencies). The rates charged by commercial banks are also
beyond the repaying capacity of the low-income groups. The only loans affordable to these people are from HUDCO,
the interest rate being 8 per cent only for EWS categories, households
with income below Rs. 1,251 in 1991.
However, due to construction delays, cost overruns etc., the monthly instalments payable by the beneficiaries are
unaffordable to a large section of the poor. This implies that most of the formal housing programmes undertaken by
public agencies using concessional finance from HUDCO, state governments and other sources are beyond the reach
of the poor (comprising about 35 per cent of the country's population) and, in some states, even beyond the reach of
middle-income households. Due to laxity in the implementation of the eligibility criteria, most of the dwelling units
reserved for EWS and LIG have gone to MIG households. Given the difficulties in cost recovery, the housing agencies
have moved away from hire-purchase to a self-financing system. This has placed housing even further beyond the
reach of the poor.
(24)
It is indeed true that the public agencies have encouraged the cooperative sector in housing. Unfortunately,
however - due to various administrative and organizational problems - not many among the poor and slum dwellers
have been able to organize themselves into cooperatives and succeed in obtaining land or houses from the public
agencies. The primary cooperative societies get loans from the state-level apex cooperative units, the latter obtaining
concessional finance from LIC, GIC etc. Since the rates charged by the latter are high and the cost of intermediation
adds a further one or two percentage points, the loans from primary cooperatives to their members are more expensive
than those of HUDCO. This is yet another reason why low-income people cannot reap the benefits from the
cooperative sector.
The houses constructed by private builders are meant for the people mostly in the higher income groups. The
joint sector projects promoted in recent years have perhaps succeeded in delivering the dwelling units in lesser time
and with greater efficiency than public projects. Yet, due to lack of control and appropriate guidelines, and even an
adequate information base, the units supposedly reserved for the economically and socially vulnerable sections have
been disposed off through connections or in the open market.
The only programmes that have reached the poor are SIP, SUP etc., undertaken by the local bodies,
development authorities, slum-clearance boards etc. The total funds available in the form of grants and cheap loans for
this purpose has, however, gone down over the years. As a result, and also due to the incapacity of these agencies to
build revolving funds through financially feasible projects, their level of activities have been quite low during recent
years.
It is, indeed, true that large subsidies have flowed into the housing sector over the past few decades. It is,
however, difficult to asses what percentage of it has gone to the poor or to any other income groups. This is because
of the non-availability of data on: (a) real income of the beneficiaries; (b) subsidy per dwelling unit; and (c) illegal
transfer of properties. Nevertheless, a careful analysis of the functioning of these agencies and the financial and
administrative requirements to be met by the beneficiaries make it clear that in no case could a large number of urban
Page 88
poor have been reached by them.

