Despite distinct advantages private sector offers in creating large stock of housing, involvement of private sector has to be done with care and caution. Since the operation of the private sector is largely driven by the motive of making large profit, with little concern of promoting public welfare, accordingly, appropriate checks and balances need to be put in place so that beneficiaries seeking houses are not fleeced, manipulated and exploited by the private sector. This would call for putting in place an appropriate policy/operational framework besides creating an independent regulatory mechanism so as to ensure that private sector behaves and operates in a professional manner and delivers all the promises made while launching any housing related scheme. Looking at the performance of private sector, with few builders cheating thousands of applicants without providing the promise apartments in Noida and other cities, even after receiving full payments for the promised houses, calls for appropriate mechanism to regulate their operations so that such incidents do not get repeated. Government must put in place an effective, efficient and dedicated framework for registering of only reputed builders /colonisers , who have appropriate knowledge, expertise, skill, resource, reputation and manpower to undertake the construction and deliver the promised houses. All fly-by-night developers must not be permitted to be involved in creating housing/ real estate sector. In addition, no private builder should be allowed to launch any scheme and receive money from the public for any house, unless the project is approved by the competent authority. Details of all the applicants registered with the developers for buying houses/flats must be displayed. All the approvals/ names of the applicants should be put on the specially created website/ through any other system, so as to bring into the knowledge domain of the people/community at large. Further, the progress of the project should be appropriately monitored periodically. Role of RERA ( Real estate Regulatory Authority), needs to be made more effective and efficient. Government should also undertake and launch dedicated programs, focusing on empowering and building capacity of the private developers on sustained basis by handholding., to make the sector more effective, efficient and productive

1. Role of Private Sector in Making Value Addition to Housing
 Jit Kumar Gupta
 Jit.kumar1944@gmail.com
Housing being a basic human necessity, is needed and required by the human beings for reasons
of security, safety, identity, quality of life etc. Housing needs vary largely and remain
individual/family centric based on income, affordability, resources available, family size,
availability of the basic inputs of life, cost of house etc. Accordingly, providing appropriate
housing has been largely an individual initiative. Over the period with rapid urbanization,
industrialization and rapid migration/mobility from rural to urban and urban to urban, led by
opportunities for gainful employment, making use of higher order of infrastructures involving
education, healthcare, trade and leisure, paradigm of housing demand shifted from rural and
became largely urban biased. Rapidly increasing demand of housing led by urbanization,
migration, infrastructures, employment and limited supply of the housing stock, led to shortage of
housing in the urban areas. Limited availability of resources with the migrants ,coupled with high
cost of creating shelter, led to creation of temporary and sub-standard housing on large scale in
the urban areas. These houses , being of temporary nature, made of waste/temporary materials and
devoid of basic amenities, led to creations of numerous problems of health, hygiene, safety and
quality of life. Looking at the role and importance of housing as determinant of quality of human
living, health and happiness, Governments operating at national level took up the agenda of
providing housing to all, as the goal to be achieved.
Looking at the entire housing related scenario in the country and studies made/ analysis carried
out, by various committees set up by the government, agencies/institutions involved in
construction/ promotion of housing and experts, have come to the conclusion that there exists
large gap between demand and supply in the housing sector and majority of gap has been found to
be in the housing related to economically weaker sections of the society. Considering the fact that
these sections do not have the capacity, resources and options for creating appropriate shelter
themselves, accordingly different strategies are required to be put in place for creating housing
in affordable category, where majority of demand exists. Considering the enormous housing
shortage there exists tremendous opportunities waiting for the private sector tobetapped.
In the past, housing for the weaker sections of the society was basically and essentially catered by the
government/parastatal agencies, but considering the large gap/ volume of the housing in the affordable category,
coupled with the limited resources and capacity available, government/parastatal agencies alone cannot fill this gap,
accordingly it will be desirable that private sector and individual beneficiaries must be actively involved and
empowered to play active role in creating appropriate housing . Private sectors, both in formal and informal
categories ,have been known to provide over 90 percent ofthe housing stock in the country. There exists wide gap
between the housing need and supply due to slow response ofsupply todemand. According to Rottenburg &Edel

