PM’s housing-for-all scheme will face many challenges

The new Housing for All scheme launched by Prime Minister Narendra Modi, which aims to provide a house for everyone by 2022, is facing a huge challenge acquiring the requisite mass of land needed to build affordable homes.

The scheme, aiming to build about 2 crore houses in urban centres for the economically weaker and lower income group people, would need over 57,000 acres of land (about 50% of Mumbai’s municipal area), shows the estimates done by Jones Lang Lasalle ( JLL), a real estate consultancy. So the kind of housing supply that the government is targeting seems out of the question if appropriate lands are not made available, adds JLL.

Though it is a very promising scheme but, “its implementation would require a clear, well-thought out policy with concrete and measurable deliverables coupled with initiatives to streamline the developmental process,” says Snehdeep Aggarwal, founder and chairman, Bhartiya Group, a Gurgaon based real estate company. This will require coordinated efforts to acquire some of the non-essential land currently held by government bodies such as the railways, port trusts and the department of heavy industries.

This scheme would be further challenged in order to meet the demand with a steady supply. Constructing 20 million houses in the next seven years would be a daunting task. “Every year, India needs to construct about 3 million houses which seems unrealistic going by the previous records,” says Ashutosh Limaye, head of research, JLL. As per the erstwhile Planning Commission’s report, construction of houses in the past five years, both by the government and private builders, has averaged about one million only. This means that India needs to more than double its current capacity to build its housing sector. “Such capacity building would need faster regulatory clearances and resolving land litigation issues carefully to improve the participation from all stakeholders,” adds Aggarwal.

The bottleneck from the demand side might arise from the lack of cheaper financing option for the l ower i ncome group people. Affordable housing needs to be backed up by an equally affordable financing option. The government needs to top up its existing interest subsidies ( incentives) to prop up more demand from the targeted group. Moreover, the scarcity of required land within the existing cities might push some part of this scheme to the fringe areas of the cities where land may be available but basic infrastructure, like road, power and water, would have to be developed. Moreover, creating social infrastructure like schools, hospitals et cetera would require additional spending by the stakeholders. Mexico City could become the first city in the world to limit the number of Uber cars, according to a draft regulation that threatens to wipe out Uber’s most popular service in the giant metropolis, the company said on Friday. Aside from the fleet limit, the plan aims to enforce a minimum car value of 250,000 pesos ($15,909) on Uber and companies like it — a big worry for the ride-hailing service that is coming under increasing pressure from regulators. The San Francisco-based company said that the minimum value would hit Uber X, its cheapest and most popular service used by 90% of drivers. The start-up cost to most drivers using the service was about 150,000 pesos, Uber said. “This would imply the end of Uber X,” the company said in a statement. “This would dramatically increase the cost and decrease availability for Mexican riders.” A Mexico City government official working on the regulation confirmed the details of the plan, which was drafted on Thursday and is expected to be finished next week. The official noted that details of the draft are still being negotiated. The draft does not specify the exact car limit. Regulation by Mexico City would be the first for Uber in Latin America. All cars in Mexico City worth over 250,000 pesos are subject to an annual tax, meaning the proposed regulation carries a potential double-whammy for the services. No city in the world has yet imposed a cap on the number of Uber cars in circulation, Uber’s public policy chief Corey Owens said this week in an interview. Ruben Alcantara, a taxi union leader, said he would demand that Uber’s cars cost at least 400,000 pesos when he meets with the government to discuss the regulation on Monday. Uber, which has been valued at over $40 billion, opened in Mexico City in 2013 and says it is one of its fastest-growing markets with 500,000 customers and over 10,000 drivers, some of whom share cars. Its competitor Cabify, which says it has 300,000 users in the city, said a limit on its number of vehicles made “no sense” because many of its drivers worked part-time. The planned regulation would also require Uber’s drivers to have permits and to pay a percentage of its revenue to a city transport fund, as shown by an earlier draft. A city official said on Tuesday the permits were expected to cost 1,599 pesos a year and the revenue levy would be 1.5%, a figure that Owens put at the “high end” of what the company pays in other major cities. The figures could still change, officials say.

As per the erstwhile Planning Commission’s report, construction of houses in the past fiVE YEARS, BOTH BY THE GOVERNMENT AND PRIVATE BUILDERS, HAS AVERAGED ABOUT ONE MILLION ONLY. THIS MEANS THAT INDIA NEEDS TO MORE THAN DOUBLE ITS CURRENT CAPACITY TO BUILD ITS HOUSING SECTOR.