Embed Size (px)
Citation preview
CHAPTER II
HOUSING PROBLEM IN INDIA AND KERALA
2.1 Introduction
Housing problem is a universal phenomenon. Housing situation is
alarming not only in poor and developing countries like India, but also in
affluent and advanced countries of Europe and America. This view has been
expressed by Charles Abram stating that so far as housing is concerned, the
whole world has remained underdeveloped. There is probably not a single
major city in the world without some form of housing problems. He added that
in Los Angles and Tokyo, in New York and in Moscow, in Honkong and in
Paris, in Stockholm and in Brasilia, housing is a serious issue. The continuing
deterioration of housing conditions is due to inadequate allocation of
resources to meet the needs of a global population that is increasing at the
rate of 2 percent (corresponding to a doubling every 30 years) of an urban
population that is increasing at the rate of 3.2 percent per year, and a rural
44
population, that is generally neglected1. According to UN Habitat estimates
(2003), 60 percent of the world’s population will be living in urban areas by
2015, the year set by world leaders to achieve the water and sanitation
related Millennium Development Goals. It is further estimated that 90 percent
of the population increase between now and 2015 will be in urban areas 2.
2.2 Housing and Housing Finance
A house is a permanent shelter to protect the human beings from
vagaries of nature. Hence, adequate housing is a fundamental need of every
human being. The international community has acknowledged the peoples’
claim to have a safe roof-a shelter against bad weather. In the Universal
Declaration of Human Rights, housing is included as a ‘Package’ right to a
standard of living adequate for health, including food, clothing, medical and
social services. Article 11 of the International Covenant on Economic, Social
and Cultural Rights repeat this, adding the right to a continuous improvement
in living conditions.
Since the adoption of the Universal Declaration of Human Rights, there
has been a progressive change in the concept of housing as a right. Periodic
studies, such as the UN World Population and the world social situation, have
given an insight into crying social and economic needs, and economic and
social indicators have developed as measuring tools of progress. It is no
longer an element of what should be an “adequate standard of living”, but has
become part of the concept of ‘human settlement’, covering metropolis as well
as the township and the village and all the physical needs of the community
45
from family housing to schools, hospitals, roads and water supply. Thus, now
housing is a symbol of social prestige and an indication of the standard of
living of the people.
Housing Finance
Housing has become inaccessible to a common man due to the
spiralling increase in the cost of land, construction cost, and the cost of
providing other amenities. His life-time savings will not be sufficient for owning
a house. So, he needs the support of some institutions through credit
assistance for meeting his primary need of shelter. Thus, housing finance is
the arrangement and provision of finance or money to facilitate purchase or
construction of new house or flat and also for extension, repairs and
maintenance of the existing house. The fact that housing is a very expensive
service which needs huge capital outlays testifies the vital role of finance in
housing sector.
2.3 Demand -Supply Gap in Housing Sector
The housing need should be distinguished from housing demand for
the person’s need should be supported by his ability to pay for it. Every
human being aspires to have his own house to live in. Housing is the third
most important human requirement after food and clothing. But, there are
many less privileged who are not able to pay for it. Therefore, the housing
need may be far more than the housing demand. However, the demand for
housing exceeds its supply resulting in a wide gap. S. Sridhar, Chairman and
46
Managing Director of NHB, said that the gap between demand and supply in
the affordable housing segment is currently about 23 million units and will
further rise with the increase in urbanisation3.
A number of reasons may be attributed to the ever increasing demand
for housing in recent years. It includes the formation of nuclear families, tax
incentives by the Governments, fastest wage growth, migration of people from
rural to urban areas, increased urbanisation, softening of interest rates,
convenient terms and conditions in the housing loan agreement, additional
benefits given to borrowers such as free insurance, waving of processing fee
etc. Besides increased rate of formation of new households, considerable shift
in home ownership pattern i.e., younger population striving to acquire their
own houses also has resulted in increased demand for housing loans.
Further, the quality of new real estate offering has improved
considerably. Promoters are no longer selling space; they are marketing a life
style. As a result, a number of people are trading their old residences for new,
a number are emerging as first time house owners and some are even
investing their cash surplus in a second place of living4. Increase in business
opportunities keeps the demand for office space high and this fuels the
demand for more housing needs too5.