The most essential requirements - a permanent address and a guarantor - are the major impediments for the
urban poor in taking advantage of the formal housing schemes, and sometimes even of slum-upgrading programmes.
The same is true for getting loans for housing. Besides the requirements of a permanent address and a guarantor, apex
cooperative housing-finance societies and HDFC generally insist on:
A clear and marketable title of land;
Approval of building plans by the concerned local authority;
Contribution of a minimum of 25 per cent of the cost of the dwelling unit by the beneficiary before
considering the loan application.
However, for the EWS schemes financed by HUDCO, the requirements are less stringent and only 10 per cent
of the total cost is required as an initial contribution. In the case of EWS serviced plots, no such contribution is
necessary. It is well-known that the urban poor in general neither have legal ownership of the land nor is it possible for
them to get the approval of the local authority for building a permanent house on the land occupied by them.
Given the revised ceiling cost of Rs. 22,000 prescribed by HUDCO for the EWS units, the initial contribution
amounts to Rs. 2,500. The monthly instalment payable over a period of 22 years generally works out to Rs. 200 or more.
This amount is about 20 per cent of the income for the households at the poverty line and obviously more for those
below it. table 10 shows that the bottom five expenditure classes of the NSS, covering about 40 per cent of the
population, allocate not more than 12 per cent of their total expenditure on housing. Importantly, the assets owned by
the bottom 32 per cent of the population (assets worth less than Rs. 5,000), on average, are worth about Rs. 1,675 (see
table 8 ) and their rents do not exceed Rs. 70 per month (RBI, 1987). It can thus be argued that both the initial
contribution and the monthly instalments are unaffordable to the poor households. The cost of a dwelling unit (and
hence the initial contribution and monthly instalments) normally works out to be higher than stipulated because of the
time taken in completing the elaborate administrative procedures and the delays in the construction. The
down-payment and the monthly instalments are much higher for schemes other than those supported by HUDCO.
The recent attempts by NHB to strengthen the capital market for housing, transform the public-sector housing
agencies into efficient production units and restrict their long-term lending activities need to be reviewed in the
context of the affordability of the poor. NHB has abolished income criteria for determining the quantum of loan and the
rate of interest and has linked these to the size of the plot or the loan. There is no reason, a priori, to assume that the
smaller plots or loans would necessarily be taken up by people in lower income brackets. Furthermore, under the liberal
market conditions as envisaged by NHB, it is difficult to ensure that the beneficiary household would not own more
than one plot or house. The monthly instalments for a loan, say, of Rs. 19,500 to be sanctioned by banks authorized by
NHB would work out to be much higher than Rs. 200 (the normal instalment for HUDCO loans, owing to a higher
interest rate between 10.5 per cent and 14.5 per cent and a shortened recovery period). Also, the stipulation of a saving
period of three years of at least Rs. 30 a month before applying for a loan does not reflect a recognition of the urgency
of the housing needs of the poor.
Instead of borrowing from HUDCO or state governments, housing agencies would be required to borrow from
NHB, HFC at 13.0-15.0 per cent rate of interest particularly for MIG and HIG schemes. These would evidently increase
the cost of the dwelling unit for the poor.
The NHB loans are available for buying a plot/house from a private individual/company or a public agency. A
clear title to the land is essential in the case of the former. In the case of buying from a public agency, the formality is
less cumbersome. Yet, given the market price of the minimum plot size of 20 m ranging anywhere between Rs. 5,000
and Rs. 20,000 even in the periphery of the large cities (the prices in the core area being much higher), the purchase of
land by the urban poor would be out of the question. It is the public housing agency alone that can provide land to
the poor if it follows the policy of cross-subsidization.
2
In recent years, pattas, or land rights, are being given to slum dwellers by some local authorities and state
governments, often for political reasons. Nonetheless, this has helped the poor in getting the plots and, as a result,
housing loans. Substantial benefits have, thus, accrued but only to the slum dwellers living on government and
unobjectional land in the states following this policy. For the pavement dwellers, occupying private lands and
"objectionable areas", finding land in the neighbourhood is the biggest problem. Provision of serviced land at long
distances from the city centre, as is the case under the sites-and-services scheme, has a low success rate.
Physical proximity to the sources of livelihood is essential for economic survival of the poor in the city. It is,
thus, evident that the public sector has been able to reach only a small segment of the urban poor owing to its very
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organizational set-up and methods of functioning.
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Volume 1: India
It is impossible to obtain a clear-cut break-down of the houses produced during a year or a decade by the
methods, types or agencies of construction in the country from existing secondary data. An attempt can, however, be
made to ascertain the directions of change in the roles and responsibilities of the different actors or production
systems, their relative contributions in the incremental housing stock and the changes in the composition of dwelling
units. An attempt has been made to do this for the 1980s, somewhat unsatisfactorily though, using secondary
information.
The data from the construction agencies of the central and the state governments indicate that their annual
contribution has been to the tune of 65,000 units. During the 1970s and 1980s for which data are available, no clear
trend emerges with regard to the number of dwelling units produced by them. Using fragmented evidence and based
on a discussion with the concerned officials, it seems appropriate to assume that these agencies have produced 85,000
dwelling units on an average annually in the more recent years. To that, one can add another 69,000 units constructed
each year under Indira Awas Yojana (fully subsidized houses for the SC/ST population) in rural areas during the 1980s
(Planning Commission, 1992).
The building permits issued to private entrepreneurs (including builders and house-owners) in Class I cities
(urban centres with a population of 100,000 or more) during the 1970s and early 1980s amounted to 93,000 per year.
Here again, one notices no definite trend but only annual fluctuations. The number of completion certificates issued,
however, works out to only 55 per cent of the permits applied for. In view of the fact that many house-owners take up
residence in their houses without the completion certificates, the average number of dwelling units produced can be
taken as 80 per cent of the permits issued. Allowing for an annual increase of 2 per cent (which can be justified based
on the fragmented data available from different cities), the units constructed in the Class I cities can be taken as 0.9
million during 1981-1991 or 90,000 per year. It would not be proper to compute the additional housing stock in
non-Class I urban centres or rural areas by using the population proportions, as the levels of the housing activities are
less than in Class I cities. However, based on the population growth rates and fragmented primary data from different
towns, one can hold that the yearly formal house construction in non-Class I urban centres has been about 60,000
during the 1980s.
The data on houses built by cooperative housing societies, restricted almost totally to urban areas, show no
trend during the 1970s and 1980s. The average number of houses (including tenements) works out to be 40,000 per
year. Cooperative house construction, however, received a big boost during the 1980s. Based on this and by using
other indirect information, annual housing production is estimated to about 550,000 units during 1981-1991. It may be
noted that the Eighth Plan document mentions the number of dwelling units constructed during the Seventh Plan
period (1985-1990) under the cooperative sector to be 230,000 million. In view of this, the figure of 550,000 dwelling
units constructed during the entire decade seems reasonable.
The activities of the HBs increased in the 1970s (with the setting-up of HUDCO which refinanced their projects)
and maintained their level during the 1980s. HUDCO financed about 20,000 dwelling units per year in the early 1970s
but in 1982-1983 the figure went up to 300,000. The actual number of houses completed with HUDCO's support would,
however, be about two thirds of the units financed by it during the 1980s. The change in the thrust of the housing
policy brought about in the late 1980s is supposed to slow down the rate of construction of dwelling units, the
emphasis now being on land development. Assuming the rate of construction to have been maintained at the level of
1982-1983 during the entire period of the 1980s, one would estimate the number of houses built by the HBs during
1981-1991 to be 2 million units in the urban areas. The figure appears reasonable since the total number of dwelling
units constructed through formal housing agencies using HUDCO's support has been reported to be 3.5 million only.
It may be noted that HUDCO reserves 50 per cent of its resources for rural housing and that this has produced 1.6
million units (Planning Commission, 1992). This would be a part of the total houses constructed with HUDCO's
support as reported above.
One can get a fairly good estimate of the total number of dwelling units constructed in the formal/legal market
by aggregating the figures reported by the above-mentioned agencies. It is, however, important that some of the HBs
hire public-sector construction agencies and hence a simple addition of the figures reported above might lead to
double counting. Based on a rough estimation of the total number of such units, one would place the number of formal
houses built during 1981-1991 as about 5.5-6.0 million. This implies that about 20 per cent of the housing stock
produced during this period belong to the formal housing market. The remaining units have resulted from
sites-and-services and slum-upgrading schemes, unauthorized construction, informal builders and individual
squatting. The Eighth Plan has estimated that the number of formal dwelling units built through various programmes
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within the public sector during the Seventh Plan period (1985-1990) is 1 million only. Assuming another 0.8 million to
have been produced during 1980-1985, one can hold that about 30 per cent of the formal housing stock was produced
directly or indirectly through public-sector agencies during 1981-1991.
An alternate estimate can be obtained indirectly by considering the financial flows into the housing sector.
Using the data on budgetary allocation of the government on housing, financial flows from institutions like LIC, GIC,
UTI and HFC, the Sub-Group on Housing Finance has estimated the share of the formal sector in housing as 16 per
cent only in the year 1987/88. This broadly tallies with our estimate of the share of formal houses produced during the
1980s, based on the figures of the units constructed by different agencies in the formal sector, permits issued etc.
An estimate on the number of units produced in the informal sector during the 1980s is much more difficult. The
Government has in the past few years moved away (slightly though) from construction of houses to the provision of
land and finance, relaxing legislation etc., and thereby has encouraged the production of houses in the informal sector.
It is possible to infer about the number of units constructed (largely through the self-help approach) under various
programmes of the Government, from the information on grants or loans sanctioned.
A scheme for allotting house sites and providing construction assistance to landless workers and the SC/ST
population, was initiated in 1971 as a central sector scheme. This was transferred to the state sector in 1974 and is now
a part of the Jawahar Rojgar Yojna. The scheme received a high priority under the Minimum Needs Programme in the
Sixth Plan. The number of house sites provided by the Government in rural areas was 5.4 million during 1985-1990. The
total number of sites disposed of in (rural areas) during the 1980s can, therefore, be taken as 10 million. Construction
assistance was given to 1.9 million and 2.25 million households during the Sixth and Seventh Plan periods,
respectively.
(25)
The total number of units built through the provision of land and financial support in rural areas, thus, works
out to be 4,150,000. About 30 percent of the households receiving land under the scheme are supposed to have built
their houses without any financial support from the Government. These houses were produced in the informal sector.
This is true even for the units built with financial support from the Government, since the funds were highly
inadequate for a formal house that would satisfy all the requirements (as is recognized in both Plan documents). The
total number of informal shelters built through the Sites and Services Programme in rural areas during 1981-1991 can
therefore be estimated to about 8.5 million.
Housing and shelter-upgrading schemes for the urban poor have been carried out since the early 1970s. Since
1989, when Nehru Rojgar Yojana was introduced, this scheme has become part. The number of units covered under
the scheme during the Seventh Plan in urban areas is 570,000. Another half million units were taken up during
1980-1985 as well. Based on the figures projected for the Eighth Plan period (1992-1997), one would take the number of
rural units upgraded during the 1980s as 2 million. The total number of units upgraded in the country during the 1980s
would therefore be about 3 million.
(26)
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Volume 1: India
1. An assessment of the changes
An analysis of the changes in housing production practices, the nature of shelter programmes and the methods
of their financing reveals that a definite process of restructuring within the housing sector has been initiated in recent
years. It is, however, difficult to judge the extent to which the changes are in line with the GSS.
It may be noted that the budgetary support for the housing sector has gone down over the years, particularly
in the Seventh and the Eighth Plans. The volume of grants or loans available to the Public Housing Agencies (PHA)
from the central and state governments, to meet their operational expenses or debt obligations, has been reduced.
Some of these agencies have complained regarding the difficulties faced by them, even in securing guarantees from
their state governments, an essential condition for HUDCO loans.
The equity contribution from the Government to PHAs and HUDCO has gone down in relative terms. As a
result, they are becoming increasingly dependent on their internal resources. This has forced many PHAs to
concentrate on housing schemes for the upper- or middle-income households only, on a self-financing basis.
Loan recovery is less than 50 per cent from the LIG and EWS categories. The PHAs have, therefore, shown
reluctance to work with them. They have, instead, sought exemptions or requested HUDCO for a revision in the upper
limit of costs for these houses. The HBs in relatively developed states like Punjab, Haryana, and even West Bengal or the development authorities in the metropolitan cities - have not received much in the way of HUDCO funds, due to
the condition that 55 per cent of loans must go to these two categories.
It is important to note that, although HUDCO proudly proclaims it allots the stipulated share of its advances to
EWS and LIG categories, it, by no means, can ensure that the specific income criterion is followed by the housing
agencies in identifying the beneficiaries. The maximum income limits for eligibility, standards of construction etc.,
being highly unrealistic, the task has become extremely difficult. As HUDCO is having difficulties in pushing through
the required quota of funds for these categories, it is not in a position to insist on rigorous implementation of the
criterion by the PHAs. Also, the latter would never be able to get an adequate number of beneficiaries if they were to
implement the income criterion seriously. Besides the operational difficulties, it can be easily demonstrated that only a
small fraction of the households below the prescribed income level can meet the monthly repayment schedule (Kundu,
1992). This is so even if they allocate 20 per cent of their total expenditure (as recommended under the World Bank
schemes) to housing. Thus, under the present system of implementation a process of filtering up is inevitable, with a
large number of people from higher income groups getting into the LIG-EWS schemes. It may also be pointed out that
the element of informality in the identification of the beneficiaries has increased in recent years. This has encouraged
the filtering-up process, allowing PHAs to fulfil their quota of EWS-LIG categories and also to improve their
loan-recovery rate.
There is a formal way of getting around the HUDCO norms. HUDCO has often permitted, presumably due to
cost escalations, upgrading of EWS schemes to LIG, and LIG schemes to MIG, on payment of specified amounts and a
higher interest rates. In several cases, the initial application under the EWS category is made to fulfil the annual quota
with an explicit understanding that it would be upgraded subsequently. In a relatively developed state like Gujarat, for
example, almost all the schemes in the EWS category sanctioned during the past five years have been converted to
LIG schemes.
There is yet another ingenious way by which the PHAs have in effect succeeded in relaxing the norms or
standards relating to housing design and quality of construction. The Cash Loan Scheme, which of late has become
popular in states like Uttar Pradesh, allows the dwelling units under a project to be scattered within a district or a taluk
. This has made supervision by HUDCO officials almost impossible in a large number of sites. Taking advantage of
this, PHAs and individuals have adopted the standards of housing to suit their affordability.
The interest rates charged by HUDCO from the housing agencies for different categories of houses have been
revised several times in recent years (Kundu, 1992). Tables 11 and 12 show the rates of interest charged in the late
1980s and early 1990s. It may be noted that the EWS scheme which carried an interest of 7 per cent per annum in the
1980s, is now placed at 8 per cent. For the LIG scheme, the present rate is 11.5 per cent instead of the 8.5 per cent and
9.0 per cent (previously charged under the two sub-categories within LIG). Currently, there are three sub-categories
within MIG, i.e., loans up to Rs. 60,000 between Rs. 60,000 and Rs. 80,000, and between Rs. 80,000 and Rs. 115,000. The
percentage interest rates are 12, 13 and 14, respectively, replacing the earlier rates of 11 and 12.5 for the two categories
Page 93
that previously existed. Similarly, the RIG interest rates in percentage terms have gone up from 13.5 to 14, 15 and 16,
depending on the loan amount.
The reasons for the increase in the interest rates are understandable. Indeed, the cost of borrowing has gone
up for all social sectors in the country including housing, during the past few years. The average HUDCO borrowing
rate was 5.5 per cent per annum in the 1970s, but 8 per cent in the 1980s. The corresponding rate in the 1990s is 9 per
cent. As a result and also due to low budgetary support, the lending rates could not be maintained at the level of early
1980s.
As a result of the above, the financing pattern has undergone changes along with the share of public
investment. HBs and development authorities are gradually trying to get out of the Hire Purchase System (HPS)
promoted by HUDCO and are going in for the SFS, largely using their internal resources and the deposits made by the
beneficiaries. The DDA, for example, closed registration under HPS in the late 1970s and the backlog is yet to be
cleared. It is now encouraging the registrants to switch over to SFS. Also, the total registration in the years 1990/91 or
1991/92 by all PHAs under all housing schemes is less than the average figures for the 1980s.
The setting-up of NHB in July 1988, and its operations since then, have made a significant impact on the
housing scene. A large number of HFCs have been set up, either as subsidiaries of existing banks or as independent
units within the public, private and joint sectors. The NHB has recognized, besides HUDCO, 15 HFCs as eligible for
the purpose of refinancing. These include institutions promoted by LIC, GIC, various banks (six) and private
organizations (seven). On the advice of NHB, RBI has relaxed the restrictions on areas of operations of the HFCs, set
up by the commercial banks. These now can open branches anywhere in the country, with the approval of NHB.
NHB made a major effort in mobilizing household savings through its HLA Scheme. This has reduced its
dependence on budgetary resources. A similar scheme floated by HDFC was quite popular in the 1980s but had to be
discontinued due to excessive demand for loans under it. The HLA has unfortunately not picked up as yet. It is,
however, believed that with the increase in savings in the household sector and the passing of the crisis in the
financial market, people would turn to housing investments, resulting in increased deposits under HLA. The rates of
interest charged by HFC to borrowers and NHB to HFC under the scheme are presented in table 13. The interest rates
have been revised upwards several times since the establishment of NHB. NHB has introduced a few changes in the
scheme - such as enlargement of the target group by including even those owning a house, extending benefits of the
scheme to the nominee of the depositor in the event of latter's death, permitting withdrawal in case of exigencies etc. in order to increase the population coverage and acceptability. A modest sum of Rs. 100 million has also been
mobilized through a government Voluntary Deposit Scheme. Sixty per cent of the deposits could be withdrawn but the
remaining will be available to the NHB for financing slum clearance and low-cost housing projects.
NHB charges differential rates from small borrowers under the Land Development and Shelter Projects (LDSP)
