Taking a round of Delhi NCR, one is reminded of ‘Water, water everywhere but not a drop to drink’, the famous words of S T Coleridge’s “The Rime of the Ancient Mariner”. One comes across so many housing projects in Ghaziabad, Greater Noida, Noida, Gurgaon, yet not many of them seem to be meant for the poor and marginalised, the quintessential below poverty line segment in the country.

Ironically, even the flats constructed by government agencies look to have got out of poor man’s grasp. Delhi Development Authority (DDA) for instance in April this year allotted, through a draw of lots, 16,000 flats where the price of a single bedroom flat ranged from ` 900,000 to ` 3.7 million On the higher side, 876 flats were priced at ` 11 million and above.

The informal sector is worst hit in Mumbai where the lowest cost, a single-bedroom house is available for (out of 90,000 houses unsold) is ` 4.6 million.i Overall, the poor in the most populous megalopolis in the country need seven million dwelling units.ii The scene is not very different in Gurgaon, a town that pretends to have ridden on presence of cyber companies to a metro status. And the national capital replays shades of Mumbai.

No wonder, the World Bank recently said that India faced shortage of up to 70 million houses.iii Out of this, the shortage in urban centres alone is expected to cross 26.5 million during the Eleventh Five Year Plan,iv about two million more than what it was estimated to be at the end of Tenth Five Year Plan. The acute scarcity in Mumbai in fact, made Maharashtra (3.72 million) the leader when National Buildings Organisation did the count of homeless in 2007. What was more disturbing was that the count of 26.5 million had registered a whopping increase of 134 % (10.56 million in 2001) in six years.

Apparently, the real estate honchos or private sector do not find the informal market profitable. According to a report in Economic Times (8th July 2011), more than half a dozen builders including Ahmedabad-based Bakeri Group, Evershine Builders, Kalpataru Group, Lodha Developers, Indiabulls Real Estate have either pulled out of low-income segment or changed their offering. “It is very difficult to get buyers for such projects as there are no formal income and ID proofs, such as PAN card, to avail loans,” the paper quoted Anil Bakeri of Bakeri Engineering having said.

“Unlike most of the infrastructure sectors, the ability to work out non-government solution in the form of PPPs this time is significantly reduced because we are talking about below poverty line population,” says Alok Bhargava, CEO – Strategic Support Group, Infrastructure Leasing & Financial Services (IL&FS). In rural areas, you have a big challenge. The company, promoted by Central Bank of India, HDFC and UTI, has been involved in preparation of City Development Plans under Jawaharlal Nehru National Urban Renewal Mission (JNNURM).

Should we attract migration to the metropolitan cities or should we disperse it and create the PURA structure in the rural area? We need to settle this debate.” Rakesh Ranjan, Director (Housing and Urban Affairs), Planning Commission

The few housing schemes like Indira Awas Yojana (IAY) and Rajiv Awas Yojana (RAY) run by the central government have failed to make housing for poor viable. Under RAY, for instance, the poor get a grant of ` 45,000 from the Government of India. Forget about building a house, you cannot even buy two truckloads of bricks (the price of one truckload has risen to ` 27,500 in Chennai). “It is grossly inadequate and does not help people,” says Arvind Mayaram, Additional Secretary, Ministry of Rural Development.

“The landmass in Dharavi is so large that you can actually combine, give everyone residential space and still create enough space for commercial activity.” Alok Bhargava, CEO – Strategic Support Group, Infrastructure Leasing & Financial Services

In urban centres, the government still has the option of leveraging the land title to lure private builders. This is what is being proposed in Dharavi, arguably the largest slum in Mumbai and India. “The land mass in Dharavi is so large that you can actually combine, give everyone residential space and still create enough space for commercial activity,” Bhargava points out adding that the number of poor in Dharavi may actually be less than the number of shanties one sees there. His argument is they may be living there because they do not have a choice in a city like Mumbai.

“The grant available under schemes like IAY and RAY are grossly inadequate and does not help anyone.” Arvind Mayaram, Additional Secretary & FA, Ministry of Rural Development

The same may not apply to rural sector where private sector will not find avenues to raise funds. “While in urban areas the land title may have value and can be leveraged. In rural areas, you still have a challenge. Where do I get even my 20-25% contribution, even if I have to get 75% loan?” Bhargava asks.