As per the 10th Five Year Plan (2002-2007), the total number of houses
that would be required cumulatively during the plan period is estimated at
22.44 million dwelling units. It is estimated that the investment required from
public sector institutions would be of the order of Rs.4,15,000 crore. This will
47
have to supplement the contribution from private players to tackle the growing
demand for housing finance during the plan period6. The housing finance
institutions and the banks have made significant strides in facilitating people in
their efforts to own a house by providing innovative loan products.
2.4 Housing Finance and Economic Development
Housing finance has been regarded as the ‘engine of growth’ by many
developed nations of the world. In India, housing finance business has
assumed great significance during this decade as a result of the entry of
commercial banks in this sector. The fiscal and monetary incentives and
budgetary provisions by the central government also triggered the growth of
this sector. Further, increasing number of nuclear families, mushrooming
middle class, rising purchasing power, reduction in interest rates, growth in
urbanisation and above all, the low default rate (NPAs), all have made
possible the growth of housing finance sector at a phenomenal rate. The
multiplier effect of investment in housing has grown over the past years as the
proportion of outstanding housing loans as percentage of GDP increased from
3.4 percent in 2001 to 6.1 percent by 2004. In the last five years (2003-2008),
housing finance has recorded compounded annual growth rate of 30 per
cent7. In spite of this growth in the housing sector, there is enormous scope
for improvement as the present level of investment in housing in our country is
meagre as compared to the figures of more than 50 percent in some of the
developed countries like US, UK and Netherlands8.
48
The importance given by the government to improve the housing and
habitat conditions is reflected in the financial allocations in the Five Year
Plans and fiscal incentives related to housing announced in the Union
Budgets.
2.5 Housing Problem in Developing Countries
The developing countries are experiencing the dramatic impact of rapid
population growth, increasing industrialisation and massive urbanisation.
These had led to a host of problems such as acute housing shortage,
congestion and overcrowding in urban centers, formation of slums and
squatter settlements, spiralling of urban land prices, frustrating traffic and
transport problems, inadequate community facilities and services, chronic
unemployment and the like. Finding solutions to these problems become
more difficult mainly on account of the availability of limited resources. In view
of the serious social, economic and political implications of this situation,
particularly where urbanisation is out pacing industrialisation, there is a
pressing need for more vital action.
Developing countries, during the past few decades, have formulated
and implemented new policies and programmes to increase the access of the
urban poor to shelter and services. Governments in some countries also
enacted programmes to provide access to land for shelter (by providing
security of land occupation to squatters) and to increase the access of the
urban poor to the financial institutions and encourage domestic savings for
housing requirements.
49
The Third World Cities also face serious housing problems. The poor
migrants to the cities can not afford to build or buy a house. Further, the huts
which are illegally built in cities lead to a variety of urban problems. The net
result is that a great number of people have no access to even the slum and
squatter settlements and they have to spend their life on footpaths, in packs,
in sewage pipes etc.
Among the democratic countries housing shortage is perhaps the
largest in India. A total of 271 million people consisting 37.4 per cent of the
population are below the poverty base line in our country9. A large percentage
of the population even above the poverty line cannot afford to acquire a house
as they hardly have any significant saving out of their low income. It is
estimated that in Calcutta about six lakhs and in Bombay about one lakh
people sleep on the pavements, enjoying no family life, no privacy, no
protection from weather and no means for disposing of human waste.
The problem of housing need is to be viewed in the overall
environment of human settlement. Apart from physical dwelling units, the
provision of basic amenities like drinking water, sanitation, drainage and
electricity is also important. Increasing population, high cost of land and
construction, unemployment etc. made housing inaccessible to the poorer
sections of the society. This necessitated state intervention in the housing
activity by considering it as a social and economic obligation. Hence, housing
policies and programmes recognized the necessity of state intervention to
meet the housing requirements of vulnerable sections and to create an
50
enabling environment for accomplishing the goal of ‘Shelter for All’ on a self
sustaining basis10.
2.5.1 Housing Problem in India
India is the second largest populated country in the world with a
population of 1027 million. To provide adequate housing to these billion plus
population is a difficult task. The problem of housing has been aggravated
further as a result of the break down of joint family system, urbanization,
increasing unemployment, non availability of land, increase in construction
cost and the like. Thus, the housing problem in India is essentially
multidimensional. The magnitude of the housing problem arises out of the
interplay of climate and geographic diversities, inter-regional socio-economic
differences and differences in the level of state intervention, in addition to the
initiatives taken by the public, private and co-operative sectors. Hence,
housing development requires a comprehensive and an integrated approach.
