Is PMAY the only solution to affordable housing crisis?

The entire world is facing an affordable housing crisis. Different governments around the world are tackling this problem in different ways. Nirmala Sitharaman with the announcement of the union budget 2019 is portraying the different initiatives the government is willing to take under the umbrella of affordability. The finance minister has proposed the construction of 1.95 crore houses from the financial year 2020-2022. India is not the only country to be facing affordability crisis, US while gearing for its presidential elections are coming up with different ideas to solve the housing crisis. With an interesting set of parallels that could be drawn between a developed and a developing nation, shows that some fundamental problems in different economies could in some situations have a global approach to this  ever-increasing problem of affordability

US needs creation of 12 million social housing units which are outside the private domain and are only done through public investment. There is a current need to provide units to those who are facing extreme cost burdens. The Homes guarantee plan proposed an affordable housing model which should be incorporated by democratic-socialists in order to solve the current crisis. It suggests that the majority of 12 million homes target could be achieved through a large new investment in municipality-owned social housing and the remainder could be executed through public investments in community land trust. The community land trust model has been proven to be a success in the earlier years and it could have the possibility of scaling up. Also for this to be a reality there needs to be a massive increase in public investment in social housing and divest the stake of private developers. The method of social housing program which reduces the reliance of private developers is being followed by the democratic-socialist government in Vienna, Finland and Sweden and also a capitalist government like in Singapore where 80% of the housing is public housing.

A parallel to this situation can be understood via the PMAY scheme which due to the lack of funds for land acquisition gives subsidy to private developers for building affordable units. Maybe the current merger of public sector banks could increase credit flow and the capacity of lending loans. Even the possibility of coming up of development banks could help in building such large scale social housing projects on greenfield sites or slums. The idea that is proposed under Homes Guarantee proposes the need to divest the authority to municipalities which could be brought in India as well where social housing projects in the city are still looked after by the state development authority. The devolution of authority could prove to be effective in turn as the lack of faith and trust in public projects currently could sometimes be resolved through faith in local figure and urban local bodies. Homes Guarantee model also proposed the crackdown of slum lords and fixing the current public housing projects which interestingly is something that PMAY enables through credit-linked subsidy. The credit linked subsidy allows the reduction in the rate of interests on loans taken by the beneficiary for construction or fixing of a dilapidated house provided he/she or the family fit the set income criteria.

PMAY scheme even though with its various segments to address the idea of “Housing for All” has not been a success in the urban sector with only 27 lakh houses complete as opposed to the PMAY-grameen which has 72 lakh houses complete. The urban failure of the scheme can be attested to the shockingly high prices of land which becomes very difficult for the government to acquire and build and hence slum dwellers more often than not get excluded from the scheme.One of the proposed solutions to the address the idea of affordability perpetually is something that can be borrowed from US. The community land trust is a proven model accommodates the poor population of the country. Community land trusts can create and preserve permanently affordable units under democratic control where the land that is in reserve for social housing projects is only reserved for that as opposed to the current method of practice in India where the houses are lent at subsidised rates but are sold at market rates. Thus, reducing the affordability and further fuelling homelessness. There are always going to be poor people in the city and that is a fact that can’t be ignored while designing these schemes. They happen to lack the idea of perpetuity when they allow resale of these properties at market cost. For community land reserve to work, the right beneficiaries need to be selected. The Socio Economic and caste census of 2011 again becomes an important tool in realizing these beneficiaries.

The current social housing in India focuses on accommodating as many people as it can in humongously tall structures which in fact could become unliveable spaces and the liveability index takes major it. The Charkop site and services scheme in Mumbai which has a housing pattern of 36 one-two storey houses built around a courtyard make it liveable and control on incrementality also keep the prices in check. Mortgages would definitely make the Community land reserves more viable as non-bank housing corporations would not lend otherwise. Mortgage financing prevents the Community land trust from defaulting and makes maintenance easy. It could also have middle-income groups being a part of it as their rent-paying capacity increases and the money required for building these social housing projects could also be recovered over a period of time.

These community land trusts need to be carefully planned and not ghettoised as the way current social housing projects so as to build faith and trust in government-built projects. They need to be incorporated as a part of city development plans and not to be looked just as makeshift housing for the poor.