Increasing Urbanization and Problem of Housing The Lower Class Population: Affordable Housing

Abstract

You may also want to list keywords from your paper in your abstract. To do this, indent as you would if you were starting a new paragraph, type Keywords: (italicized), and then list your keywords. Listing your keywords will help researchers find your work in the database Housing is an important aspect to be considered by a country and major population in our country is below the lower income group and low-cost housing or “affordable housing” has to turn out to be a better option for the government’s program for these low-income group and the economically weaker sections. Metropolitan cities are the first to experience these varieties of challenges, Pune has emerged as a large metropolitan city in India. With the lack of adequate and affordable housing options, most of the urban poor are forced to live in the slums. This paper analyses the shortage of houses for the LIG and EWS classes and also shows the impact of these government programs and raises the question about the relevance and the methodology of affordable housing.

Introduction

Housing has been an important concern for our country and with the increasing urbanization, housing the lower class population has become a major concern. The idea is to improve the living conditions of the underprivileged and the poor and to provide these families with better accommodations and also give them a safer environment. Further, as much of the urban population is becoming more concentrated in large cities, housing in large Indian cities is becoming of particular concern. Pune has also joined the league of metropolitan cities and has rapidly grown in the past decades. Affordability in the Indian context can mean a wide range of things and the term has different meanings in terms of different contexts. ‘Affordable housing’ is mainly for the people who belong to the economically weaker sections (EWS) and low-income group (LIG) who desire for the same comfort and security as that of a self-owned property/house that the other higher sections people have.

In India, the EWS and LIG group have not been getting much attention to what their demands are, however now with the current government in place, a significant amount of change has taken place and the government is also trying to reach the demands of these sections. As these two sections make up the thickest segment of the demographic for India their requirements are being looked into. There are several initiatives taken and things are getting shaped for these sections, there are several schemes for these sections that are now on the verge of completion. Lack of approachability has been the number one reason why this has not worked so far and even if these housings are made on the periphery of the cities, better connectivity will make these housing more desirable as residential destinations.

Literature Review

Affordable Housing

One of the major challenges faced by the large metropolitan cities is providing suitable/affordable housing for the low-income people also referred to as the urban poor. The private builders deal with the higher an the middle-income group and as a result, the urban poor, and this has led to slums and squatter settlements. This is the solution found by the urban poor for satisfying their housing needs.

There are different studies/attempts made to understand the requirements and the problems related to this critical situation in the metropolitan cities and as a result, the concept of affordable housing has been brought into existence. Affordable housing mostly caters to the demand of the Lower Income Group and the Economically Weaker Sections population which also includes facilities of schools, hospitals, and other community facilities.

The first step to affordable housing material selection is to select eco-friendly and less hazardous building materials. This will also enhance the sustainable design principle. The life cycle of a building is Pre building, building, and post-building stages. Each stage of the building should be such that they help conserve the energy. These three stages indicate the flow of building materials through different stages of a building. Then there is the use of local materials, the use of local materials reduces the dependence on transportation whose contribution to the building material cost is high for long-distance. The use of locally available building materials not only reduces the construction cost but also is suitable for the local environmental conditions.

Recyclability and reusability of building material: A material should be available in a form which can be recyclable or reusable. Ex–plastic waste can be used for recycling and producing newer materials. The scrap from steel can be used to manufacture the RCC bars, binding covers, and other miscellaneous steel products in building construction.

Scenario Analysis of Housing for the Urban Poor in Pune

Housing and its options have always been a major concern in India for a long time. With increasing urbanization, housing the population in urban areas has been becoming of much greater concern than in the past. Further, as much of the urban population is becoming more concentrated in large cities, housing in large Indian cities is becoming of particular concern. Over this period, Pune emerged as a favorite destination for automobiles, auto-ancillaries, and allied industries to become an „automobile hub‟. The new industrial policy on setting up SEZs further fostered industrial development in Pune.

Pune urban agglomeration has two major municipal corporations with different jurisdictions – Pune Municipal Corporation (PMC) and Pimpri Chinchwad Municipal Corporation (PCMC). While PMC covers much of the old Pune city and the areas in the south, the PCMC covers areas to the north.

Wikihouse Foundation

WikiHouse is an open technology foundation, its main aim is to allow companies, organizations, and governments to work together to develop new open technologies, standards, and common infrastructures for housing and sustainable development. The main purpose of this was to try and relate affordable housing and sustainable development and to know that will these two can go hand in hand.

Its aim is to put the design solutions for building low-cost, high-performance homes into the hands of every citizen, also to use digitization to make it easier for existing industries to design, invest in, manufacture, and assemble better, more sustainable, more affordable homes for more people. It also focuses on the distributed housing industry, comprising many citizens, communities, and small businesses developing homes and surroundings for themselves, reducing our dependence on heavy mass housing systems.

Method

The research is based on secondary data, online research papers, and my reviews about it. The paper is based on both on primary and secondary market data. Secondary data was collected from government policies like the Pradhan Mantri Awas Yojna, Housing for All by 2022, real estate industry data from research reports of magicbricks.com, etc. Primary research was conducted by asking a set of different questions from both, the developers and the homebuyers. A different set of questions was prepared for both the parties to understand the precise impact of government policies on each stakeholder.

I have also watched some documentaries based on Affordable housing and reviewed them and I am going to use it as a secondary source of data. The whole study is based on mostly secondary data and research done by the researchers.