Government, public and semi-public agencies carry out various activities
relating to housing development programmes almost independently. There is
considerable investment in housing by the informal sector covering
households, public and private builders providing houses on hire-purchase
basis etc. However, the country is facing acute housing shortage. Against the
milieu of rapid urbanisation and a changing socio-economic scenario, the
demand for housing has grown explosively. The houseless population and
houseless households during 1961-2001 is shown in Table 2.1.
51
Table 2.1
Houseless Population and Houseless Households during 1961-2001 (in Lakhs)
Houseless Population (No.) Houseless Households (No.)
Year Rural Urban Total Rural Urban Total
1961 9.70 1.95 11.65 NA NA NA
1971 15.20 4.66 19.86 3.88 1.77 5.65
1981 17.24 6.19 23.43 4.13 2.03 6.16
1991 12.82 7.25 20.07 3.05 2.17 5.22
2001 11.65 7.89 19.44 2.60 1.88 4.48
Source: National Building Organisation (based on census data)
The total houseless population has increased from 11.65 lakh in 1961
to 23.43 lakh in 1981 and then decreased to 19.44 in 2001(increase over
1961 was 67 percent). The houseless population in the rural areas increased
from 9.7 lakh in 1961 to 17.24 lakh in 1981 and then declined to 11.65 in
2001(20 percent increase). As against this, the urban houseless population
has been showing a steady increase since 1961 (increase over 1961 was 305
percent). The number of houseless households increased from 5.65 lakh in
1971 to 6.16 lakh in 1981 and then gradually declined to 4.48 lakh in 2001.
When we observe the trend shown by the statistics, it can be said that
the initiatives taken by the government for rural housing somewhat helped to
reduce the housing problem at rural level.
52
2.5.2 Housing Shortage
The housing shortage in the country as per Censes 2001 is estimated
at 24.68 million units and is likely to go up to 26.53 million during the Eleventh
Five Year Plan11, i.e., 2007-12. A plethora of reasons can be attributed to the
ever increasing shortage of housing stock in the country which may include:
i) Rapid Growth in Population
The population increased from 54.82 crore in 1971 to 102.87 crore in
200112, i.e., it has almost doubled during the past 3 decades.
ii) Rate of Urbanisation
The increasing speed of urbanisation is a major contributor to the acute
housing shortage. In the countries facing over urbanisation the rural
population migration to the cities, is caused more by population pressure in
the rural areas than by the attraction of growing economic opportunities in the
urban areas. There has been a fast trend towards urbanisation (called
‘urbanisation explosion’) in spite of the predominant rural nature of Indian
economy. The rate of urbanisation is caused by factors such as:
a) Rate and Pattern of Urbanisation
The rate of urbanisation has been very fast with the growth of towns.
As per NBO sources the number of towns has increased from 1917 in 1901 to
516113 in 2001with an overall increase of 169 percent.
53
b) Fast Growth in Urban Population
In 1901 the share of urban population in total population was 10.8
percent which increased to 27.8 percent in 2001. In absolute terms the urban
population in 1901 was 25.8 million which increased to 286.1 million in 200114
showing11 times increase.
c) Large Increase in Big Towns
The number of class one towns (population one lakh and above) has
increased from 25 in 1901 to 441 in 2001 showing an increase of 1,664
percent. During the decade 1991-2001 itself, class one towns increased from
322 to 441 registering an increase of 37 percent 15. The increasing trend
towards urbanization and the consequent rise in urban population is caused
mainly due to the factors such as: natural increase in population, migration,
expansion of town boundary etc.
iii. Quality of Home
Another dimension of the housing problem is that it has two distinctive
characteristics-quantitative and qualitative. It is more of qualitative in the rural
areas and largely quantitative in the urban areas. Viewing from the qualitative
aspect, housing conditions in terms of essential facilities like drinking water,
drainage, bathroom facility, source of power and environmental hygiene are
far from satisfactory. According to Census 2001, 16.7 percent households in
54
India have no access to any source or location of drinking water, 39 percent
have all sources within premises and 44 percent have the sources near
premises. In Kerala the situation is quite satisfactory that 72 percent of the
households have all sources within premises, 16 percent have the sources
near premises and 12 percent have sources away from premises. With regard
to drainage facility, 10 percent of the population in India have no drainage
facility (Kerala 17 percent) and 12 percent have no bathroom facility of any
type (3.3 percent in Kerala). Only 10.4 percent has the facility of electricity
(Kerala, 14.6 percent) 16.
