August 29, 2021

Rental Housing Necessary, But Privatisation will not Help

Tikender Singh Panwar

THE transition from the old model towns built during the late 60s and the new townships developed during the late 90s and still continuing is very stark. There are many changes, one of the noteworthy transformations happens to be the housing sector. Take for example the Nangal township in Punjab, which was developed during the 60s. This township had three major units Bhakra Beas Management Board, National Fertilizers Limited and Punjab Alkalis and Chemicals Limited. The major chunk of housing was provided by these three units and surprisingly till date those houses are being utilised by the workers. Housing was an inalienable right of the workers, especially for the public sector workers.

Fast forward to the post-90s we find towns and large cities switching more to informal economy and a humongous rise in the informal economy and informal workers in the urban sector. With that the onus of the employer to ensure decent housing for its workers were also lost. Then came the 74th Constitutional Amendment to the Constitution where 18 subjects under the 12th Schedule was supposed to be transferred to the city governments called the urban local bodies(ULBs), town planning being one of the most essential.

However, the journey of this amendment is replete with excuses and no intent to fulfil the tasks of decentralisation of governance and the cities were kept for open market forces. Thrusted on this were the ideas of competing cities, converting cities to entrepreneurs to attract investments and with those investments social infrastructure was supposed to be laid out. This did not happen. Intermittent efforts and schemes were announced under various names, JNNURM(Jawahar Lal Nehru Urban Renewal Mission), BSUP(Basic Services for Urban Poor), RAY(Rajiv Awas Yojana),  followed by AMRUT and finally the Smart City’s Mission. Almost all of them stuck to the basic chord of urban renewal with a project-based approach and not understanding cities and towns as a larger ecosystem.

The resultant, the cities have become extremely inequitable, ghettoised and the workers have literally lost their right to the city, housing became a distant dream for them. The planners, especially the parastatals like the development authorities in connivance with large capital pushed for capital intensive technologies for finding solutions for the city’s problems.

The Covid pandemic and the lockdown announced by the PM in March 2020 exposed the complete hollowness of the urban development strategy. The informal sector workers, mostly migrants, could not stay back in urban centres for even 24 hours and started their journey back to their villages, for they knew staying back in cities would starve them to death.

One of the key elements in this reverse migration happens to be inadequate housing in urban centres. Post-1990s the housing models of building condominiums like the Singaporean style and allowing the private capital to be a large participant in it has shown how iniquitous this model is. Not just that there are two reports(from JLL, a real estate company and RBI) that shows that during the current period more than 20 lakh houses are unsold as there are no buyers.

The migrant workers, almost 95 per cent of them cannot afford to live in such condos. What they require is decent housing where flexible rents can sustain their living. Already the informal market sustains such a housing problem. According to the NSSO - 2019, 31 million households in urban India live on rent and a vast majority of these stay in informal arrangements.

There is a greater demand for houses either on rent or labour hostels for the large informal workforce in the cities. The response of the government, instead of taking a proactive role in providing housing for the workers has come out with a scheme called ARHC(Affordable Rental Housing Complexes).

According to the website of the ministry of housing and urban affairs(MoHUA), “The ARHC scheme envisages the creation of a sustainable ecosystem of affordable rental housing that provides migrants and urban poor with dignified living with necessary civic amenities near their place of work”. The ARHC scheme is a vertical of the Pradhan Mantri Awas Yojana-Urban(PMAY-U).

Incidentally the central government may have used such sugar-coated words but the reality is that it has restricted itself to supporting only specific building technologies and not the scheme in general. So, who is going to do it, the obvious answer with this government is the private players?

There are two modes of delivery envisioned in the ARHC scheme. The first mode involves converting existing government-funded public housing into rental housing by public agencies or in PPP(Public-Private Partnership) model. The central government has directed the state governments to utilise vacant and under construction houses funded by previous schemes for this component. These schemes include houses constructed under BSUP, Integrated Housing and Slum Development Programme(IHDSP), JNNURM and even RAY.