Discussion

The success of affordable housing will depend on how much the people are willing to accept this as housing for their own, another factor to it is also the approach, these sections do not have a direct approach to the head of the department and thus there is no proper approach to what issues these sections are facing and this results in the formation of slums and unhygienic settlements as the solution. This also open ups the discussion of that is affordable housing a better option for the urbanization of the metropolitan cities and will it be enough for the population of these lower-income groups and the economically weaker groups as these are the thickest in terms of the population. Why can’t affordable housing and low-cost housing be taken up together as a task and worked out as one. Is Affordable Housing a success or just another government scheme?

The current government policy on affordable housing are a boon to the home buyer and developer as it provides them subsidized loans, service tax exemption, tax exemptions, and possible stamp duty exemptions, but at the same time, it does not give enough breathing margins to the developer which is required to successfully complete and deliver a project. If the state governments successfully implement the measures suggested by the central government for the affordable housing projects like providing single-window clearance, preapproved building permission, and layout approval system, additional FAR, and higher density, it will give the developers the desired margin and will help them in completing the projects in time without the unnecessary delays caused due to multiple approvals.

Result/Outcome

It will be correct to say that the demand for affordable housing is humungous and it also has multiple concerns owing to which the builders/developers are getting hesitant to enter this very segment. Though the concept of affordable housing seems simple and effective to this current issue, its execution remains complicated and unsolved due to the government’s unclear framework of policies, this is due to the lack of a clear definition for affordable housing. Keeping in mind the different geographies of India, the government should clearly redefine the term. In addition, there is also a lack of availability of land in Pune at a reasonable price, high fees and taxes, rising construction costs, regulatory issues, and unfavorable development norms are some concerns that restrict the desired growth and implementation of affordable housing in India.

Currently, the policy says that to register a project under the policy, the units of the project should be within the size limit of 30 sq. meters for the metro cities and 60 sq. meters for others. The numbers of units that can be planned in a project depend on the density designated by the local authority of that locality. For example, a sector in Noida has a density of a maximum of 366 flats per hectare. Due to this, the builder has to plan a mix of big and small sizes of units so that he is available to utilize the complete Floor Area Ratio (FAR) of the project, which roughly defines the total saleable area of the project. Now, if the builder decides to go under the affordable housing scheme, then he has to plan at least 90% of units of 60 sq. meters or less. Going by this rule, the builder will not be able to achieve the complete FAR as the maximum units can only be 366 but since the sizes of 330 units have to be smaller than 60 sq. meters his total saleable area will be much less which could have been more if the units could have been of bigger sizes. An easy solution for this is for the local authority must grant higher density to the affordable housing projects, so that builders can build more units in the same area of the plot and achieve his total FAR. By not achieving complete FAR, the project viability of the builder becomes negative in most cases. This issue must be resolved between the central and state governments to make affordable housing viable for the developer.

The introduction of GST can also create another hurdle for the affordable housing segment. Currently, the developer gets abatement in service tax to the tune of 75% considering the cost of land in the final product price. However, GST does not currently provide for the abatement for land. Due to this, the cost of housing will go up for the buyer, as he will have to pay for GST on the entire consideration amount. Since service tax was exempted on affordable housing, it is to be seen if affordable housing will also be out of the purview of GST and moreover if GST will provide for abatement or not is also to be seen. One of the major loopholes in the affordable housing policy is that it defines the restrictions by the size of the unit rather than by the maximum price of the unit. This means that a developer can price the unit at any price if it is under the size of 60 sq. meters. This defeats the purpose of affordable housing because developers can take all benefits of affordable housing and yet price their product at a price, which is beyond the purchasing capacity of the buyer. The government also needs to provide single window clearance for affordable housing projects to keep the price under control. Currently, the various approval authorities of state governments cause long delays in the completion of projects due to which the cost of the project can go up to as high as 3% per year of delay. If the government wants to ensure timely completion of projects at minimum costs so that it could be passed on to the buyer, it must take the clearances under its own hand and aim for a single-window clearance body. The high cost of land is one of the major deterring factors in providing low-cost homes. The state governments need to increase the FAR for the plots under the affordable housing scheme. By increasing FAR, the cost of FSI will go down drastically for the developer. More FAR means a saleable area or higher turnover for the developer. If this is implemented then the developer can earn his share of profits through higher turnover even with lesser margins per unit.

There is a different side to this story, that we do not need affordable housing, we need more housing so that it will be affordable, if we believe that the cities provide economic opportunities, that the cities are more energy-efficient and that the cities provide them with more economic and cultural backgrounds, to live close to each other and learn from one another, that means people ought to be able to live in the cities. That means we believe in more housing. If a number of housing units meet or exceeds the number of people that want and need them, those people have more freedom of choice, more mobility, and more opportunities.

References

1. Valdes Roger – We don’t need affordable housing , we need more housing so it will be affordable - https://www.forbes.com/sites/rogervaldez/2018/07/16/we-dont-need-more-affordable-housing-we-need-more-housing-so-it-will-be-affordable/amp/ - July 16, 2016
2. Pate Kishor – What affordable housing really means in India -https://www.indiainfoline.com/article-amp/article-latest/what-affordable-housing-really-means-in-india-116121900016_1.html - December 19, 2016
3. Nallathiga Ramakrishna - Scenario Analysis of Housing for Urban Poor in Pune -https://www.researchgate.net/publication/319623197_Scenario_Analysis_of_Housing_for_Urban_Poor_in_Pune – April 2016
4. Dongre Archana , Kumar Vinay – Affordable Housing -https://www.researchgate.net/publication/321937252_A_CASE_STUDY_-_AFFORDABLE_HOUSING – November 2017
5. https://wikihouse.cc/
6. Sethi Kaur Harshleen – International Journal of Engineering Research and Technology (IJERT) Vol. 6 - https://www.ijert.org/research/affordable-housing-in-india-IJERTV6IS060375.pdf - , June 2017