Housing Shortage in India

A large proportion of the inhabitants of our cities live in slums without the benefit of good quality water or sanitation. Families of five to ten members are crammed into one or two rooms. Most people in villages live in mud houses or brick houses built with mortar from mud and makeshift roof materials.

Housing and real estate companies estimate that the active demand for housing runs into scores of million units but construction activity fails to cope up. Prices in the metros increase with every passing day making Indian Real Estate's absolute dollar value comparable with developed cities in developed countries.

Considering that all important ingredients that go into housing like cement, bricks, structural steel and labour are all available locally at very reasonable rates, the only explanation for the high prices is the law of demand and supply. Demand is high and supply is insufficient. Why?

It is not that our construction industry is lethargic or is deliberately curtailing supply. They are as much driven by the profit motive as any other vocation. Materials and labour are readily available, but throughput remains sluggish. Where is the catch?

Once again it is our rules and bye laws which come in the way. Government develops towns and cities by investing the tax payers hard earned money in infrastructure like roads, water supply and sewage systems.Then it proceeds to block too many citizens from latching on to these infrastructure oases by framing town planning laws limiting the floor area which can be built. It goes further and creates a subsidized system of services for those who manage to get in. Thus the lucky few who get in do not pays the costs for water, electricity or other civic amenities and are continuously funded by operating municipal budgets. Municipalities do not generate much revenue and get most of their fundings from the states who in turn draw on the consolidated fund of India.

Of course there is no free lunch in life. So these Oases of urban infrstructure are highly valued by the market and this reflects in the embarrasingly high prices of real estate in the pampered metros. It also means that the Government is in the business of creating wealth for the lucky few who manage to buy real estate and unwittingly pushes this opportunity beyond the reach of the masses who cannot accumulate the capital to make high value property investment transactions.

What happens next is only logical. People who become rich through their investments in housing units and urban land holdings soon trade these for upcoming colonizations and are in effect on a virtuous cycle gravy train albiet at the cost of stunting a natural growth process in the larger populace.

Why is it that our democracy is unable to resolve such distortions. Is it that public monies are always channelized towards private benefit whatever the system of polity a country has? We can see the Public Sector investments benefitting the politicians, bureaucracy, managements and employees and through policy even carving out a protected space for themselves in the name of larger social objectives.

It is not to say that Governments not invest in Cities and Towns. It is just that if as Government you have limited resources, you must not fritter away that money on a small section of people. The best way to conserve scarce resources is to leave everything that can be left to viable business models which are self sustaining.

Government can of course help in igniting the process by providing the seed capital and other quasi legal support and framework and then exiting the schemes with huge profits like Venture Capitalists do and then recycling these gains to reach further afield. In no case can the scarce monies be funneled into perpetually subsidizing water, electricity and other amenities for a populations which is in anycase growing richer by the day.

A new colonization appropriately connected to existing centers of business activity and settlements is easily viable as a business model in this housing starved nation. It is for the colonizers to decide what density of populations they would like to support as it would be based on their capacity to mobilize and secure supplies of water and other amenities as well as the value perceptions they would like to create among prospective subscribers. It is for the colonizers to decide what proportions of commercial, public and free space is best for their business model.Government can of course provide the necessary contractual frameworks which enforces adherence for future. The only money that the Government would be required to spend would be in providing road connectivity to the nearest highway. Thus a million colonies can come up in a short span and our rural populations can shift to towns and participate in the opportunities offered by a post modern society.

There can be no doubt that this is doable and the craving for a private space of one's own can provide the seed crystal on which the whole edifice of a thriving human maelstrom can be built.