The second mode of delivery envisages that rental housing will be constructed, operated and maintained by public/private actors on their own land. We will have to wait and see how this gets unfolded.

Once the states sign the MoA(Memorandum of Agreement) with MoHUA, they will then engage agencies who the scheme refers as concessionaires to participate in the scheme. Under Mode 1 of the scheme the select concessionaires, a private/public entity, will repair and retrofit these vacant units, manage them for a period of 25 years and then hand them back to the state/ ULB. The rental amount will be fixed by the state/ULBs. The concessionaires are expected to develop necessary social infrastructure as needed.

The selection of the concessionaire, as designed under the ARHC, is supposed to be done on a process where the bidder offering a maximum positive premium to the ULBs will be selected.

According to the MoHUA dashboard under the ARHC scheme there are nearly 86,085 vacant houses which were constructed under various schemes in the country, the highest number in Maharashtra(32,345), followed by Delhi(29,112), Gujarat(7,715), UP(5,232) and likewise almost all the states have these vacant houses. To date(since December 2020), out of these 86,095 houses only 1,934 have been allotted. The bulk of this allotment has been done by the Chandigarh administration which is nearly 88 per cent of the total number-1707.
The concessionaire in Chandigarh is the Chandigarh Housing Board(CHB) under the UT administration. The private players, as envisioned in the scheme may not be too eager to run the mode 1 phase of the scheme where there is more uncertainty; they would rather prefer to go for mode 2 which allows the real estate sector to enter in this area and thus earn more profits.
Instead of addressing the larger housing problem and the ecosystem attached to it, mere piecemeal approach of converting the already constructed houses into rentals will not help. Without going into the actual reasons for these vacant houses, the problem cannot be addressed. Why is it that the beneficiaries of the above-mentioned schemes did not occupy these houses?
There are a few reasons for public housing projects not being occupied Firstly, in most cities these projects are located on the periphery and are poorly connected with other populated areas. Living in such houses would mean losing their livelihoods. The second reason is that in most of these projects, being in periphery the city governments have not been able to connect these houses with basic services like water and sewerage as well as public amenities like anganwadis, government schools, and health facilities. Thirdly, there is also an aspect of poor design and construction that has been noted in these projects.
An interesting study was done recently by a group of activists from the CPR and WPC in ‘India Housing Report’ stated a few more reasons. According to them, the women’s lives were particularly impacted in the transition from inner-city slum housing to peripheral public housing. Not only did they lose opportunities for domestic work available in close proximity they also lost time. Hence there was has hardly any social mobility witnessed.
There is big complexity in the migration pattern in the cities from demographic profiling to migration identities. Nearly 95 per cent of the most vulnerable groups who migrate are SCs, STs and Muslims. Likewise, there are three different identities permanent residents(32 per cent), short term(21 per cent) and long term migrants(47 per cent), according to the above survey. The ARHC is unable to comprehend this problem and suggests solutions that are more general in nature.
Not less than 85 per cent of informal workers travel a distance of less than 5 km as their daily commute to their workplace and spend less than Rs 500. Hence peripheral locations of these houses will once again render them meaningless or there should be a subsidised transport system for the workers.
Likewise, rent affordability is a big issue. The average rent paid across India is nearly Rs 3,324 according to the NSSO survey 2018. The ARHC rent should not be more than this to ensure that these are occupied and sustained. However, the scheme illustrates that it is designed to be financially self-sustaining which implies that rent would be the major component for making it self-sustaining. This will again dissuade the workers from availing such accommodation. In Chandigarh the monthly rent is kept at Rs 3,000 with an incremental increase of eight per cent biennial. How long such a formula will last only time will tell? There must be flexibility in rent collection as most of the migrant workers do not earn monthly rather, they earn on a daily or weekly basis.
The ARHC scheme which is direly required for the migrant workers in the cities falls short of the desired goals and is embedded in the monetisation framework which may further boomerang into another failure. There must be an active role of the city and state governments taking workers unions and other social groups into consideration. Else it will falter the way most of the flagship programmes of the government have fallen. But that would be more perilous for the migrant population in the cities.