India has continued to struggle with the challenge of inadequate housing amidst rapid urbanisation and worsening urban poverty. Over the years, government policies have failed to fill the gap, focused as they are on only ownership housing while neglecting rental housing. Additionally, despite some market innovations, such as the emergence of co-living spaces, India has still continued to struggle to provide adequate homes for the lower middle class and the economically weaker sections in cities.
However, the government now appears to be willing to address the issue of urban rental housing in cities and regressive rental laws, through two policy initiatives—the 2015 draft National Urban Rental Housing Policy (NURHP) and draft Model Tenancy Act which,
flawed while it may be, attempts to revise old rent control laws.
Over the years, the government of India has also launched many schemes which provide sustenance-level facilities to the economically weaker section (EWS) and low-income group (LIG) population. Several schemes have been launched periodically to tackle the growing problem of housing shortage, but almost all of them have been ownership-driven. Even the latest housing policy scheme, the Pradhan Mantri Awas Yojana—Urban (PMAY-U), launched in 2015 with a target to provide ‘housing for all‘ by 2022, has been largely targeting home ownership.
Yet, with all the incentives provided, most urban poor in India cannot afford to buy a house. Affordability is not just the upfront cost of purchasing a house or availing a loan but also operational expenses of living, which could include travel expenses of commuting to work, cost of access to social infrastructures, such as schools and hospitals, among others.
Affordable housing is also one of the critical problems for the growing population of seasonal migrants—those who migrate from their hometowns or villages to cities for seasonal jobs like construction or labour contracts. The severe lack of affordable housing became a prominent issue during the COVID pandemic when India was forced to declare a nationwide lock-down. The country saw a massive exodus of reverse migration, where thousands of workers, facing a long-term loss of livelihood, undertook long journeys to return home to their villages and towns.
A large proportion of such urban migrants live in slums, informal settlements and unauthorised colonies or on pavements to save on accommodation costs.
They spend a substantial time commuting to their workplaces by walking, cycling or availing public transportation, wherever possible, to reduce travel expenses. Affordable rental housing could serve as a potential solution to the problems of such seasonal migrants and the more significant issue of the housing shortage that India faces.
In July 2020, perhaps reacting to the lapse in the availability of affordable rental housing, especially for the urban migrant workforce, the ministry of housing & urban affairs (MoHUA) launched a sub-scheme under PMAY-U providing for affordable rental housing complexes (ARHCs).
The main objective of this scheme is to offer ease of living and provide access to dignified as well as planned housing to the urban poor near their worksites. It intends to benefit multiple stakeholders, including dwellers, developers and urban local bodies. The primary beneficiary of the scheme is the EWS or LIG segment.
While it is a significant development for the government to acknowledge that affordable rental housing needs a policy-driven push for it to succeed, the lacklustre and half-baked approach has certainly not had the expected impact.
Deficiencies in NURHP
NURHP makes an admirable effort to promote rental housing as a supplement to ownership-based housing, but there are some glaring omissions which need to be addressed. A significant shortcoming is the lack of clarity regarding the roles of the Union government, the state governments and urban local bodies.
The government’s role is defined as that of a ‘facilitator’ or ‘enabler’. It will merely extend fiscal and non-fiscal concessions for rental housing created by states, through private-public partnerships (PPP) or under corporate social responsibility (CSR).
The policy also fails to address the issue of homelessness. As Mukta Naik, urban planner and a senior researcher at the Centre for Policy Research (CPR), explains, “This is because the government still continues to treat homelessness as a livelihood issue which is why schemes for construction of shelters come under the National Urban Livelihood Mission instead of putting it under housing (ownership or rental) policies.”
Although it is a valiant attempt at formulating a rental housing policy, there is still an underlying bias towards promoting home ownership. Unlike many Union government schemes, which are linked to budgetary support for the construction of homes, NURHP, in its present form, provides for no funding from the Union government. The policy also washes its hands off any such fiscal responsibility by merely repeating that housing is a state subject and it is the primary responsibility of state governments to ensure housing for all.
Budgetary provisions have been mentioned only in the form of a fund to be set up for rental vouchers, which would be given on a pilot basis in select smart cities. The vouchers are meant to partially offset the cost of rent incurred by the urban poor. However, it should be noted that the rental accommodation for these urban poor would most likely be part of the existing stock of private housing at prohibitive market rates. Thus, the offset provided by any such rental vouchers would probably be marginal and would not serve to present formal rental housing as an affordable alternative to such groups.
The Union government’s low financial commitment will mean tremendous difficulties in housing the urban poor, as India’s major cities have the highest demand for rental housing but rents remain exorbitant.
Overall, the Union government’s role in NURHP has been restricted only to demand-side interventions when there is an equal need also to increase the supply of social rental housing stock. NURHP fails to address this issue in an equitable manner. For policies such as NURHP to be successful and for India to realise its goal of ‘housing for all’, the government must provide incentives and encourage all states to be equal partners in the endeavour.
Presently, NURHP is still stuck in the draft phase, with a group of ministers citing its ‘sensitive nature’ as the reason for the delay in presenting it for discussion in Parliament. One can only hope that whenever a draft is presented again, it will perhaps be a more robust and balanced policy.
Deficiencies in ARHC Scheme
The success of the ARHC scheme will largely depend on whether it will equally satisfy the following aspects of rental affordability:
● ability to pay the rent without having a negative impact on the consumption of minimum basic non-housing goods/services.
● an equitable balance needs to be maintained between cost of land which is
cheaper in the urban peripheries and transportation costs to the nearest employment hub.
● access to adequate space, water supply, electricity, sanitation, sewage management, open spaces, etc.
There are several challenges that this scheme would have to overcome to be successful. Instead of direct intervention by the State, this scheme depends heavily on other market players for implementation. For instance, it mentions ‘implementation agencies’ that would carry out repairs of old vacant government houses or build new housing units. With a possibility that such a scheme might find no takers from the private sector, the government may be hard-pressed to find an appropriate ‘implementing agency’ and the scheme may be bound to fail even before it is launched.
The policy is not explicitly clear on the means of identifying potential beneficiaries and, furthermore, there are no explicit income criteria mentioned for eligibility. This may inadvertently lead to the scheme being missed by the most vulnerable migrant populations and cornered by those who are relatively better off.
The housing unit allowed to an individual can only be used for residential purposes and no commercial activity is permitted inside the premises. There is a possibility that such a condition might not be in tune with the way of life for many urban migrants for whom the housing accommodations are also a space for them to carry out home-based commercial work.
This scheme offers no flexibility to individual beneficiaries who will invariably plan to expand their family and life in the city. Migrants are usually known to adopt an incremental housing process, allowing them a cost-effective and flexible housing option in urban settings.
Foregoing a participatory process, the scheme does little to empower migrants in terms of their access to housing. Instead, it heavily favours private entities, such as real estate developers, job contractors and informal employers, who already exercise disproportionate control over the lives of migrants.
Land cost remains a challenging proposition in urban areas and it may hinder private participation, if not planned carefully, with incentives for the participating entities. New social and security set-ups in proximity to ARHCs will require municipal and development authority’s active role throughout.
Rental housing schemes, such as the ARHC, are definite steps in the right direction, but, by themselves, they may not do enough to stimulate the rental housing market or make a dent in the housing shortage problem. Such social housing requires a close partnership among public and private entities, along with a robust oversight mechanism for long-term success. Furthermore, as the provision and regulation of housing remain a state subject, the effective adoption and implementation of such a social housing policy depend on the governments of each state and Union Territory.