undertaken by public agencies (see table 13 ). The NHB rate of refinancing is 1 per cent less than the weighted average
for the total scheme. This system, as opposed to charging a uniform rate, does not discriminate against the projects
having a large number of small plots (entitled to loans at lower rate), as this would lower the refinancing rate as well.
NHB has opened its window for lending to professional developers for integrated projects (not for land
acquisition only) with a minimum of 20 dwelling units under LDSP. The developers are required to dispose of 80 per
cent of the houses at predetermined rates (only 20 per cent can be sold at market prices) and abide by certain other
stipulations regarding the plot size etc. This is in line with the GSS recommendation of enabling and facilitating private
investment in housing while at the same time protecting the interests of the poor. It is, however, not very surprising
that in the public-private partnership projects, the houses meant for vulnerable sections, to be provided at subsidized
rates, or on a non-profit basis, have mostly been disposed of through illegal gratification, political patronage and
social connections. In a country, where even public agencies have failed to ensure that the benefits of social housing
schemes go to identified groups of the population, expecting this to be achieved in projects of partnership would
necessitate restructuring the entire legal and institutional set-up. Government effort in this direction is conspicuous by
its absence.
RBI restructured the lending rates of the scheduled commercial banks and state cooperative banks in
September 1990, including those for housing loans. As a result, the refinancing rates of NHB for commercial banks
were also revised upwards, except in the case of loans of less than Rs. 25,000 where there was a decline. The increase
in the cost ceilings (for loans) and a number of other relaxations have resulted in increasing the demand for housing
loans. Similar revisions in the rates and relaxations of conditionalities have been made for refinancing the scheduled
state cooperative banks as well.
The rates of interest were hiked further during 1991/92. The pre- and post-revision rates for direct lending are
given in table 13. Similar revisions have been brought in the refinancing of loans given by the primary cooperative
housing societies and LDSP. It may be noted that refinancing is done up to 100 per cent by NHB.
Page 94
The major difference between NHB and HUDCO financing is that in the former the rates of interest depend on
the loan amount, subject to plot size and not income level, a criterion which has been widely misused under the
HUDCO scheme. Also, the HLA of NHB is expected to wean the housing agencies
away from the hire-purchase system to that of self-financing, as clients are required to make the total payment
to the housing agency through banking loans, other borrowings, personal savings etc. at the time of taking
possession of the house. It thus relieves PHA of the responsibility of providing long-term finance. This is passed on
to the banks and HFC that are better equipped for that purpose. The spread of two percentage points over and above
the NHB rate is given to HFC (commercial banks, cooperative banks and other financing companies) in case of small
loans to encourage them to have a large number of small borrowers by partially compensating for the difficulties
therein.
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Volume 1: India
Chapter III. Bombay
According to the 1991 Census, Bombay, with a population of 12.6 million, is the largest urban agglomeration in
India. It has experienced a fast demographic growth during the past few decades, particularly since 1951. Its
population growth rate is higher than that of Calcutta but less than that of Delhi (see table 14 ). It should be noted that
the growth rate has declined since 1961. The decadal growth rate of the Greater Bombay Municipal Corporation (BMC)
which was 76 percent during 1941-1951 came down to 20 per cent during 1981-1991. This could partially be attributed
to serious housing problem and extreme pressure on the limited infrastructural facilities. Despite this decline, the
absolute population increase is substantial. It has been estimated by Bombay Metropolitan Regional Development
Authority (unpublished records) that about 45,000 families joined the squatter settlements each year during the 1980s.
These pose a serious challenge to the agencies involved in housing in the city and its periphery.
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Volume 1: India
Chapter III. Bombay
Bombay exhibits significant contrasts in the character of its residential colonies, located in different parts of the
city. The central business district, in south Bombay, and its modern extension to Nariman Point (the southern tip of the
city) has predominantly high-rise western style residential apartments. The reclaimed area of Cuffe Parade and
north-western Black Bay on the Malabar Hills and Cumballa also house the elite population of the city with a high
incidence of multi-storeyed buildings. The northern part of the island city has predominantly old residential buildings
that retain their original character. Further north, there are chawls or tenement houses around old cotton mills. Beyond
the island city, there are two thickly populated suburbs along two commuter railway lines that provide the basis for
suburbanization. Between the two, a large number of squatter settlements have grown up, several of them being on
reclaimed land. The poor in Bombay can neither find shelter in the central areas (due to the high cost of land) nor in the
peripheries (due to transport cost). They are, thereby, forced to live on marginal lands within the city.
The percentage of useable housing stock in Bombay (96 per cent) is lower than in Calcutta or Delhi (see table
15 ). This is because the share of unserviceable katcha houses is very large, much larger than that in Calcutta or Delhi.
Furthermore, the percentage of semi-pucca houses is very high (20). The housing shortage has been estimated at 7 per
cent of the existing housing stock. This is one of the highest among all metropolitan cities in India. This figure,
obtained from the Population Census data on the housing shortage is, however, an underestimation as is discussed
below. The serious pressure on the existing housing stock in Bombay can be inferred from table 16. The percentage of
households residing in one-room units is 67.3, which is significantly above the corresponding figures for Calcutta and
Delhi. The average number of people per room in one-room units in the case of Bombay is, once again, one of the
highest among the metropolitan cities of the country. The same is the case with the percentage of slum population.
Paradoxically, the percentage of vacant houses in Greater Bombay is very high compared with most other
metropolises. In 1971, the figure was about 10 per cent which was the highest in the country. The figure has
subsequently gone down to about 6 per cent in 1981, just short of Delhi's figure (see table 17 ).
(27)
In terms of electricity connections, the position of Bombay seems to be somewhat better than that of either
Calcutta or Delhi (see table 18 ). This, however, is not the case with toilets since 27 per cent of the households do have
any toilet facility at individual or community level.
Besides the above statistics, compiled from the population censuses that are generally comparable over time
and across cities, it is possible to assess the quality of housing stock and magnitude of shelter problem, using
information from city-level surveys, and studies conducted by concerned local bodies, development authorities or
individual scholars. Unfortunately, these provide estimates at one point of time only that are not strictly comparable
with the estimates available for other cities.
A housing survey conducted by the BMC in the 1950s (results not published) placed the slum population in
the island city at 15 per cent. However, according to a survey conducted by Bombay Metropolitan Regional
Development Authority (BMRDA) in the early 1980s, 80 per cent of the low-income households in the island city were
housed (or warehoused) in chawls and dilapidated buildings. A section of the middle-class families has also been
pushed into these in recent years. Of the total population living in these houses, 90 per cent have only one-room units.
chawls constitute 74 per cent of the total housing stock in the city. The majority of the chawl dwellers share toilets,
staircases and corridors. The average size of household in the chawls is 6.3, which is extremely high by any standard.
What is, however, absolutely shocking is that a number of these units accommodate 20 to 40 people. Despite all these,
the people living here, however, do not want to move to other localities due to their convenient location and access to
amenities at the community level (Desai, 1992). The poor construction of chawls, climatic conditions and lack of
adequate maintenance result in periodic collapse of old structures and serious casualties. According to a Municipal
Census in 1970, over 9000 houses in the city need to be demolished.
To provide boarding and lodging facilities to the floating population, a large number of khanawals have
appeared in the working-class localities of the city. The khanawals are basically eating places having some limited
night-shelter facility. With the increase in the number shanty settlements and the emergence of a renting system in the
slums on a daily or hourly basis, the number of khanawals has gone down in the 1980s.
A survey was conducted in the early 1980s by BMRDA for the preparation of the Bombay Urban Development
Project (BUDP), negotiated with the World Bank (BMRDA, 1982). The results of the survey bring out the pressure on
the existing housing stock quite sharply, as may be seen in table 19.
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BMRDA officially placed the housing deficit at 1 million units in 1983. It may, however, be argued, using the
figures given above, that at least 1 million more houses were either in dire need of replacement or of improvement. The
number of houseless households was estimated to be 80,000, which is much higher than the figure of 22,600 reported
in the Population Census of 1981, a couple of years before the BMRDA survey. This is because the Population
Census considers any structure wherein people are currently residing as a house for its purpose. The figure of
pavement dwellers obtained through a survey conducted by an NGO called Society for the Promotion of Area
Research Centre (SPARC, 1985) was more than twice that of BMRDA.
The BMRDA survey further revealed that most of the squatter settlements and shanties were located along
railway tracks or under bridges. In contrast to the popular belief that the people living in these settlements are recent
migrants, 18 per cent of the heads of the households were born in Bombay and another 40 per cent had arrived in the
city more than 15 years ago, while another 33 per cent arrived between 6 and 15 years ago. The survey further showed
that the conditions of the pavement dwellers were much worse than those of the slum dwellers. More importantly, their
existence was not even formally recognized by the public agencies.
The figure for the housing shortage of 23,000, as given by the Population Census of 1981, cannot be taken
seriously as the basis for planned interventions, due to the deficiency in the concept of a house. The Development
Plan for Bombay, prepared in 1967, had estimated the figure to be 131,000. The housing shortage as reported during
the Fifth Five Year Plan was, however, much higher (270,000). The growing shortage can be explained in terms of rapid
population growth, low investment in housing and poor maintenance. Similarly, BMRDA had estimated the back-log of
the housing deficit to be 1 million units. The additional incremental annual need was estimated at 60,000 units.
MHADA's construction has never exceeded 3000 units in any year since 1976. The private and cooperative sectors, on
the other hand, have been contributing around 12,000 units per year. This has left a huge gap in the housing supply
which could be filled up only through the initiative of the informal sector.
With the freeze on rents imposed through the Rent Restriction Act of 1947 and the increasing cost of building
materials and skilled workers, most house-owners found it difficult to maintain their houses. Besides, several legal and
administrative hurdles in the transfer or sale of property, change of land use etc., got in the way of the private sector's
investment, in housing. The problem became aggravated due to Urban Land Ceiling (and Regulation) Act of 1976,
which resulted in a reduction in the incremental supply of land. It may further be noted that the process of completing
the formalities for obtaining building permission took about two years, even for the public agencies (Sundaram, 1989).
This dampened the level of housing operation in the city.
Buying or building a house is the most common way of getting houses for the middle- and upper-income
classes. Regular tenancy has become less popular over the years because of the difficulties encountered in raising the
rent at regular intervals and in getting the premises vacated when required. A tenant is generally obliged to pay a cash
down-payment, called pugri, which is almost equal to the market price of the house along with a monthly rent. This
system has totally destroyed the free rental housing market since a tenant virtually becomes the owner of the house.
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Volume 1: India
Chapter III. Bombay
The main agencies engaged in housing and slum improvement in the city of Bombay until the early 1970s were
the state HB, Bombay Improvement Trust, Bombay Development Directorate and Bombay Building Repairs and
Reconstruction Board (BBRRB). These generally took up schemes in the city at the insistence of the central and state
governments. It is surprising that BMC which is one of the most efficient local bodies in India (never superseded by
the state government until 1984) - has not been directly involved in public housing or slum upgrading except in
housing schemes for its own staff. It sometimes worked as a public works agency, executing programmes of slum
upgrading. In 1974, the Slum
Improvement Board was created at the state level, and took over this responsibility from the BMC. The three
statutory bodies, HB, BBRRB and the Slum Improvement Board, were brought under the purview of one
comprehensive statute in 1976, called the Maharashtra Housing and Area Development Act. This resulted in the
setting up of MHADA, which took over the overall responsibility of public-sector housing in Bombay, along with
BMRDA. Thus, besides housing, the responsibility of slum upgrading and reconstruction of dilapidated buildings lies
with MHADA. The Authority functions through five regional boards, one of them being Bombay Housing and Area
Development Board which has the jurisdiction over Bombay city and its suburbs. CIDCO is an authority created for
the development of New Bombay on the mainland of the metropolitan region through the provision of housing and
infrastructural facilities.
The housing needs of government employees during their tenure of work are taken care of through a different
system. The state PWD constructs and maintains houses for the state government departments located in Bombay.
Similarly, the central PWD undertakes this responsibility for central government departments.
The legislative framework for undertaking housing and infrastructural development projects is provided by the
following acts of the state government:
Maharashtra Regional and Town Planning Act (laying down the procedures for preparing urban
development plans;
Maharashtra Housing and Area Development Act (providing for the setting-up of MHADA and for
undertaking house construction, repairs and slum improvement activities;
Acts regulating establishment and functioning of municipal bodies;
Acts restricting rental increases and protecting tenants.
The state legislatures, besides controlling the functioning of cooperative housing societies and private
developers, stipulating stamp duties and other taxes, transaction of property and the central legislations as Land
Acquisition and Land Ceiling (discussed in the previous chapter), also have an important bearing on the housing
market in Bombay.
The initiative in social housing for people outside the government came from time-to-time through centrally
sponsored schemes in different Five Year Plans. The Slum Clearance Scheme was taken up in 1956 with substantial
central assistance for rehousing slum families in single- and multi-storeyed tenements, at nominal rents. These rental
housing schemes for the EWS and other targeted sections of population were terminated in 1969 as the public
agencies experienced a serious financial crunch.
These had put a tremendous financial burden on the state
exchequer which, given the other development responsibilities, the state government was unwilling to carry. Gradually
the public housing agencies switched over from rental to hire purchase and self-financing modes of shelter delivery.
The availability of funds from HUDCO at a low rate of interest gave impetus to these activities. With the help of loans
and subsidies from the government and public financing agencies, the state HB and, later, MHADA constructed a
number of multi-storeyed tenements for people of different income groups. These houses were allotted to the
applicants, eligible under the prescribed income criterion.
(28)
HB and MHADA together constructed about 100,000 tenements for various income groups up to 1986. Of
these, about 75 per cent were officially allotted to the EWS and LIG. Recent surveys and studies have, however,
shown that about 40 per cent of the units allotted to households in economically vulnerable categories were taken up
by those households in higher income groups, after paying a premium to the original allottees.
Page 99
Table 20 presents the changing composition of dwelling units produced by different types of formal housing
agencies during the period from 1973 to 1980. It may be seen that the percentage share of the public sector in the total
dwelling units went up from 6.8 per cent in 1973/74 to 13.3 per cent in 1979/80. The private sector, however, is the most
important contributor. Its share remained stable at around 55 per cent over the years. The shares of the cooperative
societies and employer's housing declined marginally. Sundaram (1989) observes that the percentage of units built by
the private and cooperative sectors together, comes to 64 per cent. The figure is much smaller than that obtained from
BMRDA for the year 1979/80 (84.6 per cent).
The poor in the city were priced out of all the formal housing programmes and therefore sought to be covered
through slum-upgrading schemes. Under these schemes, launched by various public agencies, (particularly MHADA)
in the late 1970s, land tenure was granted to a number of cooperatives of slum dwellers, on a leasehold basis. The cost
of land and infrastructural development was to be recovered from the beneficiaries over a period of 20 years at an
interest rate of 12 per cent. Home improvement loans - ranging from Rs. 1,000 to Rs. 5,000 - were given to the
beneficiaries, recoverable in 20 years. Community participation was a major component in the organization of the
upgrading activities. Tenants who, in general, were not members of the cooperatives were allowed to stay after
contributing their proportional share in the cost of the development. Various commercial banks and HDFC advanced
loans for the implementation of the scheme. Unfortunately, however, the slums on central-government and private land
could not be brought under the scheme, due to administrative and legal difficulties.
The scheme for Environmental Improvement of Urban Slums was initiated on a large scale for the benefit of the
poor. This constituted a component of the Minimum Needs Programme (MNP). The switch from formal housing to
environment improvement/upgrading programmes reflects the Government's intention to reduce the volume of
subsidies in the housing sector, while also reducing the population's dependence on public agencies. The stipulations
in the scheme further reveal the Government's desire to remove unauthorized hutments and to discourage future
immigration into the city.
The assessment of a visiting team from the World Bank is in line with the above (Wheaton, 1980a and 1980b). It
pointed out that 75 per cent of the households in the city could not afford a modest unit costing Rs. 20,000. Given the
low affordability of the poor, sites-and-services was the only programme that could reach this group. The scheme
called " Affordable Low Income Shelter, " launched by the Maharashtra government, endorsed this perspective as it
noted that the conventional public housing programmes are unaffordable to about 80 per cent of households.
The loan assistance from the World Bank was given under BUDP in 1985. BUDP had a significant component
of housing and related activities and attempted to:
Arrest the growing annual housing deficit which stood, according to calculations, at 44,000 units in 1985/86;
Increase the number of dwelling units created under sites-and-services and other new housing programmes
from 15,000 units in 1983/84 to 40,000 units in 1985/86;
Increase the number of units upgraded from 20,000 units in 1983/84 to 50,000 units in 1985/86; and
Reconstruct and renovate the dilapidated tenements through area-based programmes, starting with a project
at Kamathipura.
It is, thus, evident that the thrust of the public housing agencies shifted, under the guidance of the Bank, from
constructing formal houses to facilitating individual households to build for themselves or to acquire houses in formal
or informal markets, according to their affordability.
BMRDA's study in the mid-1980s gave similar conclusions (BMRDA, 1986). It demonstrated that about 60 per
cent of the households in the city could not afford the cheapest house produced by the formal market and would have
to go only for a serviced plot. The cooperative and private sectors, too, have a visible bias in favour of the middle- and
higher-income classes. Thus, given the low rate of shelter delivery through MHADA, private-sector involvement in
middle- and upper-income housing only, administrative, legal and physical constraints inhibiting supply of the land,
building inputs etc., it is not surprising that a large number of "environmentally and legally unacceptable" units have
been built during the past ten years.
Table 21 summarizes the picture of the access of households in different income groups to different types of
housing and shelter-delivery systems in Bombay. It may be seen that the EWS which, as defined under BUDP
comprise 17 per cent of the households, get priced out of all types of formal housing programmes. Their access is