Housing stock can also be classified on the basis of the materials used
for construction of roof and wall. They are: pucca, semi pucca and kutcha
houses. Pucca houses (those using durable materials for either roof or walls)
are made of durable construction materials like burnt bricks, G.I. and other
metal sheets, stones, cement, concrete etc. for walls. Roofing is made of
sheets, asbestos, cement sheets, burnt bricks, tiles, RCC etc. ‘Kutcha’ houses
(those which are made of non-durable materials and require complete
replacement in the imminent future) can be either serviceable ‘Kutcha’ houses
which are made of non durable but serviceable materials like mud for wall and
thatch for roof and unserviceable ‘Kutcha’ houses having walls with mud and
thatched with grass, leaves or reeds. Semi-pucca houses have either walls or
roof of pucca materials and the other of kutcha materials. The ‘Kutcha’ houses
need to be replaced with Pucca houses or semi Pucca houses.
55
iv. Natural Calamities
Natural calamities like tsunami, earth quake etc. cause complete or
partial damage to a lot of houses. Such houses need to be reconstructed.
Hence, damage caused by natural calamities also adds to housing shortage.
v. Others
Slow growth of house construction activities due to increasing cost of
materials, non-availability of materials, hike in land prices, financial constraints
etc. are also responsible for the housing shortage in the country.
Housing Shortage in India (State-wise)
The housing shortage and the housing condit ions of the
people vary widely from state to state and from region to region.
The housing shortage in India by States during 2001 is given in Table 2.2.
Table 2.2 Housing Shortage in India by States-2001
(In million)
Housing Shortage State/UT
Rural Urban Total Andhra Pradesh 1.27 0.95 2.22 Arunachal Pradesh 0.12 0.02 0.14 Assam 2.22 0.14 2.36 Bihar 3.95 0.35 4.30 Chhattisgarh 0.02 0.08 0.10 Gujarat 0.70 0.99 1.69 Goa 0.02 0.02 0.04 Haryana 0.13 0.21 0.34
contd..
56
Housing Shortage State/UT
Rural Urban Total Himachal Pradesh 0.00 0.01 0.01 Jammu & Kashmir 0.11 0.07 0.18 Jharkhand 0.04 0.11 0.15 Karnataka 0.48 0.66 1.14 Kerala 0.33 0.31 0.64 Madhya Pradesh 0.05 0.39 0.44 Maharashtra 0.73 1.37 2.10 Manipur 0.05 0.03 0.08 Meghalaya 0.15 0.02 0.17 Mizoram 0.04 0.01 0.05 Nagaland 0.09 0.00 0.09 Orissa 0.49 0.37 0.86 Punjab 0.09 0.21 0.30 Rajasthan 0.14 0.30 0.44 Sikkim 0.01 0.00 0.01 Tamil Nadu 0.44 1.54 1.98 Tripura 0.18 0.03 0.21 Uttar Pradesh 1.08 1.04 2.12 Uttaranchal 0.05 0.08 0.13 West Bengal 1.09 0.64 1.73 A & N Islands 0.02 0.01 0.03 Chandigarh 0.00 0.02 0.02 Dadra & Nagar Haveli 0.00 0.00 0.00 Daman & Diu 0.00 0.00 0.00 Delhi 0.02 0.53 0.55 Lakshadweep 0.00 0.00 0.00 Pondicherry 0.01 0.03 0.04 All India 14.12 10.56 24.68
Source: NBO (based on census data)
Three states (U.P, Maharashtra and Tamil Nadu) account for
37 percent of the urban housing shortage and 5 states (A P,
Assam, Bihar, Uttar Pradesh and West Bengal) account for 68
percent of the rural housing shortage.
57
2.5.3 Housing Stock
The housing stock is assessed as the sum of the houses for residential
use and residential-cum other use. The number of additional housing required
depends on two things, namely; (i) the population growth and (ii)
unserviceable housing stock. Apart from this, damage caused by natural
calamities also adds to this. The housing stock in the country for the last two
decades is shown in Table 2.3.
Table 2.3
Housing Stock (All India basis) (Million)
1981 1991 2001
Rural 81.88 108.47 135.10
Urban 26.07 38.74 52.06
Total 107.95 147.21 187.16
Increase (%) -- (36.37) (27.14)
Source: Compiled from Report on Trend and Progress of Housing in India, NHB, June 2003, p.81.
