As India surges forward economically and demographically, providing affordable housing for the urban poor has become a major challenge. Currently, the government pegs the housing shortfall at 10 million households and hopes to provide every Indian with affordable, quality housing by 2022.
Achieving this vision requires housing that is “affordable”, as determined by criterion such as family income, size of the dwelling unit, or ratio of house price to annual income, according to a 2008 taskforce set up by the Ministry of Housing and Urban Affairs (MoHUA). For a decade now, the government has tried to focus its efforts to provide affordable housing and include the private sector by making it easier for them to comprehend their roles and contributions.
But despite their best efforts, affordable housing remains a distant dream for many urban residents. The affordable housing deficit is set to widen to 30 million houses by 2022, according to a recent study by Deloitte. The major challenges are scarcity of accessible land, rising land and construction costs, regulatory constraints and dysfunctional public-private partnerships. Not surprisingly, these factors have led to a supply crunch.
Transit Oriented Development, or TOD, if well implemented, can lead to the provision of affordable housing. It is a city planning strategy that integrates land use and transportation to develop compact, well-connected and equitable cities. Affordable homes get built around transit stations in a manner that benefits the working class, allows them access to jobs and essential services, and avoids the pitfalls of displacement and gentrification.
Last year, the MoHUA recognising the benefits of TOD launched the National TOD policy. This created an opportunity to leverage the 15 billion worth of transit investments underway across India by potentially bringing in more land under development, thereby increasing supply and normalising land prices. Similarly, the government has granted infrastructure status to affordable housing, meaning that such projects can benefit from lower borrowing rates, tax concessions and increased flow of foreign and private capital.
So far, however, few TOD projects have been implemented well in India. The provision of mass transit in some TOD neighbourhoods can, in fact, lead to rising property values due to the rapid vertical expansion of buildings and land-use change. This has made housing in such neighbourhoods unaffordable to poor and economically weaker residents. This contradicts an important principle of TOD, that is, transit neighbourhoods should have a balanced mix of income groups.
Upgrade existing slums
In a recent study, we have focused our attention on how to make TOD work and highlighted key suggestions. Firstly, it is important to find ways to accommodate people where they are by upgrading existing slums or low-income areas, tapping into community knowledge and energy, and retaining links to social and livelihood networks.
Secondly, policies that overemphasise home-ownership should be re-framed to benefit people across income levels, particularly those working in the informal economy. Finally, city authorities and real estate developers should revise rules and building standards to expand the availability of housing on under-utilised public lands.
Globally, many cities have attempted an alternative approach where they provide affordable housing at urban peripheries, encouraging residents to relocate where land is cheaper. However, this approach has created its own problems as people are cut off from social and infrastructure networks as well as gainful employment opportunities. This has led to negative consequences in low- and middle-income countries, where some cities are growing so quickly that governments cannot build services and infrastructure fast enough to accommodate new arrivals, leading to a proliferation of slums at the peripheries.
Getting TOD right can help drive the nation’s economy. As Rakesh Mohan, Deputy Governor of the RBI, said, “future national competitiveness and economic success will depend on the comparative efficiency of cities. Because housing is where jobs go to sleep at night, the quantity, quality, availability and affordability of housing becomes a key component in national economic competitiveness.” This mode of city planning has the potential to deliver benefits in line with India’s affordable housing goals.
(Mehta is Lead, Urban Development, WRI India Ross Center and Dhindaw is Strategy Head, Integrated Urban Prac)