1. Extract of the talk given at the Asia Pacific Forum held in Delhi on 3rd
and 4th
September 2015 on the
four verticals of Housing/ Sanitation/ Market/Microfinance.
By: Col.Prakash Tewari (Retd.)
Executive Vice President, JSPL
CSR & Education
ANALYSING - MARKET SYSTEMS FOR LOW INCOME HOUSING (LIH)
Introduction
1. As per 2011 census, out of a total population of 1211 million, 31%of the people live in urban areas.
From 2001- 2011 there has been a growth of 2.8% in the urban population resulting in increase in
urbananisation from 28% to 31%. This has resulted in shortages of land and housing and congestion in
transit and has stressed existing basic amenity like water, power, open spaces etc. Few months back I
got the report of the Community Satisfaction Index of the various developmental activities that we are
carrying out in our villages near to our plants. We found that we were doing much better than that of the
District and State in general. We also measured the Multi-Dimensional Poverty Index and Village
Development Index of all the villages where we are doing intervention. Our indexes were moderately
better than that we calculated for the state. Presently Human Development Index is taken as a
benchmark for measuring the development index of the state or cities. I feel that this index is more
quantitative than qualitative, and more of an aggregate and does not give the correct picture of the state
of affairs. I would like to express my views based on my experiences in Rehabilitation and Resettlement
work in Asia, Africa, Mumbai Middle East, Africa and Australia and Low Cost Housing in J and K with
Habitat for Humanity, Disaster in Nepal and resettlement of project affected people in Mozambique, South
Africa etc.
AFFORDABLE HOUSING
2. Before discussing the market system, I would like to throw some light as to what is affordable housing
as per my perception-
(a) MINIMUM VOLUME OF HABITATION- Due to pressure on urban land, the architecture whether
commercial or residential perforce has to go vertical. So how to find the right balance between
area standards and volume standard is a major decision to be taken for affordable housing.
(b) PROVISION OF BASIC AMENITIES- When one talks of affordable housing, they only talk of
minimum area and costs. One does not take into consideration the costs of basic amenities like
sanitation, water, power, parks, schools, health care etc.
(c) COST OF HOUSE- the cost of house includes the purchase price plus the maintenance. My
experience in Mumbai has been that LIH/ Slum Rehabilitation housing are given but there is no
mechanism for maintenance or sustainability after few years. People were made to run between
Maharashtra Housing and Development Authority (MHADA) and Bombay Municipal Corporation
(BMC).
(d) LOCATION OF HOUSE- the location has to be at reasonable distance from the workplace or
cities. These locations have to be properly connected through various government and private
transportation means.

2. ISSUES IN DEVELOPMENT OF AFFORDABLE HOUSING
3. There are various issues involved in development of affordable housing. Some of these are:
(a) Lack of availability of urban land. There is very scarce availability of urban land. In Metro and Cosmo
politician cities there are hardly any viable land parcels available where affordable housing can come up.
(b) Excessive control on development of land. Most of the information on the available lands is not
available and there is excessive control on development of land the details of which are not known to the
common man.
(c) Lack of marketable land parcels. There is lot of marketable land parcels that are available with the
railways, defense and ports. These organisations till date have not been able to have a long term
strategy and plans in place due to which are not been able to take decisions on the excess parcels of
land they hold in various locations.
(d) Issue of land titles & lack of information – There is lack of information and too much of red tape
involved in issue of land titles. Recently I had the experience of carrying out the mutation of the land in my
name in one of the states in India. My experience was very interesting as the advocate who makes the
documents, witnesses who have to identify you all was available at a cost.
(e) Rising threshold of control. My experience in Mumbai has been that every organization like BMC,
MHADA etc. wants control but no accountability. People are made to run from pillar to post with no clear
cut responsibility as to who is responsible for what.
(f) Lack of access to housing finance LIH. There are hardly any schemes available in the Government
with regards to low cost housing in the Country.
HOW TO DEVELOP MARKET SYSTEM/ MECHANISM
4. So the question arises as how to develop market systems and mechanism for the same, some of them
are given below:
(a) Role of technology – There are lot of new technology and mechanism available for developing LIH
with speed and scale in the least possible time. Some of these are High Reinforced Steel (HRS), with
speed floor, Magnesium oxide (MgO) boards, SNELL technology etc.
(b) Role of Government Policy. Government has to come up with policies which encourage affordable
housing for the economically weaker sections along with that of middle and higher income group.
(c) Role of housing finance companies- Dewan Housing Finance Corporation Limited (DHFL) is one of
the finance company operating in India and the second largest in the private sector led by Mr. Kapil
Wadhawan. The Company is still living the Founder’s Dream and enabling access to home ownership.
The company takes pride in its purpose-driven team of enthusiastic people who are willing to carry on the
Founder’s vision and transform the housing sector in India by providing affordable housing finance. The
Company has encouraged hundreds of thousands of people to make that upward journey by simplifying
financial access and providing them with the privilege of home loan products, insurance services and
unique fixed deposit schemes tailor made to suit their needs.
(d) Stratification –
As there is lack of space, the more prudent way of utilizing the space is by going vertical than horizontal.
It is usually found that while making the vertical dwelling units the LIG/ EWS, provision is not made for
maintenance costs due to which after a period of time the common property resources like lifts, parking,
gardens and other utilities become totally defund and non-functional.