restricted to slum-upgrading/ improvement programmes only. Similarly, LIG households have a very low share of the
formal housing market.
Page 100
This indicates that much of the subsidies, disbursed through the formal housing programmes, have been
cornered by the MIG and HIG population in Bombay.
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Volume 1: India
Chapter IV. Calcutta
Calcutta was - up to 1981 - the largest urban agglomeration in India. Its growth has been slow in recent
decades, although it grew by over 10 per cent annually in several decades during the last century. It is now the second
largest agglomeration with 10.9 million inhabitants.
The crowded living conditions and the pressure on housing
stock, besides the low growth of manufacturing activities, have, contributed to the slowing-down of its demographic
growth.
(29)
The Calcutta Metropolitan Development Area comprises 1414 km of which the twin cities of Calcutta and
Haora claim 133 km only. The share of these cities in the total area of CMD is less than 10 per cent, although their
share of population is about 50 per cent. This reflects a significant variation in population density within the
metropolitan area.
2
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Volume 1: India
The Calcutta agglomeration has a higher percentage of officially useable housing stock than Bombay and
Delhi, with a high incidence of semi-pucca structures (see table 15 ). The proportion of unserviceable katcha houses is
low. This can be explained in terms of its low population growth in recent years and the problem of waterlogging which
would wash out such houses. The high percentage of semi-pucca structures, similar to that of Bombay, is due to the
predominance of bustees, and reflects the poor quality of the housing stock. The pressure of population on its
dwelling units is not evident from table 16 as the percentage of households in one-room units is quite low. The size of
the rooms in Calcutta, however, is very small and consequently this indicator may not be strictly comparable across
the cities. It is also true that the housing condition to an extent has improved since the 1950s and 1960s when the
pavements, public places and the bustees were heavily crowded as a result of the influx of rural migrants due to the
Bengal famine in 1943, and of the refugees on the eve of Independence in 1947 and later in the early 1970s due to the
political turmoil in East Pakistan (now Bangladesh). In the 1960s, the state of municipal finance and the level of civic
amenities came to a breaking point, a situation described as "urban disaster" by Moorhouse (1983). The quality of
housing and the living environment became appalling. Besides, the political disturbance and the street violence in the
late 1970s brought the civic administration to a standstill. A study by the National Institute of Urban Affairs (1986),
however, concludes that the housing situation in the city has not improved very much since then. It argues that the
agencies engaged in housing production must triple their output in the following years to meet the growing demand.
The conclusions of yet another study are similar (Maitra, 1988). It is indeed very alarming that about a third of the
population in the agglomeration still live in slums, the figure being higher than that of all other metropolises.
The population pressure on the housing stock may be inferred from the fact that only a small percentage of the
houses were vacant in 1981 (see table 17 ). The percentage of households having toilet facilities in Calcutta, however,
is comparatively high (see table 18 ). This is due to their having access to community facilities in most of the densely
populated localities. This can also be partly attributed to the bustee Improvement Programme (DIP) undertaken in the
1970s, as discussed below. The fact that Calcutta had a lower percentage of slum population than Bombay and Kanpur
(but higher than Delhi) in 1981 may be attributed to this. The level and quality of these facilities are, however, very low.
A study by Banerjee (1983) reveals that the average number of persons per tap is 80. In some densely populated areas
the figure is as high as 250. The percentage of households not having electricity connection is also very high - one of
the highest among the metropolises, which reflects adversely on the quality of life in the city.
The bustees in Calcutta constitute the major segment of the slums. These are mostly degraded and highly
congested settlements with inadequate basic amenities. However, legally they are similar to the other rental tenements
in the rest of the city. Within a bustee, there are barrack-like structures, sub-divided into small cubicles, each being
occupied by one or more families. There are a few common utilities like corridors, courtyards and toilets that are shared
by a few families, as in the case in Bombay. It is interesting that the ownership of the structure here is separated
from that of the land on which it is located. It is the thika tenant who owns the structure. However, prior to the state
takeover he had to pay a rent to the private landowner while the occupier paid the rent to him (the thika tenant). This
complicated property right has often got in the way of carrying out development projects.
(30)
Besides the bustees, there are squatters on pavements, public and private lands. People residing here are, in
some way, protected from eviction by the local leaders who act as intermediaries between politicians and concerned
government functionaries. These leaders may help in arranging water supply and other basic amenities. In return, they
collect fees from these people on a regular basis and use them as vote banks. The number of pavement dwellers
according to the survey conducted by Calcutta Metropolitan Development Authority (CMDA) in March 1987 was
55,571. Of these, over 55,000 resided within the old Calcutta corporation area and about 26,000 of these in the central
business district of the city (Jagannath and Haldar, 1990).
It is difficult to have a precise estimate of the total slum population in Calcutta. CMDA estimated the figure to
be 3,150,000 in 1981, with their spatial distribution as indicated in table 22.
An important development in Calcutta has been the setting-up of a fully planned township called Salt Lake. A
large number of cooperatives and other public and private agencies were given land here during the 1970s to take up
house construction within a stipulated lay-out plan. The recent developments in this area, however, have been
haphazard and have disturbed the natural drainage and threatened the ecological balance of the entire city.
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Volume 1: India
The government of West Bengal passed the Calcutta Municipal Act in 1951 and the Calcutta Slum Clearance
and Rehabilitation of Slum Dwellers Act in 1958, and thereby empowered itself to undertake bustee clearance and
improvement programmes. In 1960, it set up the Calcutta Metropolitan Planning Organization (CMPO), basically on the
recommendations of World Health Organization, following the cholera epidemic in 1958. However, not much could be
achieved during the 1950s and 1960s on the housing front for the poor, due to the reluctance of bustee dwellers to
move elsewhere, and lack of adequate financial support. CMPO, prepared a bustee Development Plan (BDP) for
comprehensive development of Calcutta Metropolitan District for a period of 20 years (1966-1986). Concern for the
deteriorating housing conditions in the 1960s, as discussed above, led to the launching of bustee Improvement
Programme (HIP) in the twin cities of Calcutta and Haora under the BDP. The Programme made a significant departure
from those adopted in the 1950s as it harboured no illusion of clearing the slums and providing alternate formal houses
to the poor. Instead, it advocated orderly development of affordable (even katcha) structures, proper maintenance and
systematic upgrading.
In the initial stages, BIP was restricted to environmental improvement only, through the provision of facilities
like drinking water, sewerage system, lighting of pathways etc. It had a "social management component" for the
purpose of involving the local community in the programme, extending health education and maintenance of the
facilities through the beneficiaries. The World Bank did not join the programme initially. Subsequently, however, it
came forward to participate in it along with IDA and strengthened its infrastructural components. In 1977, the scope of
BIP was expanded to include economic and social aspects as well, besides the components of physical improvement
and community based management of the facilities. Commercial banks also joined in to support the efforts of CMDA in
developing small-scale industries under the programme.
The state government had passed the West Bengal Slum Area (Improvement and Clearance) Act in 1972 to
facilitate the implementation of the programme. The Act recognized the bustees as apart of the housing stock and
enabled the government to acquire the land on which these were located and carry out improvements therein.
Enactment of the West Bengal Town and Country (Planning and Development) Act of 1979, the Calcutta Municipal
Corporation Act of 1980 and the thika Tenancy (Acquisition and Regulations) Act of 1981 further strengthened the
hands of the government in land acquisition and planning. The bustee lands were acquired by the state through the
thika Act. The thika tenants, were, thus saved from the exploitative clutches of the landlords who are now required to
pay only at the municipal rates to the local body. Unfortunately, however, government could not exercise any control
over the thika tenants. This resulted in a sharp increase in the rental values, a large-scale eviction of poor tenants and
an influx of middle-income households who could afford the higher rents, in the improved bustees. Calcutta Municipal
Corporation Act permitted the thika tenants to build pucca houses, replacing the old ones, but could not impose any
restriction on them to keep the rents within reasonable limits or to retain their old tenants.
It may be mentioned here that the consultants invited by a state government from the Ford Foundation in the
early 1970s (Kingsley and Kristof, 1971) had emphasised the need for building formal houses on a large scale. They
had recommended that 47,000 dwelling units should be build by public and private agencies during the last three years
of the Fourth Plan (1971-1974). In the Fifth Plan, they thought formal housing as well as land development by public
agencies ought to be given importance. The philosophy adopted in the BIP was, however, different from this. BIP
essentially was based on a "fire fighting approach " and focused on slum upgrading. This was in conformity with the
World Bank's policy of providing the basic social infrastructure. CMDA received substantial funds for BIP and the
Calcutta Urban Development Project, i.e., CUDP-I (1971-1977), CUDP-II (1977-1982) and CUDP-III, from the World Bank
and continued its slum-improvement/upgrading schemes on a large scale.
The achievements of the programme, however, fell short of the targets. The growth of households during the
1970s was much higher than that of dwelling units. In view of the high cost of relocation of slums, CMDA adopted the
Sites and Services Programme. World Bank funds were available for this purpose under CUDP-II and CUDP-III, along
with some assistance from the Central Government. All these led to suburban development around Calcutta, limited
dispersal of manufacturing activities and growth of new towns.
A brief overview of the programmes for the urban poor in Calcutta Metropolitan Development area reveals that
three different models have been adopted so far. These are:
Slum clearance and relocation in multi-storeyed tenements;
Off-site relocation in open developed plots;
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On-site upgrading of the shelter and environmental improvement.
The slum-clearance model was followed during the 1950s and 1960s. The Housing Directorate (HD) of the state
government built 1136 tenement for the slum population. The programme was not a big success as the bustee
population did not want to become dislocated from their existing residence-work place linkages. The multi-storeyed
structures build by HD had other functional disadvantages for the bustee population who were accustomed to carry
out their activities outside their residence, on the ground. Also, many among them did not, or could not pay the
increased rent. Calcutta Improvement Trust (CIT) was another agency which built 6716 formal houses for the poor. CIT
's basic responsibility was to undertake urban development projects in the city. In doing so, it often dislocated the
slum population, residing on public land required for the project. It, therefore, undertook the responsibility of
rehousing the population in formal units as is done by HD. A small number of semi-pucca dwelling units (about 300)
with basic minimum utilities were built by CMPO and later by CMDA.
CMDA launched the Sites and Services Programme in the 1970s for the EWS and LIG households, which can
be placed in the second category, mentioned above. It released developed plots with basic amenities that promoted
house construction by the beneficiaries in the informal sector. However, due to a dearth of funds and land within or
near the city, only a small number of plots could be developed and disbursed at the subsidized rate. It was also
observed that the households in higher income groups took advantage of the programme by legal as well as illegal
means.
In view of the limited success of the "formal housing and Sites and Services Programme," CMDA gave greater
attention to slum-upgrading schemes. This did not involve massive expenditure per household, and alleviated the
need to acquire new land or to become entangled in complicated legal formalities. Also, its benefit did not generally
filter up to MIG and HIG households. By 1986, two thirds of the slums, accommodating about 3 million people, were
covered under BIP. It may, however, be mentioned that the programme benefited only those bustee dwellers that had a
legal status. The segment of the bustee population residing without legal status, and the pavement dwellers remained
outside the purview of the programme.
CMDA, HB, CIT and Haora Improvement Trust have been engaged in the construction of formal houses.
Subsidized funds from HUDCO have been available to them for this purpose. The formal housing activities in Calcutta
undertaken by various public agencies for people in different income groups, including the poor, during the 1970s and
1980s, are presented in four categories below.
Subsidized rental housing: A large number of rental housing units has been built in the Salt Lake area. Here,
600 acres of developed land was allotted in bulk to different public-sector agencies for constructing houses
for their employees. The construction work was undertaken by HD, FWD, CPWD etc., and finances for this
purpose were arranged by the concerned public agencies. Over 10,000 dwelling units were built in this area.
HD built about 5000 dwelling units for industrial workers and low-income families. The land shortage got in
the way of carrying on with this programme on a larger scale. It turned out to be a shelter project filling in the
vacant land wherever available in the proximity of the existing employment centres. CMPO and NBO built
about 1000 dwelling units on an experimental basis in Maniklata area. It was a demonstration project
integrating residence with place of work for lower-income people. It also demonstrated the use of
non-conventional material and pre-fabrication technology.
Hire-purchase ownership housing: About 70 acres of developed land in the Salt Lake area were acquired in
bulk by CMDA for building houses under a hire-purchase scheme, using HUDCO loans at concessional
terms. This scheme was subsequently transferred to RE. About 1000 dwelling units were built under the
scheme for people in different income brackets. HD, CMDA and RE built houses for people of different
income groups in select localities by acquiring land in bulk but on a smaller scale, using subsidized funds
from HUDCO. These agencies have supplied dwelling units to different income groups, on payment of a
specified lump-sum amount and easy instalments over a stipulated period. Like the rental-housing project
filling the vacant land in different parts of the city discussed above, a hire-purchase scheme was also
launched in a number of localities. HD undertook this responsibility with financial support from HUDCO.
The requirements of the latter meant that more than 50 per cent of the dwelling units out of the total of over
2000 were reserved for LIG and EWS households. The provision of cross-subsidies helped reduce the
monthly instalments to be paid by the EWS households.
Slum rehousing and improvement-cum-renewal or shelters: As noted above, CIT has built formal shelters
to rehouse the slum population displaced by its development projects (bridge construction, road widening
etc.). Similarly, HD, CMPO and CMDA have built a small number of houses for the urban poor. These,
however, did not make a dent in the housing situation for the poor in the city.
Housing on plots provided through sites-and-services: HD and CMDA acquired large and small parcels of
Page 105
land in the urban peripheries, developed them (partly through HUDCO finances) and distributed them to
supposedly low-income households. This resulted in urban extension and development of new townships.
About 400 acres of land were developed under the scheme. Due to the reluctance of the bustee population to
move out to the peripheries of the city and the high instalment rates being beyond their affordability, this
facility was used largely by middle- and upper-income households.
The four types of housing undertaken by or with support from public agencies are presented in table 23 These
do not include the bustee improvement and slum-upgrading activities, launched on a massive scale since the early
1970s (benefiting about 3 million people, directly or indirectly) as that did not increase the quantity of housing units.
The limitations of the formal housing programmes are evident from table 24. All the public agencies together
could not build more than 40,000 dwelling units until the late 1980s, despite financial support from the central and state
governments and HUDCO. The benefits of these programmes evidently did not reach the poor who were concentrated
in the bustees. A large number of them, however, could take advantage of the BIP. On the other hand, as a result of the
low rate of construction of formal houses, several low- and middle-income households shifted to the bustees or
purchased houses allotted to the poor.
Private developers have played a major role in providing housing to the higher- and middle-income groups.
Typically, a developer acquires apiece of land and invites applications for flats from prospective buyers. Through this
process, the developer is able to put the entire responsibility of mobilizing resources for construction on to the clients.
The buyers often are in a position to raise mortgage finance that cover parts of the cost. Yet, they have the
responsibility of making the initial down-payment (often about 50 per cent of the price) and meet much of the
construction cost from their own savings or borrowings. Sometimes, the buyers are able to get loans from their
employers, cooperative societies, HDFC and other financial institutions at below-market rates. Of late, the schemes are
being announced even before the land is acquired and the funds necessary for buying the land are also raised from the
clients.
The difficulties land in obtaining vacant land within the city have prompted private builders to acquire old
properties. They buy the right of building (by demolishing old properties) either by making a downpayment or with a
promise of allotting a flat in the proposed building (or both), to the original inhabitants. However, when the land is
located in the suburbs of the city, the clients are sometimes required to meet a small part of the construction cost as
well. In many cases, the builders have chosen not to demolish the old structures, and purchased only the right to build
over them. The importance of small builders has increased tremendously in recent years.
Interestingly, the number of housing cooperative societies has also grown rapidly, contributing to the increase
in the number of multi-storeyed apartments. Only a few of them have been able to acquire vacant land in the suburbs
of Haora and Calcutta or in the peripheral townships. Most multi-storeyed structures have replaced existing
dilapidated houses. The role of the builder, here, has been extremely important and growing over the years. Often, it is
the builder who is responsible for forming the society by mobilizing the group of people residing in old buildings in a
neighbourhood. The former also takes the responsibility of clearing legal and administrative formalities, including
getting the plan passed by the local authority, and organizing the construction work. Finances are generally raised
from other people who become members of the cooperative and buy a flat in the building. It is difficult to estimate the
number of cooperatives being operated by small builders. The general feeling among the planners in Calcutta is that
the figure is more than 60 per cent.
Table 24 summarizes the housing situation in Calcutta. 45 per cent of the population is identified as belonging
to the EWS. These mostly live on pavements, in bustees and squatter settlements. It is unfortunate that almost all
formal housing programmes have bypassed them. A section of this population did build houses for themselves, using
the Sites and Services Programme of CMDA. Most of these houses, however, were subsequently purchased by
middle- and higher-income people. The LIG, comprising 26 per cent of the population, also live in bustees and squatter
settlements, except a small fraction who have inherited ownership or tenancy rights. A few have been able to obtain a
house through the subsidized housing schemes of the Government and have retained it. Several MIG households are
also living in the bustees. Some among these have, however, been covered by public housing programmes. The private
formal sector has basically catered to the needs of the HIG and a section of the MIG population. The picture, thus,
appears to be similar to that in Bombay.
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Volume 1: India
Chapter V. Delhi
Delhi is the fastest growing metropolis in the country, considering the period from 1921-1991. During this
period, the urban agglomeration has never experienced a decadal growth rate of less than 45 per cent (see table 14 ).
The capacity of the agglomeration to absorb migrants was relatively high. This was due to its low density and the
availability of vacant land in and around the city. But the desire to make it a model city made the planners extremely
