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Draft National Urban Rental Housing Policy 2017: Not-so-strong foundation for rental housing

The Centre’s role as a ‘facilitator’ or ‘enabler’ that will merely extend fiscal and non-fiscal concessions for rental housing created by the state, provision for no central funding are some of the limitations of the draft policy

Written by Shalini Nair | New Delhi |
May 20, 2017 3:03:19 am
The proportion of migrants in the urban population is 35 per cent as per the 2007-08 National Sample Survey (Illustration: Subrata Dhar)

Nearly three decades after the first National Housing Policy in 1988, there has been a belated acknowledgment of the policy blindness towards those who cannot afford to buy a house regardless of the subsidies and tax concessions offered. It has come in the form of the draft National Urban Rental Housing Policy 2017, currently awaiting the Union Cabinet’s approval.

The proportion of migrants in the urban population is 35 per cent as per the 2007-08 National Sample Survey. While the latest Census data on migration is not out yet, in 2001, the rural to urban migration was 21.74 million, up from 10.98 million in the decade up to 1971. In comparison, the urban to rural migration has only increased from 5.33 million in 1971 to 6.58 million in 2001. The proliferation of slums in cities is a direct fallout of the absolute lack of affordable rental housing to cater to the huge influx of migrants.

The last time India saw mass rental housing being created in its cities was in the pre-independence era when mill owners constructed townships that served as quarters for migrant workers. Since then, all policies leading up to the UPA’s Rajiv Awas Yojana and NDA’s Pradhan Mantri Awas Yojana have been tailored to cater to the aspiration of home-ownership. There has been no effort by the state to come up with a cohesive national rental housing policy. The 2017 draft policy itself acknowledges this oversight by stating: “The focus of most of the policy/programmatic interventions of government are oriented towards home-ownership which is unlikely to solve the housing shortage in urban India keeping in view that majority of the urban housing shortage pertains to EWS and LIG categories….Even budget incentives home ownership by providing greater tax deduction on interest paid. On rental side, there’s no explicit incentive for growth of rental market on pan-India basis.”

The draft National Urban Rental Housing Policy 2017, makes an attempt but with its glaring, inherent, omissions, it remains a toothless policy.

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The Ministry of Housing and Urban Poverty Alleviation, which has framed the policy, defines its own role as that of a ‘facilitator’ or ‘enabler’. It will merely extend fiscal and non-fiscal concessions for rental housing created by the state or through PPP and under corporate social responsibility.

It classifies rental housing into two broad categories: Social rental housing for urban poor and market-driven rental housing. Social rental housing is targeted at the economically weaker sections, low-income groups as well as the section defined as ‘tenants by constraint’ which includes the urban poor belonging to Scheduled Castes, Scheduled Tribes and other backward classes, migrants, transgenders and senior citizen.

The market-driven rental housing includes institutional rental units such as hostels for students and working men and women, public rental housing for the 17.5 million employed by public sector undertakings (PSUs) and government departments and private rental housing for everyone else.

The policy explicitly refuses to address the issue of homelessness. “This is because the government still continues to treat homelessness as livelihood issue which is why schemes for construction of shelters come under the National Urban Livelihood Mission instead of putting it under housing (ownership or rental) policies,” said Mukta Naik, urban planner and a senior policy researcher at the Centre for Policy Research.

Few states and union territories such as Chandigarh, Chhattisgarh and Gujarat have their own rental housing policies, so does the Mumbai Metropolitan Regions. However, for various reason, these have failed to check the spread of informal housing. For instance, in case of Maharashtra, its original rental housing policy, meant for migrants, was tweaked to put in a domicile requirement defeating the very purpose of the policy. Odisha has had a more focused approach where it decided to channelise the Rs 312-crore cess fund collected under the Building and other Construction Workers Act for creating rental units for construction labour which forms a significant portion of migrant workers. In the last two decades, over Rs 24,014 crore has been collected as cess but only Rs 4,255 crore spent by the states. The policy suggests that this could be used for constructing rental units.

The attempt at formulating a rental housing policy notwithstanding, the long-prevailing policy bias towards promotion of home ownership is still evident. Unlike many central government schemes that offer budgetary support for construction of homes, the rental housing policy, in its present form, provides for no central funding. The policy shakes off any such fiscal responsibility by merely stating, “Housing being a state subject, it is primarily the responsibility of state governments to ensure housing for all.” The only instance in which it makes some promise of budgetary provision is when it talks of setting up a fund for rental vouchers to be given on a pilot basis in select smart cities. These vouchers, equivalent to a certain cash amount, are meant to partially offset the cost of rent incurred by the urban poor. However, the rental accommodation itself would come from the existing private providers at mostly prohibitive market rates. The Centre’s role, in short, is restricted to demand-side intervention, whereas what is actually needed are measures to increase the supply of social rental housing stock. With regards to supply, the entire onus has been put on the market.

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