Building blocks for growth

THE PRIME MINISTER, Mr. A. B. Vajpayee, has taken the right step in constituting a Group of Ministers to comprehensively address issues confronting the housing sector. India's performance has fallen short of expectations in meeting this basic economic need. The pressure on the Governments since Independence has increased along with rise in urbanisation. For instance, while a mere 15 per cent of the country's population lived in urban areas in 1947, the figure now is close to 30 per cent. The increased demand for housing also coincided with the desire of the Governments in the past to provide a wide range of economic services, giving rise to the creation of State-level housing institutions. Despite efforts to narrow down shortfalls, estimates place the urban housing shortage at 6.64 million dwelling units in 2001. While there has indeed been a reduction in the shortage over the last decade, from 8.23 million in 1991, there is no cause for comfort. The challenge is even more difficult now, with a sharp redefining of the economic roles of Governments. Given this ongoing transformation, the approach towards solving the problem of providing shelter needs to be reappraised as to whether Governments would have to continue as providers or concentrate more on playing the role of a facilitator.

It is against this redefinition of the role of Governments that the latest effort gains importance in that it would set the terms for a collective approach to resolve a wide range of issues. The single largest hurdle, ironically, is the lack of availability of land suitable for housing projects. Overcoming the acute shortage in serviced land, especially in urban areas, requires the coordinated effort of various institutions. A recognised fact that for every 10 lakh additional dwelling units at least 6,000 hectares of developed land is required, brings out the magnitude of the challenge ahead. One starting point for the present attempts to better attune Governments to face the task is a review of the working of the various State housing institutions. Quite common is the case of housing institutions deciding upon developing locations that do not reflect market conditions; either in choice of location or in pricing. The working of State Housing Boards is illustrated in the observation made by the Comptroller and Auditor-General (CAG) on the working of the organisation in the most urbanised State. The Tamil Nadu Housing Board - which services the State where 43.9 per cent of the population is urban - was charged with not assessing the demand prior to project development, as a result of which over 50 per cent of the units constructed by it under the `small and medium towns scheme' remained unoccupied. An appraisal of the performance of the State housing agencies, especially the impact of political appointments to such organisations, should form an important part of the exercises ahead.

Present attempts to bolster housing would be incomplete without studying the impact of developments in this sector on the economy. The positive economic relationship between investments in construction, real estate and housing and overall economic growth is evident. One noticeable trend during the 1990s, when the Indian economy moved towards increased contributions from the service sector, has been the role played by the construction sector. Given the linkages - both forward and backward - between housing and economic and employment growth, it is imperative that the present attempts are taken seriously. The two million houses programme, launched in 1998-99, runs the risk of remaining yet another well-intentioned plan if the basic issues are not addressed.

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Section  : Opinion
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