ambitious. They tried to determine the pace and pattern of growth through a Comprehensive Master Plan using
land-use restrictions and building bye-laws. As a result of this deterministic approach and associated controls, the
growth impulse shifted from the city core to its periphery, and to the towns in the neighbourhood. The plan for the
National Capital Region (NCR), designed basically to check the concentration of population and economic activities in
the city by diverting them into priority ring towns, also contributed to this process. As a result, several towns within
NCR grew at over 100 per cent during the 1960s and 1970s. Also, the population growth in the towns and rural areas in
the immediate hinterland of Delhi was rapid. In contrast, the population in about 55 per cent of the wards (zones) in
Delhi declined in absolute terms during the 1970s and 1980s (Kundu, 1988).
Delhi comprises several cities. Old Delhi with its densely populated colonies, low- and medium-rise building,
narrow and congested streets etc., provides a low-quality housing environment to its residents. The imperial city of
New Delhi, on the other hand, is characterized by impressive grandeur, low-density and low-rise houses in the central
areas and medium density colonies with multi-storeyed tenements (built by DDA) in the peripheries. Delhi
Cantonment, like the central parts of New Delhi, has low-density colonies separated by wide streets and open spaces
or gardens.
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Volume 1: India
Chapter V. Delhi
Table 15 presents the composition of Delhi's housing stock in 1981. It has a lower percentage of useable
housing stock than Calcutta, due to a higher incidence of unserviceable katcha units. The population pressure on the
existing dwelling units is somewhat less in Delhi compared with Bombay and Calcutta. This can be inferred from the
lower percentage of semi-pucca houses, of the households in one-room units and the smaller number of persons per
room (see table 16 ). The density per dwelling-unit appears to be the same as in Calcutta. It must, however, be noted
that a larger percentage of the units in Delhi are new and large sized. In terms of access to electricity and toilet
facilities, the situation in Delhi is comparable with that of the other two metropolises (see table 18 ).
When Delhi became the capital of free India, various ministries, central and state government offices, and
foreign embassies came almost overnight. Also, it became an important commercial centre for northern India after the
marketing links with Lahore (which went to Pakistan) were cut. This, coupled with the massive influx of refugees from
Pakistan, resulted in a phenomenal growth of population, as noted above. To meet the challenge, the government
launched massive house construction projects. About 65,000 dwelling units were built in 20 colonies for the displaced
persons, within a record time. Besides, the Government took up a large-scale housing programme for its growing
number of employees. Between 1947 and 1962, approximately 12,000 units were constructed for different categories of
government servants. Despite all this, only a small portion of the demand could be met and the shelter problem
continued to grow. The shortage was felt most seriously by the lower-income categories.
During the 1950s and 1960s, private developers and housing companies had also become very active. They
purchased and subdivided large plots of agricultural land in the outskirts of the city in accordance with the approved
lay-out plans. Social and physical infrastructure of a reasonably high level were provided in these privately-developed
colonies, matching the affordability of the residents. This led to the pushing out of a section of the poor households
and absorption of a large majority of new migrants in the marginal lands, squatter settlements and unauthorized
colonies. There was, thus, virtually no control over the growth of population and economic activities or the land-use
pattern in the city.
It may be seen in table 25 that over 86 per cent of the housing stock were traditional dwelling units in 1951. This
share has come down to about 32 per cent in 1981, but still it has remained the dominant house type in the city.
Resettlement and squatter colonies claimed about 25 per cent while the unauthorized and regularized houses
comprised another 17 per cent.
The plotted housing units (13.3 per cent) and flats in multi-storeyed buildings
constructed by DDA (5.7 per cent), government departments (6.3 per cent) and cooperative housing societies (0.1 per
cent), together claimed about one fourth of the total stock in 1981.
(31)
Plotted development has been a special feature of housing activities in Delhi during the pre- and
post-Independence period. Prior to 1961, private developers generally built two dwelling units in a plot, consisting of a
ground floor with a garden as one dwelling unit and the first floor, barsati and the terrace as the second. With the
statutory Master Plan for Delhi enforced from 1 September 1962, private developers were eliminated from the land
market and DDA became the sole authority for the development and disposal of land. However, small private
developers remained quite active and played an important role in construction activities within the city. As indicated in
table 25, the unauthorized and regularized housing stock was 36,000 in 1961. Assuming the average household size to
be five, these colonies accommodated 180,000 people. DDA has estimated the number of people in the unauthorized
and regularized colonies to be 270,000 in 1991. This reflects the rapid growth of unauthorized and irregular
construction, in and around the city.
(32)
Multi-family housing units or flats in multi-storeyed buildings became the dominant type of house construction
during the 1960s and 1970s. This was achieved largely through the group housing schemes of DDA for different
income groups. The cooperative housing societies built houses on lands allotted to them by DDA. This also
reinforced the new pattern. The number of flats constructed since 1961 was estimated to 66,000 in 1980. The houses
built with the support of DDA appears under multi-family blocks. Besides DDA, the agencies contributing to this
category of houses are the Central Government, Delhi Administration and cooperatives.
The cooperative sector has gained in importance in recent years, and its contribution to the housing stock has
increased substantially during the 1980s. This sector is expected to play the major role in the years to come, due to the
scarcity of land, rising costs of construction and the increasingly professional approach of DDA and cooperative
group housing societies.
Page 108
About 200,000 households have been allotted plots under the scheme for resettling slum dwellers and
squatters. The purpose of this scheme was to remove these people from unauthorized settlements and relocate them to
officially sanctioned areas. At its inception in the 1960s, the scheme was regarded as progressive as it sought to
rehabilitate the poor population. It was soon realized that rehousing the rapidly growing slum population in any
acceptable manner would put tremendous pressure on the Exchequer. It was also unacceptable to the poor, as it
dislocated them from localities near their workplace. Soon the programme was seen as elitist, designed to evict the
slum dwellers from the prime land occupied by them. As a result, the emphasis shifted from slum clearance to
programmes of slum improvement and upgrading. Households squatting on DDA land before a certain date were given
land tenure. The general planning principle adopted was that the squatters must remain near their workplace.
Table 26 indicates the performance of DDA during the past 25 year of its existence, against the targets set by
itself. It may be observed that only 54 per cent of the total area notified for acquisition was actually acquired. More
than 34,000 acres or 44 per cent of the area under notification could not be acquired during the past 25 years. This area
has not been denotified either, which could have allowed for private development within the legal framework. Only 74
per cent of the officially acquired area has actually been handed over to DDA and, importantly, about 7,500 acres has
been eaten up by unauthorized colonies. Most of these colonies have arisen on land acquired or in the process of
acquisition by DDA. Some of these have emerged on the Green Belt which could not be preserved. It is often observed
that the First Master Plan of Delhi has been noted more in violation than in compliance. The Second Master Plan of
Delhi relies somewhat less on administrative and legal controls. However, the basic approach of directing the
development in the city through land-use restrictions has, unfortunately, not been given up.
Much hope was placed on ULCRA after its adoption in 1976 for acquiring land for constructing dwelling units
for the poor, in accordance with the provisions of the Master Plan. Unfortunately, not much land could be obtained
through this Act, due to the lack of political will, manifested in inadequate administrative and legal powers in the
hands of the public authorities, and in their use for private benefits.
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Volume 1: India
Chapter V. Delhi
B. Organizational structure in housing and the shelter-delivery process
Delhi has been the ground for town planning and urban management experiments since Independence. The
Delhi Improvement Trust (DIT), in existence since 1937, undertook a few projects of town development and slum
clearance but its impact on the housing scene was, at best, marginal.
As a result of the developments on the eve of Independence, neither DIT nor the Delhi Municipal Corporation (
DMC) were in a position to tackle the problems of the city. The unforeseen exigencies had upset their exercises of
development planning. All this brought the newly formed Ministry of Rehabilitation into the housing scene. It
launched multi-storeyed house-construction programmes on a massive scale.
In 1956, the Interim General Plan was prepared to guide and control the development in and around the city.
DDA came into existence in 1957, vested with the power and responsibility of planning the city and checking its
haphazard growth. In 1959, all vacant undeveloped land within the urbanizable limits of the city was frozen. It was
stipulated that future developments would be carried out within the framework of a comprehensive plan prepared for
the city and its hinterland. The "Socialisation of urban land" was considered necessary for this purpose.
Accordingly, DDA drew up a 20-year Master Plan. It envisaged the provision of dwelling units to the entire
population of the city by 1981. With this objective, a detailed land-use plan was worked out for every zone of the city.
It was proposed that a set of ring towns would be developed at reasonable distances from the city and a large Green
Belt of agricultural land would be interposed between Delhi and the adjacent urban centres.
DMC, whose jurisdiction extends over large segments of rural and urban areas in Delhi UT, the New Delhi
Municipal Corporation (NDMC) and the Delhi Cantonment, have the responsibility of providing basic amenities to
their population, residing in their well-demarcated territories and of maintaining their infrastructural facilities. None
among these local bodies have taken up major housing programmes, except for their own staff.
The population of Delhi was 1.8 million only in 1961 which was projected to go up to 4.6 million by 1981 as
opposed to the actual figure of 5.7 million. The Master Plan adopted a norm of 4.5 people per dwelling unit and an
average density of 97 dwelling units per acre. Based on these, the requirement of urbanizable land was projected as
110,000 acres of which 47, 000 acres were for residential purpose and the remaining for commercial, industrial,
infrastructural and institutional usages. The Master Plan drew up a schedule of house construction as is shown in
table 27.
The plan went wrong since its basic assumption of restricting the demographic growth and location of
economic activities through land-use controls was invalid within the democratic framework of the country. The growth
rate of population was much higher than stipulated and the population reached 8.4 million by 1991. The capacity of the
state apparatus to obtain adequate land for meeting the requirements of the plan was hampered by legislative and
bureaucratic hurdles. Also, DDA had limited funds and, therefore, could not take up housing schemes on a big scale.
This resulted in a huge backlog of unfulfilled demand and a long waiting time for the applicants. The capacity of DDA
to create a revolving fund to undertake housing projects on a regular basis was constrained by its high standards,
cost overruns, corruption, delays and subsidies doled out indiscriminately. Furthermore, DDA could not mop up the
unearned income at the time of resale of the properties given by DDA (as was stated in its lease contracts), since
almost all transactions were done illegally.
DDA could not get much support from HUDCO, particularly during the late 1970s and 1980s, as costs were
much higher than HUDCO's norms of eligibility for different income categories. An EWS unit in Delhi, for example,
currently costs more than Rs. 80,000 while the cost ceiling of HUDCO is Rs. 22,000 only. The payment of instalments to
DDA by beneficiaries is not much of a problem, even for EWS categories, since a large number of households in
higher-income groups had got into the houses meant for lower categories. DDA was also not very particular in
cross-checking the income levels declared by the prospective beneficiaries which smoothed the process of upward
filtering. Furthermore, since a large majority of the beneficiaries were government servants, professionals etc., who got
individual houses or land for their cooperatives from DDA, they had no difficulty in getting loans from their
employers, Provident Funds or from banks. The Delhi State Co-operative Housing Society has also been quite active
in refinancing the loans advanced by primary societies. The real problem here, therefore, has been the exclusion of the
poor from the formal housing schemes.
In view of the limitations of the formal housing in reaching the poor, the programme for slum clearance and
Page 110
rehabilitation was conceived as an alternative in the 1950s and early 1960s. It was adopted in a big way in the
mid-1970s (when the Government had assumed emergency powers) and is now being tried on a small scale in certain
localities. This, however, has proved to be very expensive for Delhi's administration. Massive subsidies are involved
in providing a formal dwelling unit at an alternative site which, given the resource crunch, cannot be carried out for the
entire slum population. Also, due to bad planning and, worse still, bad implementation, the concerned slum population
is often subjected to tremendous inconveniences, the most important of these being displacement from the place of
work. Slum clearance carried out during the mid-1970s by the Delhi Administration, when people from congested
central areas of Delhi were forcibly pushed out to the peripheries, without any regard to their livelihood and basic
amenities, has left a deep scar on the face of urban planning in the city. It may be noted that no separate authority has
been created for slum clearance and improvement in the Delhi UT. The responsibility is shared by DDA and DMC in a
somewhat unsatisfactory manner; the development and capital investment projects are undertaken by the former while
the task of maintenance is with the latter. The Slum Wing which has the overall responsibility of these activities, has
been shifting between DDA and DMC. Currently, it is under the administrative set-up of DMC. Due to the arbitrary
distinction made between the development and maintenance functions, and frequent shifting of the Slum Wing, it has
been difficult to fix the responsibility on any agency in periods of crisis.
Due to the provision of subsidized plots and houses under the relocation programme, a large number of
beneficiaries have sold their land and shelter, mostly to better-off households, and squatted back once again near their
original localities. Through political patronage and administrative connections, many slum leaders/lords have made
squatting a lucrative business and reaped the benefit of the programmes.
The only schemes whose benefits can and have indeed reached the poor in Delhi are those of
sites-and-services and slum improvement. Under these, either a plot of land with basic amenities or a partially built
house is provided to the poor on a hire-purchase basis. In some localities, only neighbourhood facilities are provided
and the slum dwellers do not get tenure of the land they have been occupying for years. They are, thus, kept in a state
of flux which makes them vulnerable to political exploitation. As a result, they can be used as vote banks or for holding
rallies and demonstrations. The recent trend in Delhi, however, has been to give the poor the title to their land. This
has encouraged them to make investments in their dwelling units. CBOs and NGOs have been involved in the
management of land and common facilities. This has made selling of land by the beneficiaries difficult as properties are
owned jointly by the community. The system has been tried with success in a few localities during the past five years
and likely to be adopted on a large scale.
The summary assessment regarding the income and shelter-delivery nexus as presented in table 28 reveals that
the formal housing programme could not - by their very design, stipulations and costs - reach the EWS or even the LIG
categories. The middle-and upper-income people, on the other hand, cornered much of the benefits of public housing
due to the wrongly administered policies of DDA. Old Delhi colonies and urban villages accommodated a large
segment of LIG and MIG households. A few among these have been able to get subsidized DDA flats. The poor, thus,
continue to live in slums, shanties and resettlement colonies. The schemes of environmental improvement and slum
upgrading are the only ones that have reached them. Their impact, however, is much less than in the cities of Calcutta
and Bombay. A very small percentage of the poor have been able to get and retain plots or dwelling units in the formal
housing schemes or even in the resettlement colonies.
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Volume 1: India
Chapter VI. An overview of shelter strategies in India: Conclusions and recommendations
The analyses in the preceding chapters bring out the major obstacles in the housing sector and identify the
limitations of the current programmes for the purpose of increasing total housing supply, and targeting it to the LIG
and EWS groups. The conclusions arrived at in this regard are presented in the following two sections.
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Volume 1: India
A. Obstacles to effective housing supply
It would be appropriate to identify the factors ailing the housing sector and restricting the supply of dwelling
units by considering the problems associated with the availability of its critical inputs. Undoubtedly, the limited
availability of serviced land is the most crucial factor constraining its supply. The demand for land and housing has
been uneven in space. It has grown rapidly in a few large cities as these attracted manufacturing activities and people
in high- and middle-income brackets. The mismatch between demand and supply of land has become serious due to
difficulties in land transaction and the conversion of land from agricultural to non-agricultural use. Various acts of
state legislation, zoning restrictions, building bye-laws etc. also have got in the way of land development and house
construction. All these have led to a sharp increase in land values in most of the metropolitan cities, over 25 per cent a
year, during the late 1970s and early 1980s. The difficulties in increasing the rental values correspondingly (due to
legal restrictions) have rendered investment in housing an uneconomic proposition.
In a few states and UT's, public agencies have played an important role in the development and disposal of
urban land. The legal and administrative procedures involved in land acquisition by the Government are extremely
cumbersome and time-consuming. The methods of determining and paying compensation are unsatisfactory and
consequently many affected people seek legal redress of their grievances which delays the acquisition process
enormously. This has encouraged illegal subdivision of, and unauthorized construction on, the land which is in the
process of acquisition. The capacity of public authorities to take possession of land by paying immediate
compensation and launching development projects is limited due to inadequate financial and administrative support
from the Government. The functioning of public housing agencies, on the other hand, has been constrained by
various governmental stipulations on the nature of construction, pricing, disposal etc., as well as interference by
government officials at all levels. These have got in the way of building up revolving funds by these agencies and
their becoming financially self-sufficient.
The availability of land and its price in the formal market are of marginal consequence for a large section of the
urban poor who squat on public places and raise illegal structures on them. The population census of 1991 reveals that
the demographic growth slowed down significantly during the 1980s, particularly in the metropolitan cities. The
declining trend was perceptible for these cities even during the 1960s and 1970s. This can be explained in terms of the
slowing down of the rate of immigration. It may be argued that with the growing scarcity of land and its rising prices,
both the public as well as private landowners in urban areas have become more vigilant in protecting their land against
encroachment. This in turn has resulted in a slower growth in the number of informal settlements and the populations
therein. In a number of colonies/zones in the cities of Delhi, Bombay and Calcutta, absolute population has remained
stable or declined over the past two decades. This can be attributed to the clearance of slums in select localities. In
many cases, private and public agencies have paid large sums of money (formally as well as informally) to have their
land cleared and to resettle the squatters elsewhere. Development authorities and local bodies have made
pronouncements from time to time, disclaiming any responsibility of providing land or basic amenities to people
coming into the city after a certain cut-off date. They have also stipulated that further encroachments will be dealt with
sternly. At the time of giving land title to slum dwellers, they have often urged or impelled the beneficiaries to ensure
that no family comes to settle in that colony other than those already enumerated. This has, in general proved, to be