The total housing stock increased from 107.95 million in 1981 to
147.21 in 1991 and again to 187.16 million in 2001. However, growth rate of
housing stock during 1991-2001 was only 27.14 percent as compared to
36.37 during the previous decade. This also has resulted in the increase of
housing shortage.
India’s total population of 1028.61 million, as per Census of India,
2001, consists of 191.96 million households residing in 187.16 million housing
58
units. Decennial growth rate of population, households and housing stock
from 1971-81 to 1991-2001 is shown in Table 2.4.
Table 2.4
Decennial Growth Rate of Population, Households and Housing Stock: 1971 to 2001
Decennial Growth Rate (Percentage)
Type 1971-1981 1981-1991 1991-2001
Population 46.6 36.3 31.5
Households 52.4 40.0 31.8
Urban
Housing stock 50.3 44.8 32.0
Population 19.9 19.6 18.1
Households 19.9 20.5 22.7
Rural
Housing stock 19.9 25.0 23.9
Population 25.2 23.5 21.5
Households 26.3 25.1 25.1
Total
Housing stock 26.0 29.7 26.1
Source: Report on Trend and Progress of Housing in India, NHB, June 2004, p.79.
In urban areas, the decennial growth rate of population, households
and housing stock has been showing a declining trend. But, in rural areas, the
growth rate of household formation has increased steadily from 19.9 to 22.7
while the growth rate of housing stock decreased from 25.0 in 1981-91 to 23.9
in 1991-2001. The decline in the growth rate of housing stock coupled with the
increase in the growth rate of household formation aggravates housing
shortage, especially in rural areas. But, it is to be noted that the growth rate in
the housing stock is higher than the growth rate of households. This has
59
resulted in the reduction of the housing shortage as well as the ratio of
households to housing stock.
2.6 Housing Finance Policy
It is a matter of policy for the government to provide shelter on the
heads of all poor, disabled and backward classes. The RBI controls the
commercial and co-operative banks in respect of their housing finance
schemes. The RBI directed the banks to treat the housing finance as a priority
sector activity and to allocate 1.5 percent of the incremental deposits for
housing finance purposes. The NHB continued to develop the housing finance
sector through its regulatory and developmental role. As a result of this,
during 1996-97, HNB has deregulated the interest rates paid on deposits
accepted by HFCs, with net worth of Rs.50 lakh and above. Similarly, their
lending rates for all loans above Rs.50,000 are freed for the purpose of
recognition by NHB for its refinance schemes. A refinance scheme for the
RRBs has also been introduced for their housing finance advances. With the
sole objective of facilitating and promoting the financing of the housing and
urban development projects, HUDCO was incorporated as a fully owned
government company.
National Housing and Habitat Policy
The National Housing and Habitat Policy (NHHP) 1998 had envisaged
eradication of houselessness, improvement in housing conditions of the
inadequately housed people and providing a minimum level of basic services
60
and amenities to all. The Policy recognized the role of Central and State
Governments, co-operative sector, private sector and various other agencies.
It stressed the role of the Government as a facilitator rather than a provider.
The main aim of the policy was to enable strong public-private partnerships
for tackling housing and infrastructure related problems by participating the
private and co-operative sectors in a collective endeavour. For this, the
Government is providing fiscal concessions, supporting legal and regulatory
reforms and is engaged in creating a healthy environment for housing.
2.7 Housing Situation in Kerala
Housing is a leading sector in Kerala, generating employment and
income to a large number of skilled, semi skilled and unskilled workers. The
overall employment generation in the economy due to investment in housing
is eight times the direct employment17. As per Census 2001, the housing
stock in Kerala was 66 lakh which was 3.75 percent of the total stock of
housing in the country. The demand for housing by 2011-12 is assessed at
around 10 lakh units, taking into consideration the reconstruction of
dilapidated houses and renovation of houses. The number of dilapidated
houses as per the survey reports of Housing Commissionerate was 15.45
lakh.
61
2.7.1 Housing Shortage in Kerala
Kerala is also facing severe housing shortage which is
diverse in nature and enormous in magnitude. The housing problem
in the state affects the really poor and needy. Paucity of purchasing power,
poverty, lack of security of tenure for land, speculative land market, inflexible
housing finance system, inappropriate planning and building regulations, lack
of awareness about appropriate building materials and construction
technologies and problems with the institutional framework are barriers in
providing adequate support for the poor.