3. GLOBAL RISKS
5. The world is facing a lot of problems and challenges because of thousands of people migrating to cities
every day. If this is not managed properly the cost of congestion, pollution will increase rapidly thereafter
affecting future prosperity. Some of the issues are discussed below-
(a) Extreme weather- They are events which are likely to be more frequent and more severe in coming
years. The concentration of people in vulnerable areas will worsen with the impact.
(b) Lack of fresh water- The demand for water is growing and is projected to shoot up by 40% in 20 years’
time. There is already a lot of stress in extensive local and regional water availability.
(c) Non communicable diseases (NCDs) - Being one of the most vulnerable to NCDs it is impacting both
families and the economy immensely.
(d) Lock in to fossil fuels- The continuous over utilization of non- renewable resources is leading towards
the depletion of fossil fuels at a very fast pace.
(e) Unsustainable urbanization- The population shifts from rural to urban areas and this gradual increase
in the proportion of people living in urban areas forces a society to self-sustaining mechanism/ coping
mechanism to mitigate various risks/ hazards needs to be controlled.
OPPORTUNITIES
6. Although the world is facing a large number of risks, but these risks also pave way for many new
opportunities which are coming in the face of Compact, Green and Connected Cities.
(a) The coming in of compact, green & connected cities which are reducing the capital cost of
infrastructure by initiating rural growth has proven a great opportunity. This is done by creating Job
opportunities in areas where there is lack of jobs. The concept has changed the way the cities were
developed before.
(b) In future there is a prospect of Smart cities which will provide big data and real time data that will
provide us with better use of resources and learning from the best. Some of the smart cities that are
present around the world are:
(i) Rio bus rapid transport - South America
The city faces a big challenge for transportation and to overcome this they are in the process of
constructing four BRT lines to improve mobility for 2016 Olympic Games.
(ii) Reclaiming roads for recreation – Columbia
The roads are made free from motorized traffic to allow free and safe circulation of people
using bicycle, skates or foot for few hours usually on Sundays or holidays.
(iii) Low carbon growth – South.America
They have come up with action plan comprising 26 actions to reduce GHG emission by 20% by
2019.
(iv) Green alleys & streets – U.S Philadelphia
The agencies undertake projects to incorporate Green stormwater in infrastructure elements
such as rain gardens, planters and street trees.
(v) City with forest urban – Melbourne
An implantation of Greening Strategy has been done in the city to improve vegetation, health,
forest diversity and soil moisture.
(vi) Integrated public transport – Denmark

4. The city has developed an integrated public transport system to ease out the mobilization of
people from one place to other
SOURCES OF FUNDS
7. There are different source for funding LIH, but it includes many risks with in itself. Some risks are
involved in finding a proper source to fund such schemes. Different countries have different schemes
ranging from private equity (North America and Europe) to long term private debts, deposits and
Government directed credit.
8. There are some models which are being followed by different countries in the world to provide LIH to its
people:
(a) Micro Lenders- SOUTH AFRICA BANKS
The micro-credit Program provides training and loans averaging $50-250 to increase income and
empower women. Marketing strategies and encouraging savings are an integral part of the program.
Loans (with interest) are usually 6 to 12 months in duration and are granted to members within women’s
groups for income generating projects. Women use their proceeds to enhance the lives of their children.
In March 2000, Standard Bank and African Bank also came up with Mass market & micro loan
partnership. Their prime responsibility was Credit approval, Micro lender and assets management.
(b) Housing Micro Credit – PERU
In Peru finance are being provided for Improving, expanding, subdivision, rebuilding and replacing the
existing houses.
(c) Private Equity-
The Banks & Large Corporates in Unites State provide Low Income Housing schemes by giving them
Tax Credits; further the Tax Credits are sold to banks.
(d) Innovative Underwriting In THAILAND
Government Housing Bank of Thailand Underwrite Loans to LIH by hiring purchase prior to mortgage, by
regular payment incentives and Long term land lease
(e) MANAGING CASH FLOW RISK IN MEXICO
In this country the property is mortgaged with market risk hedge to cope with ordinary or permanent
decrease in real wages.
CONCLUSION
There is a wide range of strategic approach to ensure successful housing reforms. It is important to
undertake systematic actions leading to simultaneous changes in the financial, legal and institutional
frameworks of housing. It should be clear that the market mechanisms are not the right solution for every
housing problem, but the market needs to operate efficiently to respond to household needs and
preferences. Comprehensive reforms, including more efficient forms of state regulation- legal, tax and
financial incentives in particular, are required to balance existing market imperfections and to enable
proper market system for low income housing.