much more effective against encroachment than policing physically through an administrative system. All these have
reduced illegal access to land and slowed down the growth of informal housing stock in the recent years.
The second important constraint to housing supply is institutional finance. Currently, much of the funds for
land acquisition and house construction come from the prospective house-owners, i.e., borrowings from friends,
relatives, local moneylenders etc. It is only the workers in the organized sector or people in high-income levels that
have access to subsidized loans. The requirements for availing oneself of institutional finance are so stringent that, in
general, these cannot be met by the low- and even middle-income households. The loans given by the employers in
the public sector and housing-finance institutions carry a low interest rate, providing thereby indirect subsidies to the
beneficiaries. As may be expected, these subsidized funds have been cornered by a small section of the population
having links with the administrative and political system. Most of the resources meant for the urban poor thus have
been taken by people in higher income brackets.
A large part of this concessional finance reached the people through housing schemes floated by PHAs. The
latter are ill-equipped to ascertain the income levels of applicants, assess the bankability of their projects and recover
the loans. Due to the poor loan recoveries, PHAs receiving grants from the Government have become a regular feature.
The PHAs, on the other hand, are not keen to implement the income criteria (due to the apprehension of non-recovery)
or to take up EWS or LIG schemes on a large scale. The deliberate casualness in implementing the eligibility criteria
under their schemes is as much responsible for non-targeting of housing finance as corruption and influence of the
Page 113
vested interests.
It may be noted that even at the low rate of interest charged by HUDCO for EWS and LIG schemes, the monthly
instalments are beyond the affordability of a large section of households falling in the relevant income brackets. As a
result, not many among the targeted groups can benefit from the schemes. The MIG and HIG on the other hand, who
have an effective demand for housing finance, are required to compete among themselves and wait for a long time to
get a loan. Some of them take advantage of the schemes meant for people in lower income groups. The procedures for
getting loans are so onerous that people often choose to go to private financing agencies or informal sources. The
underdeveloped state of the mortgage market in India is another impediment to drawing larger resources for the
housing sector. The combined effect of all these has been a low rate of investment in formal housing.
The low- and middle-income households - confronted with the problems of obtaining land and finance unfortunately cannot turn to the rental market as this, too, is riddled with legal and procedural difficulties. Rent-control
legislation, existing in some form in most states and UTs, makes rent revision and repossession of the house by the
owner, extremely difficult. The law, thus, favours the tenant but only after he or she has gained possession of the
premises. Getting the house on rent, however, has became more problematic since the owner often insists on a down
payment, higher rent or formal assurance to vacate the premises on demand. As a result, the percentage of vacant
houses has increased in large cities, paradoxically, in the face of an acute housing shortage. Rental housing has not
developed as an industry since the return from it (in terms of rental income) is much lower than even the rate of interest
charged by banks for priority sectors. It is only land speculation which is economically viable but this does not
necessarily augment supply in the housing market.
The legal and administrative controls exercised by public authorities at the local level have also acted as major
hurdles to housing supply. These controls - designed basically for conservation, environmental protection, physical
safety and for ensuring a planned growth of the city - have often been used indiscriminately for harassment and
personal gratification. No clear-cut guideline has been laid down for the passing of building plans, and considerable
discretionary powers rest with the public functionaries. Obtaining clearance from a number of authorities for building a
house or for altering it thus often takes months. This results in corrupt practices and increases the total cost of the
house.
The system of hiring small contractors for building houses has, unfortunately, not developed in India.
Technically, small contractors with their personalized system of arranging labour and building materials are at an ad
vantage to undertake small construction responsibility. However, due to their informal methods of operation, they
have not gained respectability or the confidence of the clients. Most of them are not registered at the state or local
level and their job specifications are often not standardized. This leaves scope for variation in the quality of their work,
resulting in the dissatisfaction of the clients. No significant attempt has been made by the Government to lay down the
norms of operation for small builders and contractors. An adequate system for taking action against them in case of
non-compliance or adoption of fraudulent practices does not exist. As a result, people are generally forced to go to
public agencies or large builders for constructing or purchasing a house. This often works out to be more expensive.
The scarcity of some of the critical building materials, e.g., cement, steel etc., has often delayed construction
work. In the recent past, the Government had control over the prices and supply of these commodities which was used
to make them available to certain sections of population at reasonable rates. The experience of public control, here, has
been similar to that of other scarce inputs like institutional finance. The allocation procedures have not been free from
the problems of favouritism, corruption and bureaucratic delays. The relaxation in these controls and incentives given
to the producer of these items (through loans at concessional rates by the NHB) in recent years is likely to help
housing activity.
Besides the difficulties on the supply side, as discussed above, there are problems of inadequate effective
demand that restrict the production of dwelling units. The bottom 30 per cent of households (in terms of consumption
levels), allocate over 80 per cent of their total expenditure on food and fuel. After meeting the regular non-food
requirements, they are left with a small sum of money to spend on housing. Currently, rents account for less than 12
per cent of their total expenditure. Even if this can be increased to 20 per cent, not many among the bottom 30 per cent
of households would be able to pay the instalments for a formal sector house on a 20-m plot, assuming that the funds
are available at a low interest rate of 8 or 10 per cent. This results in cost-recovery problems and underhand selling of
properties by the poor, to meet what they conceive as more urgent needs. The only affordable schemes to them,
therefore, are the sites-and-services and slum upgrading schemes wherein a smaller amount of loan is given (directly or
indirectly) which can be recovered over a period of time. Under sites-and-services schemes, however, the
responsibility of arranging funds for building materials and organizing house construction lies with the beneficiary.
This often puts the beneficiary in the trap of a moneylender or contractor, leading to the dispossession of the land.
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Volume 1: India
B. Evaluation of shelter schemes with reference to the urban poor
An overview of the policies and programmes of the Government in the housing sector clearly brings out the
bottle-necks in the way of increasing the overall housing supply as also of targeting it to socially vulnerable sections
of the population. The direct construction of houses by the Government for selling or renting to the urban poor,
unorganized industrial workers or other vulnerable sections of the society did not make much impact due to the low
scale of operation of the schemes. Also, these were economically non-viable due to the difficulties in cost/rent
recovery. The efforts by PHAs to provide dwelling units to a certain section of the population through hire-purchase
and self-financing schemes, using subsidized finance from HUDCO, state governments etc., are commendable as far as
they go. These, however, do not go very far due to the paucity of funds and of serviced land with the PHAs and the
administrative and managerial deficiencies therein. A large section of the poor could not take advantage of these
schemes as they failed to fulfil the procedural and financial requirements. People in higher income brackets competed
with one another and only a few among them could have access to these subsidized loans. Administrative and
socio-political linkages played an important role in the disbursal of the limited dwelling units produced by the PHAs.
The recent measures adopted by the NHB have given a boost to the activities in the housing sector for the
middle- and upper-income classes. The provision of institutional finance at reasonable rates to individuals, PHAs and
industrialists engaged in the production of building materials has activated the housing market. It may, however, be
noted that the capacity of the NHB and housing-finance institutions to reach the urban poor is extremely limited due to
the high rates of interest charged by them, and other stipulations.
It has been argued that all the formal housing schemes in the public or private sectors are beyond the reach of
the bottom 30 per cent of the population as they cannot pay back the instalments. The Task Force on Housing and
Urban Development acknowledged the fact that
"over a period of time, even the cheapest house built by public agencies. ..has become. ..way beyond the means of the
EWS and LIG Despite objectives in favour of the poor stated in the Plan Documents, there is insufficient evidence as
to the extent the urban poor have benefitted from the schemes" (Planning Commission, 1982).
Provision of housing, drinking water and sewerage facilities, to the norms stipulated in various government
documents and policy statements, involves massive subsidies. However, due to the meagre funds allocated to
housing and urban development, the lowering of minimum standards has become necessary. As a result,
sites-and-services and slum-improvement schemes were introduced in lieu of formal housing programmes for the poor.
The Sixth and Seventh Plans have reinforced the trend away from the so-called social housing to affordable housing
programmes. The schemes for shelter and minimum basic services can, therefore, be seen as an extension of housing
activities. The responsibility for these schemes has gradually been passed to local authorities and slum-clearance
boards, with state-level HBs playing only a marginal role.
Two urban development programmes initiated by the Central Government need to be discussed here as these
have shelter components. These are Urban Community Development (UCD) and Integrated Development of Small and
Medium Towns (IDSMT). UCD was initially launched as a centrally-sponsored scheme in the mid-1960s, envisaging
primarily slum upgrading through community participation. It had the provision of constructing EWS dwelling units in
the cities of Hyderabad and Vishakhapatnam. Land titles were given under this scheme to slum dwellers and the
lay-out plans were prepared by the implementing agencies (functioning under the municipalities). Houses were,
however, to be built by the people, largely through their own effort. The project could not be taken up on a large scale
or duplicated in other cities due to a shortage of funds (from HUDCO or international agencies like UNICEF and ODA)
and legal problems involved in plot adjustment. The IDSMT scheme was started in a few towns to reduce migration
into the large cities. The scheme unfortunately did not make any dent in the housing scene as very few funds were
allocated for this purpose. Also, the rate of interest charged was higher than that under the UCD or EWS schemes of
HUDCO. The scheme exists in the Eighth Plan as well, but the funds allocated to it are very few and consequently the
housing component would receive only a token amount.
In addition to central-government-sponsored programmes, state and local governments have also launched
schemes, for providing shelter, water and sanitation to the urban poor. HUDCO and the World Bank have made loans
available for these schemes. Sites-and-services schemes, for example, envisage provision of small plots with certain
minimum facilities to the urban poor on a hire-purchase basis. Government agencies are expected to playa role in house
construction through organization of community effort, extension of technical support and provision of subsidized
finance (up to Rs. 5,000). The rate of interest charged by HUDCO was about 5 per cent, currently revised to 8 per cent.
This is much below that of the World Bank. The sites-and-services schemes financed by the World Bank carried an
interest rate of over 10 per cent in Bombay, Madras, a few other towns in Tamil Nadu, in Gujarat and Madhya Pradesh.
Page 115
As a part of the scheme, serviced plots were provided for EWS, LIG and MIG housing and also for commercial and
industrial use at differential rates involving cross-subsidies. Under this scheme, the responsibility of house
construction has been transferred from public agencies to the beneficiaries. It may, for example, be observed that
under Madras Urban Development Project, core housing was a part of the project, whereas under MUDP-II, only
developed plots were made available and the allottees could apply for a separate housing loan.
A slum-improvement programme was introduced in Calcutta in the 1960s. Since the Fourth Plan, this has
become the dominant mode of slum development although its nature varies from city to city and has undergone a
change over the years. These schemes can be placed in three categories: slum improvement, slum upgrading and slum
reconstruction.
The Slum Improvement Programme (SIP) involves merely improving the physical quality of life in the identified
areas through a package of services with or without charging the cost from the beneficiaries. This unfortunately does
not have a shelter component. The Slum Upgradation Programme (SUP) launched during the early 1970s, basically at
the instance of the World Bank, has this component. Certain basic amenities are provided under it (as in SIP) but the
requirement of land titles to be given to the beneficiaries on a freehold or leasehold basis distinguishes it from SIP. The
other feature of SUP is the availability of a home improvement loan on an optional basis. The prospective beneficiary
is required to clear the backlog of rent and municipal dues, if any, while registering under the programme. An
agreement is then signed between the implementing agency and the beneficiary according to which the land title is
bestowed on the latter by charging a certain percentage of the cost of infrastructural development. The agreement can
also be between the agency and a cooperative. HUDCO and the World Bank are the two financing agencies of this
programme, although the interest rates charged by them differ significantly, i.e., 8 per cent and 12 per cent respectively.
The World Bank has been able to exercise some influence over the procedural and operational matters relating
to the programme although the details of implementation are worked out by the concerned government departments,
slum clearance boards, development authorities or local bodies. It has, for example, persuaded the implementing
agencies to provide semi-finished structures or a low level of services to the people to match their affordability. It has
also succeeded in strengthening the organizational structure, introducing accountability at the local level and bringing
in community participation in a limited way.
Under the Slum Reconstruction Programme, the people are shifted to alternative sites. It, thus, becomes similar
to the Slum Clearance Programme undertaken in the 1960s and mid-1970s. The only difference is that in the former, the
households are resettled in the same plot after reconstruction of houses under a proper lay-out plan. The scheme
involves substantial subsidies due to the low affordability of the urban poor. Consequently, it could not be
implemented on a large scale in the late 1980s and early 1990s.
Studies have shown that when land titles are given to the beneficiaries and the level of amenities is upgraded
through governmental support, individual households come forward to make investments in their dwelling units. This
results in increased land values and consequent displacement of the original residents.
Tenants are generally
pushed out at the onset of the project due to the apprehension of their asserting rights as landowners. Appropriate
institutional or legal arrangements to minimize the displacement of the original inhabitants has not been made. The
problem is currently being tackled in an unsatisfactory manner by involving voluntary agencies, and through
community participation.
(33)
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Volume 1: India
C. Recommendations
Given the present socio-political scenario in India, an important step to resolving the housing crisis would be to
liberate the market from the existing legislative and bureaucratic controls and activate the agents of housing supply, as
suggested in the GSS. The modification in the Rent Control Act as adopted in Delhi and several states - enabling
periodic rent revisions and getting the premises vacated when needed - would be an important step. Proper
implementation of some of the clauses (granting exemption for social purposes) under ULCRA could allow and
encourage private agencies to take up schemes for low- and middle-income households. Public agencies should also
be able to use this Act to acquire land for housing or sites-and-services projects for the poor.
The projects involving private and public-sector participation wherein the builders and contractors undertake
to build and dispose of dwelling units as per the terms and conditions specified under an agreement, holds forth much
promise for the future. Here, the tasks and responsibilities of the involved public organizations in facilitating the
project need to be specified in clear-cut terms to ensure accountability. Similarly, the obligations of the builders in
providing the desired composition of houses, charging the stipulated prices for different categories of houses and
their disposal according to the eligibility criteria must be strictly adhered to. The cost of development and maintenance
of the city-level facilities (incurred outside the project area) must also be charged to the developers (to be passed on to
high-income residential units and commercial buildings) so that such projects become economically viable at the city
level and replicable in the long run.
It would be difficult to expect much of the benefits of economic liberalization and the joint-sector projects,
launched in recent years, to reach the bottom 30 per cent of the urban population. Clearly, these people cannot
purchase or build houses without active support of the Government in the provision of land, finance, technical skill
and essential building materials. In view of this, the provisions for acquiring land by the State under LAA or ULCRA
need to be strengthened and some of the clauses granting exemptions for ambiguous purposes need to be scrapped.
Much of the criticism of ULCRA is directed at the exemption clauses rather than at the Act itself. It is only when the
public agencies can procure land both within the city and the rural peripheries at reasonable rates that they would be
able to fulfil their responsibilities towards the poor.
The Government's role as a facilitator assumes importance in the provision of housing finance. The RBI and
NHB have already given a boost to housing finance by adopting measures to attract more resources to this sector,
creating a number of housing-finance institutions under their umbrella and relaxing the terms and conditions for
providing institutional and individual loans. Simplifying the procedures for mortgaging of property and developing a
secondary mortgage market would also go a long way to increasing the flow of funds to small borrowers.
Strengthening of legal and administrative measures in case of default in paying the instalments and meeting other
obligations by the beneficiaries would be necessary. The subsidies provided through the housing and financing
schemes, cornered by urban elites, must be eliminated. What the middle-income households need today are
institutional finance at a reasonable interest rate of, say, l0 to l2 per cent and a speedy system of credit disposal
against the guarantee of their land or income.
The public housing-finance schemes would, even under the most optimistic conditions, reach only a small
fraction of the urban poor. The sanctioning of loans by not insisting on formal collaterals, using collective guarantee
etc., seems to be the only way of reaching the poor. It has been shown that much of the demand for credit by this
section of the population arises out of their non-housing needs and is met through informal channels, such as
borrowings from friends, relatives and local moneylenders. In view of this, multi-purpose cooperative societies need to
be set up, backed by a system of speedy credit disposal and recovery. The involvement of NGOs and CBOs in
identifying the genuine target group, organizing a system of fund disposal and recovery, managing house
construction activities etc. would be extremely important. The gap between the formal and informal institutions needs
to be bridged by the formal financing agencies through relaxation of their norms and strengthening of grass-roots
organizations having links with the former. The risk involved in this venture must be borne by the community and the
Government.
The role of public agencies in housing the poor cannot be restricted to the giving of land title and certain basic
amenities only. Land for the poor is a contradiction in terms, since the title to a small plot (of even 20 m ) places the
person in the category of non-poor. Given the non-fulfilment of various basic needs, the beneficiary is likely to
dispose of the land formally or informally. He or she can be trapped by the contractor or the moneylender into selling
the plot. It would, therefore, be necessary to confer land title to the family or the community. Provision of a loan on
easy terms for house construction would also be important. Sites-and-services projects, backed up by housing loans
at low interest rates and community involvement in the management, would be an effective method of providing
2
Page 117
housing to the poor.