The number of sub-standard houses with high density and over
crowding, poor sanitary conditions, absence of basic amenities and slum-like
conditions are concentrated in certain rural and urban pockets in the state.
Though the number of housing shortage in 2001 was only 63 thousand units,
the number of dilapidated houses was 5.38 lakhs. With rate of growth of
family formation, another 4.0 lakh houses may be required to accommodate
newly formed households. It is estimated that there is a demand for 10 lakh
houses in urban and rural areas needing investment of the order of Rs.
28,000 crore covering the needs of all groups. Nearly 4.6 lakh houses are
needed for the very poor under EWS in urban and rural areas, around 1.4
lakh for EWS above poverty line, 2 lakhs for low income group, 1.5 lakhs for
middle income group and 0.5 lakhs for high income group families18.
In the budget speech 2000-01, the Finance Minister of Kerala,
Mr. Sivadasa Menon stated that the government is committed to its declared
62
goal of providing housing for all the homeless and landless people over state
in a phased manner and Rs. 30 crore have been set apart for the subsidy
component of 33,000 houses under the Maitri Housing Scheme. As a special
resource mobilisation scheme the government also introduced a Special
Bumber Lottery for raising funds for housing of the homeless in the state.
The problem of rural housing in the state is more acute than in urban
areas. According to 2001 census the housing shortage in Kerala was 6.4 lakh
units of which 3.3 lakh were in rural areas and 3.1 lakh in urban areas. Apart
from filling the gap between the existing housing units and the number
needed, it also poses a problem of replacing the existing units which are
unserviceable kutcha houses in the nature of dilapidated structure unfit for
human habitation. In 2001, more than eight percent of the households lived in
extremely poor quality or dilapidated houses as against the 5.6 per cent at the
all India level. Inadequate housing seems to have created several sociological
and psychological problems among the people living on the margins.
The housing shortage is estimated on the assumption that every
household has a dwelling unit at least of serviceable kutcha nature. Cities and
towns in Kerala are also experiencing severe growth of slums and squatter
settlements due to rapid urbanisation. It is estimated that 15-20 percent of the
urban population is living in unhealthy environments. The slum population is
estimated to be 13.6 lakh in Kerala.
The problem of providing suitable accommodation is being confronted
all over the state. The large inflow of foreign money has increased the cost of
63
land and construction enormously as most of the NRIs invest their funds in
real estate. This has resulted in a situation where the LIG and MIG cannot
afford to have a piece of land or a house. High cost of building materials, high
construction cost, private enterprises operating on huge profit motive and the
increasing trend of interest rates on housing loans are other constraints which
directly affect the supply of housing. In this background the government
agencies should take initiative to construct low cost houses for low income
groups in rural areas and to improve the quality of life of the weaker sections
of the society. The homeless families in the districts of Kerala are given in
Table 2.5.
Table 2.5
Homeless Families in Kerala Sl. No. Districts No. of Families with
land but homeless No. of Families-landless
and homeless 1 Thiruvananthapuram 30,989 42,445 2 Kollam 25,527 20,165 3 Pathanamthitta 18,270 21,198 4 Alapuzha 9,668 6,709 5 Kottayam 1,06,226 12,052 6 Idikki 11,967 71,104 7 Ernakulam 22,230 19,128 8 Trissur 27,286 19,959 9 Palakkad 35,272 35,571 10 Malappuram 14,763 15,990 11 Kozhikode 19,373 13,038 12 Wayanad 14,972 19,266 13 Kannur 27,688 31,717 14 Kasaragod 8,253 4,614
Total 3,72,484 3,32,866
Source: Kerala Housing and Habitat Policy -2007, Government of Kerala Task Force on Housing, May 2007, p.30.
64
As stated in the Kerala Housing and Habitat Policy -2007, there are
3,72,484 families with land but homeless and 3,32,866 homeless families
without land. The Kottayam district has the highest number (1,06,226) of
homeless families with some land. The number of landless and homeless
families is the highest in Idikki district which accounts for 71,104 families.
The trend in population growth and the projected demand for housing
in Kerala is shown in Table 2.6.