This does not mean, conversion of slums into pucca dwelling units faces no stumbling blocks. For one, since the price of the land is very high in the city, the slum dwellers more often than not sell off their units and shift to some other slums. If you combine two or three LIG units, you can still construct a mansion. This is what has happened in many housing colonies the DDA built for low-income groups.

There is also the question of speculative housing, which needs to be addressed. “In Kolkata, they rent out the house and go and live in the slum. We have seen this even in Gurgaon and other places. Ansal, DLF and others set 20% of the houses for low income. These have been combined and converted into nice mansions because the land is pretty good and nicely located. How are we to deal with this problem that you don’t continuously incentivise creation of new slums because some slum lords make it a business to have these developments?” questions Mayaram.

Besides speculative housing, there are also the issues of benami transactions and gentrification that need to be addressed in urban development. “I can bring 20 beggars from the road and give them a thousand rupees each and say – why don’t you stand in queue for me? They will readily say they need housing. Yet they will go back to begging and I on their behalf will take over the whole thing through benami transaction,” asserts Mayaram. He quotes the example of Spanish Harlem of New York to point out that urban renewal and re-development is a global phenomenon. But the unique identification number issued under Aadhaar may resolve the two problems as biometrics can detect benami deals as well as gentrification. For low income housing in cities, it may be a good idea to adopt the proposed Dharavi model. Not only is the government in a win-win situation, the slum dweller has nothing to lose. Since the residential space is developed where he is living, he does not face displacement. To ensure that the low-income groups do not sell off their units and move away, it would be advisable to get it financed by a bank. While the government should repay major part of the loan, the remaining part should be charged from the beneficiary in easy installments to the bank. The unit should be mortgaged to the bank for the period of loan repayment.

The states should also have a look at a model in Rajasthan whereby the builder is given extra FSI to construct the building and in turn gives ready building to the government, which buys at a pre-determined price. When the building is ready, BPL families are asked to apply. The successful beneficiary gets loans from the bank because the house is ready to be mortgaged For rural sector, Self-Help Group (SHG) may be the way to go. For one, the SHG would clearly know what type of construction will be viable in which area and who is in real need of a house. The cooperative would also know the saving capability of its members and be in a better position to calculate his credit worthiness. “The SHG model is truly the way to go because they would be good at identifying the beneficiaries, they would be good at knowing what is the type of construction which will actually work in a sustainable way in that area,” suggests Anuradha Rao, Deputy General Manager (Home Loans), State Bank of India adding that an element of education can be attempted on SHG housing through PRIs.

Alok Bhargava tells the government to create an annuity through a central housing fund to make rural housing palatable for private sector. The fund, he adds, may be raised on the pattern of education fund or road fund. According to him, the private sector participation can increase the ability to leverage resources – technical, commercial etc. The state already has a scheme – PURA (Provision of Urban Amenities in Rural Areas) – to check migration from rural to urban sector. But instead of trying the scheme in pilots, it needs to be amplified and magnified.

But Rakesh Ranjan, Director (Housing and Urban Affairs), Planning Commission is sure the debate between PURA and urban migration is not settled as yet. What he is not sure about is whether the government should attract migration to metros and provide it amenities there. “Should we attract migration to the metropolitan cities or should we disperse it and create the PURA structure in the rural areas? I don’t think the debate is settled”, he states. K K Pandey, Professor at Indian Institute of Public Administration, stresses on looking at housing in a holistic manner covering services and points at JNNURM for the purpose: “We cannot just think about shelter without water, sewer, road and other on-site services within the colony. The seven-point charter (of JNNURM) includes land tenure, shelter, water, sanitation, education, health and social security.” He also lays emphasis on development of eastern part to bridge the diagonal divide in urban sector. “Gujarat, Maharashtra, Karnataka, Tamil Nadu – this area is highly populated, 40-50%. If you see Orissa, Madhya Pradesh, Eastern UP, Bihar, it is 20-25%. So there is a need to develop the eastern part,” he argues.

The states have the option of clubbing a loan with the grant under RAY and individual’s capacity. They may emulate Andhra Pradesh, which has combined the RAY grant with a loan and gives ` 215,000 to ensure that the BPL household can make a proper dwelling.