In the slums in the central areas of cities, slum-improvement and plot reconstruction programmes can be
implemented. The Governments' role in such cases would be designing and implementing the project through
community participation, and supporting the creation of grass-roots organizations to ensure loan disbursal/recovery
and maintenance of the facilities. Some funds can be generated by apportioning land for multi-storeyed flats and
commercial centres and selling these at market rates. This would reduce the cost to be borne by the slum dwellers and
also ensure a mixed character for the locality, creating healthy economic interdependencies.
Public agencies can playa role in rental housing for the poor in large cities. Currently, a rental market of some
sort exists for them, exploited by slum lords, blanket-renting merchants who provide them with a place to sleep or a
blanket at a high monthly or daily rent. The night shelters built by the local governments or development authorities
have not made much of a dent in the problem, due to their small scale and certain operational deficiencies. It would be
important to build a large number of night shelters and family flats in different parts of the city, particularly in the
proximity of business centres, for use on a daily, weekly or monthly basis. Better utilization of the facilities and cost
recovery can be ensured through better management. Creation of this facility on a large scale would solve the housing
problem of the floating population and recent migrants in the low-income brackets (at least for those above a certain
income level). Industrial houses and voluntary organizations may be motivated to take up chains of such night
shelters and family flats.
The housing condition in the villages is worse than in urban areas. Absence of significant sectoral
diversification and the slow growth of non-agricultural jobs at a reasonable level of productivity have forced people to
move out of the rural economy. It is indeed true that rural-urban migration has slowed down in recent years due to the
problems of congestion, inadequacy of shelter and basic amenities and restrictive policies followed by the city-level
authorities. However, in absolute terms, the inflow of population continues at an alarming rate. Taking a long-term
view on the cost of employment generation and provision of shelter and basic amenities, it can be argued that creation
of these facilities would be more economic in rural areas and small towns due to availability of land, water and building
materials at a lower cost. The policy of dispersing people and economic activities in the rural peripheries and small
towns would curb the growth of housing demand in large urban centres.
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Page 1