2. (1972), the housing market often suffers from lags in supply adjustment due toconsiderable time taken to build a
new house.
Housing market remains distinct and unique for number offeatures that distinguishes it from other markets. These
features include: Immobility of housing units: Durability: Heterogeneity: Capital intensity ; Capital appreciation:
Labour intensity, Land focused; Technology driven; Externalities etc. Considering these peculiarities and
externalities, role of private sector assumes importance due to limitation existing on the part of the government
agencies to effectively, efficiently and appropriately address the issues related to housing. Globally, national
government in many countries have in recent times introduced large number of reforms and supportive policies
and programs, aimed atstimulating and assisting the private sector toplay leading roles in housing.
Rationale for Private Sector involvement in the Housing Sector
 Reason , rationale and logic governing the large scale involvement of private sector besides
the government/parastatal agencies, in the creation of large housing stock in general and in
the affordable category of housing in particular, emanates from the facts that besides
limitations imposed by the enormous backlog and limited availability of resources with
the parastatal agencies, private sector holds distinct advantages over the public sector in
creating large volume of housing stock. However, it has to be understood and appreciated
that creating adequate housing, without the support of the government will not be possible
due to large number of prevailing externalities which are controlled and regulated by the
government policies and approach to housing. Accordingly, government need to create
an enabling and supportive environment for the private sector to operate efficiently to
meet the housing needs of the people. Involving private sector in housing on large scale
has genesis in the following reasons;
 Historically, housing development has largely beenthe private driven- with private sector, (comprising of
individuals, co-operative and corporate organizations) contributing large proportion of housing stock in
the country.
 Private sector has shown and proven capacity, capability, efficiency and understanding
the house needs/ requirements of the beneficiaries in the production of appropriate
housing, as compared to the public sector agencies.
 Private sector has shown its capacity and efficiency in sourcing and assembling
appropriate land, design/construct the houses besides generating resources for the
completion of the housing.
 The private sector involvement goes beyond direct housing construction to manufacturing of all types of
building materials, supply oflabour and capital (Windapo, 2007).
 UN (1976), observes that if the national housing goals areto bemet, government should encourage, orient
and where necessary, supervise the private housing sector.
 Private sector is known to have capacity and capability to source cost- effective and time efficient
global/local technologies, to minimize the cost of construction and reduce time frame for construction of
houses.

3.  Private sector is known for achieving high order of operational efficiencies duly supported with efficient
and innovative management capacities/capabilities /techniques, which remain critical in creating large
volume ofhousing stock atminimal cost.
 Private sectorholds distinct advantages in cost-cutting without compromising with the quality , byadopting
processes and approaches based onmass production.
 Private sector has shown its capacity and proved its worth for sourcing materials in bulk at a mutually
agreed cost( generally much lower than prevailing market price) directly from the manufactures , at
minimal cost for minimizing cost-escalation due toincrease in the cost ofinputs during the project time.
 Private sector is known for its innovations, capacity and capability in project planning, designing ,
construction and completion of the projects without involving any time-overrun and cost- overrun.
 Private sector unlike public sector holds the distinct advantage of raising resources, organizing manpower,
involving new and innovative technologies ,infrastructure, and machinery in the minimum possible time
.
 Contemporary developments worldwide practices, approaches and strategies distinctly favour the private
sector driven housing development.
 Government in India, in its National Housing Policy and current flagship housing program- Prime
ministerAwas Yojna , both urban and rural, have emphasized the role and importance of involving the
private sector in creating affordable housing on large scale. The flagship program provides the option of
taking up such schemes either on standalone basis by the private sector or jointly byboth private sector
and the parastatal agencies operating in the housing sector. Indifferent states ,private sector is also allowed
to plan and develop housing colonies/construction of apartments by giving licensing of the housing
colonies. State of Haryana, is known to bepioneer in involving private sector through the mechanism of
licensing ofresidential colonies.
Limitations and Approach
For appropriately involving the private sector, numerous problems and road blocks that limit the
housing delivery has to be clearly understood and appreciated. Involving private sector would require on the
part ofgovernment/parastatal agencies tonot only put in place asupportive and enabling environment/regime
but also appropriate strategies to address the following factors, which largely impact the construction and
delivery of houses.
i. Cost oflabour
ii) Accessibility toland
iii) Costofbuilding materials
iv) Accessibility to housing finance facilities
v) Hindrances posed bygovernment policies, regulations and bye-laws;
vi) Access / provision to infrastructure
vii Inflation
viii) Corruption/greed

