Housing is a welfare weapon. It can help people escape poverty

In Indian cities, housing can be expensive. People don’t just need roofs, private bathrooms and other basic amenities; many want to invest in houses and pass them from one generation to the next. This, however, remains out of reach for many.

Central, state, and local governments have come up with several schemes to address this deficit, including the construction and sale of housing complexes at subsidised prices by state development boards. However, because these schemes have many applicants, beneficiaries are usually selected randomly, thereby giving rise to “housing lotteries” seen in many major cities. Built on public land, this housing is earmarked for economically weaker sections and lower-income groups.

How do these programmes change the lives of beneficiaries? A recent study interviewed 834 total winners and non-winners of the 2012 and 2014 Mumbai lotteries — which are run by the Maharashtra Housing And Development Authority (MHADA).

The study finds large differences between winners and non-winners three to five years after the lotteries were held. Winners tend to live in housing with better roofs, with private taps and toilets. They also report a higher monthly income and are seen to be more optimistic about the future. They are more likely to participate in local politics, particularly by asking officials for service improvements.

The most striking findings are in education and employment. In the three-to-fiveyear period, the winners have gained about half-a-year more education compared to non-winners (on average, non-winners have about 10 years of education). The winners are also almost 5% more likely to be employed. Those who turned 16 and 21 after the lottery are more likely to complete their secondary and post-secondary education, respectively. They were also more likely to be employed. These results are remarkable, particularly because MHADA housing is typically in areas with lower-quality schools and fewer economic opportunities.

Importantly, however, winners are not rent them out. About half of all winner so. They can also take the cash value of housing (the rental income minus the m gage payment) instead. After 10 years, can resell the homes and pocket the di ence between the MHADA sale price and market value, which can be in milli Despite the relatively poor location of housing, there are various avenues for beneficiaries to gain through this sche

Allowing rental and resale is o bemoaned as one of the scheme’s dr backs, but it is too difficult to enforce rules prohibiting these acti Moreover, the flexibility this cre may be an important featur unlocking its potential. E though these schemes generate nificant changes in the lives of eficiaries, they are not very co because the sale price of the ho covers most of the construction marketing costs. Most of the v of the scheme comes from opportunity it creates for the poor to par pate in the real estate market. Perhaps greatest cost is the acquisition of public l

The study suggests that state developm board schemes and their centrally-s sored counterparts, such as Pradhan Ma Awas Yojana, are important componen India’s portfolio of welfare schemes. T are likely to be most useful in urban a where rising real estate prices simult ously underscore the need for, and pote of, these programmes.

As with all welfare schemes, it is im tant to make sure they reach the right ple, particularly as it entails public l being converted into private assets. Diff ties in accessing the scheme — such as application fee or the paperwork require get a bank loan — can keep it out of reac the extremely poor. Governments sh minimise these difficulties so that life-ch ing benefits reach those who need them most, providing an effective exit out of erty in the long-term, across generatio