National Trends in Housing-Production Practices

A. India's new shelter strategy

B. Reorganization of the shelter sector

1. Development plan allocation and capital formation

2. Shelter-delivery schemes, and methods of financing

a. Renting accommodation from a public agency

b. Ownership through hire-purchase from a public agency

c. Ownership through self-financing schemes (SFSs)

d. Purchasing a house from a private agency

e. Owning a house as a member of a cooperative

f. Construction of houses by owners or contractors

g. Renting a house in the market

3. The legislative framework for housing

C. Land management and provision of infrastructure and basic amenities

D. Scope and scale of the shelter problem in India

II. Housing supply at the national level

A. Actors in the housing sector

1. Housing agencies in public and private sectors

b. Agencies at the state level

c. City-level public agencies

d. Primary cooperative societies

e. Private developers and builders

2. Construction agencies in public and private sectors

3. CBOs and NGOs

4. An overview of the delivery process

1. Actors in the formal housing-finance system

a. Institutions providing housing finance only

b. Private housing-finance institutions

iii. Apex cooperatives at state level and affiliated primary societies

c. General financing institutions providing housing finance

i. Commercial banks and cooperative banks

ii. Life insurance corporations

iii. Cooperative banks

iv. Pension and provident funds (PPF)

2. Informal housing finance

3. Incentives to investment in housing

C. Access and affordability of various income groups

1. An assessment of the changes

A. Housing scenario and scale of the shelter problem

B. The organizational structure in housing and the shelter-delivery process

A. Housing scenario and scale of the shelter problem

B. The organizational structure in housing and the shelter-delivery process

A. Housing scenario and scale of the shelter problem

B. Organizational structure in housing and the shelter-delivery process

VI. An overview of shelter strategies in India: Conclusions and recommendations

A. Obstacles to effective housing supply

B. Evaluation of shelter schemes with reference to the urban poor

National Trends in Housing-Production Practices

Population, households, housing stock and housing shortage, in millions (1961-1981)

Select indicators on the housing situation in India (1961-1981)

Rental characteristics of households, by house type and expenditure class

Percentage distribution of gross household savings at current prices

Rent for urban households, bottom five expenditure classes (1983)

Financing pattern under hire-purchase schemes of HUDCO (1989-1990)

Financing pattern under hire-purchase schemes of HUDCO (1992-1993)

Interest rates charged by NHB and other housing-finance institutions

Demographic profiles of Greater Bombay, Calcutta and Delhi

Housing characteristics of Greater Bombay, Calcutta and Delhi (1981)

Housing requirements, Bombay (early 1980s)

Percentage share of different actors in housing production, Bombay

Access to housing in Bombay, by income group

Slum population in Calcutta Metropolitan Development Area (1981)