4. Privatesector wouldexpect that;Government should facilitate the private sector in sourcing land at an affordable
cost; grant appropriate permissions ontime bound basis; create anoption ofsingle window based system of project
approvals; minimize the number of approvals required; grant time bound completion/occupation of the project;
make available basic/supportive infrastructures like water supply/ electric connection on time bound basis; make
available financial resources at affordable cost; incentivize sourcing/ innovating state of art construction
technologies; promote industries producing of cost-effective construction materials/ materials produced from
industrial and agricultural waste; reusing the construction and demolition waste; reducing government taxes and
levies onland/ materials/ technologies involved in construction/transfer ofland/houses ; rationalizing building bye-
laws and development controls and granting higher floor area ratio/densities and incentivizing the completion of
houses within the prescribed time frame and within the defined cost.
Publicsector wouldexpect that ; Private sector should minimize profit and make houses both cost-effective and
qualitative ; deliver houses within defined time, defined quality, defined specifications and approved terms of
conditions ; create large housing stock in the affordable category where exists large demand/shortage; involve
beneficiaries actively in the planning, designing and construction of houses; create state of art architectural design
of houses; bring innovative speeder and cost-effective construction technologies; bring professional management
in the housing sector; create large variety of affordable housing options; create large stock of rental housing and
make housing sector affordable, qualitative and vibrant.
However, it needs to be understood and appreciated , that despite distinct advantages private sector
offers in creating large stock of housing, involvement of private sector has to be done with care
and caution. Since the operation of the private sector is largely driven by the motive of making
large profit, with little concern of promoting public welfare, accordingly, appropriate checks and
balances need to be put in place so that beneficiaries seeking houses are not fleeced, manipulated
and exploited by the private sector. This would call for putting in place an appropriate
policy/operational framework besides creating an independent regulatory mechanism so as to
ensure that private sector behaves and operates in a professional manner and delivers all the
promises made while launching any housing related scheme. Looking at the performance of
private sector, with few builders cheating thousands of applicants without providing the promise
apartments in Noida and other cities, even after receiving full payments for the promised houses,
calls for appropriate mechanism to regulate their operations so that such incidents do not get
repeated. Government must put in place an effective, efficient and dedicated framework for
registering of only reputed builders /colonisers , who have appropriate knowledge, expertise, skill,
resource, reputation and manpower to undertake the construction and deliver the promised houses.
All fly-by-night developers must not be permitted to be involved in creating housing/ real estate
sector. In addition, no private builder should be allowed to launch any scheme and receive money
from the public for any house, unless the project is approved by the competent authority. Details
of all the applicants registered with the developers for buying houses/flats must be displayed by
the developers. All the approvals/ names of the applicants should be put on the specially created
website/ through any other system, so as to bring into the knowledge domain of the of the

5. people/community at large. Further, the progress of the project should be appropriately monitored
periodically. Role of RERA ( Real estate Regulatory Authority), has to be made more effective
and efficient. Government should also undertake and launch dedicated programs, focusing on
empowering and building capacity of the private developers on sustained basis by handholding.,
to make the sector more effective, efficient and productive .