Table 2.6
Trend in Population Growth and Projected Housing Demand
Year Population (Nos)
Increase (%) Houses
(Nos)
Increase (%)
Family size
1981 254,53,680 - 46,11,486 - 5.53
1991 290,98,518 14.3 60,26,320 30.7 4.83
2001 318,41,374 9.4 65,41,120 8.5 4.87
2007 327,96,615 3.0 69,85,419 6.8 4.68
2011 33,751,857 2.9 83,42,384 19.4 4.05
2021 35,776,967 6.0 88,33,819 5.9 4.05
Source: www.hsgcomr.keralagov.in
Since1981 both population and demand for housing shows an increase
but at a diminishing rate. The population increased from 254,53,680 in 1981
to 327,96,615 in 2007 showing an overall increase of 28.9 percent. During the
same period, the demand for housing increased from 46,11,486 to 69,85,419
registering 51.5 percent increase. It is to be noted that the average family size
65
decreased from 5.53 to 4.68 during the same period and expected to
decrease to 4.05 in 2011 and 2021.
2.7.2 Kerala Housing and Habitat Policy-2007
Kerala Housing and Habitat Policy -2007, is in continuation of public
sector interventions of housing initiatives in the state during the last 5
decades. Kerala has been a pioneer in the housing sector with the historic
One Lakh housing programme taken up in 1971. Housing programmes under
SASH, Maitri, Kairali, Thanal etc. are the other important initiatives taken up in
subsequent decades. The first Housing Policy of Kerala was brought out in
1994. These policy initiatives focused on transition of public sector role as
`facilitator’. Decentralization, development of fiscal incentives and
concessions, accelerated flow of housing finance and promotion of
environment-friendly, cost-effective and pro-poor technologies.
The Kerala Housing and Habitat Policy 2007 is a response to the need
of a housing revolution in Kerala. The main aim of the Policy is to ensure
“Housing for All” leading to sustainable development of human settlements
and providing a better quality of life to all citizens using potentials of all the
stakeholders. Thus, the policy ensures equitable supply of land, shelter and
services at affordable prices for all groups of people in rural and urban areas
in the state. The State’s remarkable achievements in the sphere of social
sector and human development are well reflected in the general housing
situation. Thus, at the aggregate level, the mismatch between the households
and occupied residential houses in 2001 was 63,000 units only- or less than
66
one per cent of the housing stock in the State. But, the housing problem of
very poor households remains unsolved19.
So, in order to ameliorate the housing problem in the state, Kerala
Housing and Habitat Policy-2007 provides several innovative schemes and
programmes to help the weak and the needy. During 1996-2006 government
agencies/departments have provided assistance to construct 718,851 houses.
About 80 per cent of the support provided by the State to various housing
programmes has gone to EWS. During the decadal period, over 14.5 lakh
houses have been constructed through all initiatives20.
The following are some of the specific action areas envisaged in the
Housing and Habitat Policy- 2007.
• Creation of a State Shelter Fund with annual accretion of Rs.50 crore.
• Establishment of a ‘Bhavana Nidhi’ by tapping investments from non-
resident and resident Indians.
• Strengthening of the micro finance credit institution for SHGs and NGOs.
• Tapping of additional financial resources through a separate savings- cum
loan scheme.
The policy also proposes levy of one percent cess on the cost of
individual residential units with a built up area of 3000 sq.ft. and above, which
will be pooled into the State Shelter Fund for EWS and LIGs. The policy lays
emphasis on environment-friendly development with energy saving
applications such as solar water heating, rain water harvesting, waste water
67
recycling and use of building materials and construction methods that are
least energy intensive.
Kerala has been a pioneer state in introducing cost effective housing
and appropriate technologies in housing contribution with many innovative
technologies, pioneered by Padmashri Laurie Baker. This has been taken
forward through many technology transfer initiatives through the network of
District Nirmithi Kendras, KESNIK, COSTFORD, HTG, IRTC, Mitra Niketan,
KSHB, etc. To make suitable strategies for housing and sustainable
development of human settlements, this Policy takes note of shelter
conditions, access to services and opportunities for income and employment
generation with particular reference to poor.
2.8 Housing Finance in Kerala
2.8.1 Problem of Financing for Housing
Adequate shelter is essential for every human being to have a dignified
life. But, there is acute housing shortage in the country which is estimated to
be 24.7 million units. The need for housing finance at affordable terms is an
important reason for the total backlog of housing in India especially in Kerala.
The total housing finance requirements are of two types: firstly, to wipe off the
existing housing backlog and secondly, to meet the annual deterioration of
housing stock. Housing sector is directly linked with the financial sector. The
fact that housing is a very expensive service which needs huge capital
68
outlays, testifies the vital role of finance in housing sector. In fact, housing
loans is a function of finance to a great extent.
The market forces dominate the housing scenario in the State. Modern
structural design options and quality building materials are available at
competitive rates. The reduction in the interest rates, fiscal incentives given by
the government, expected savings in rent etc., have made housing more
affordable to the common man. But, the people living on the margins of
mainstream development cannot afford modern building materials and
technology. Only the affluent can afford a house with all its amenities. Even
then they also require financing from external sources, since the target is
always set beyond their means. The demand for housing finance also
emanates from the desire to own a house in the early age. There is also the
problem of new consumer preferences and of the perception that traditional
material and methods may not be sturdy. Again, homeless people or those
without adequate housing aspire to get houses built with modern materials
and to scales they cannot afford. They make plans for constructing bigger
houses, which require larger investment. Again, the linkage of housing with
other industries has boosted the economy as well. Thus, housing finance acts
as a facilitator to the housing industry. To make it brief, increased housing
activity consequent to the enhanced demand for housing necessitates the
requirements of housing finance.
In order to tap this potential of demand for housing finance, a number
of institutions emerged in this field. They are offering innovative housing loan
69
products to meet the varied requirements of present and prospective
borrowers. Thus, financial assistance provided under the public housing
schemes is inadequate to satisfy their requirements. Therefore, the present
form of public housing schemes needs some realistic change.
The significance of housing finance in Kerala can be evaluated in terms
of certain unique features of the state, such as high population density, high
literacy rate, per capita availability of land, inflow of funds and narrow rural-
urban division. Kerala represents only 1.18 percent of the total area of the
country but 3.43 percent of the total population. The density of population in
Kerala is 819 as compared to 324 for India. The literacy rate in the state is
high (90.92 percent) as compared to 65.38 percent for India21.The increasing
unemployment prompted people to migrate to other countries or states in
search of job resulted in large flow of funds into the state. Such funds are
largely used for construction or purchase of houses and/or investment in real
estate. The narrow rural- urban divide influenced the preference of the people
to own high quality dwellings. Now, the attitude of the people has changed
that even an average Keralite prefers to have a big, beautifully designed
house with modern facilities using external finance apart from own savings.
The total houses constructed during 1996-2006 works out to 5.77 lakh
and the projected total number of houses in the state by 2007 is found to be
69.85 lakh. During the past 10 years, 7.19 lakh houses have been constructed
under assisted schemes and 7.46 lakh units under loans schemes22. It shows
that nearly 50 percent of the houses being constructed need Governmental
assistance. Houses constructed under the assisted schemes during 1997- 98
to 2006-07 are given in Table 2.7.
Table 2.7 Houses constructed under the assisted schemes during 1997– 08 to 2006 – 07
Sl. No Name of Schemes 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 Total
1 LAY 12834 9452 20729 19092 21372 32107 42020 42643 36413 13896 2737602 JRY 4969 4682 0 0 0 0 0 0 0 0 164013 JGSY 0 0 3629 2613 2520 843 448 648 620 0 113214 Vambay 0 0 0 0 1330 11528 6926 6137 1546 0 274675 NSDP 1050 5157 6794 2921 1789 3685 1188 802 244 0 236706 Bhavanasree 0 0 0 0 0 0 0 33833 0 0 338337 ROMHS 1400 0 0 0 0 0 0 0 0 0 24008 NFWF 1713 1550 1400 985 2000 445 1500 1500 1500 1500 152129 Special Package
Scheme 0 0 0 0 0 0 0 0 2500 0 2500
10 House cum work shed 500 500 0 0 371 0 77 0 0 0 1448
11 Housing to Tribalfamily 510 461 228 100 3788 1746 393 104 508 1430 9268
12 GOI grant 0 500 0 0 500 371 250 77 0 0 1698 13 Kerala State
Handloom Corpn 500 500 0 0 0 0 0 250 0 0 1250
14 ARHS 0 2 0 0 0 0 0 0 0 0 1115 NARHS 284 158 67 42 40 18 26 9 12 0 141816 IGLHS 38 1140 951 269 99 13 18 15 22 14 257917 SC ST Department 0 0 0 0 0 43 152 0 466 559 1220 18 EWS 31107 43853 69225 78901 20194 11888 10673 4293 1432 112 293395 Total 54905 67955 103023 104923 54003 62687 63671 90311 45263 17511 718851
Source: Compiled from Economic Review, Government of Kerala, concerned years.
71
Total houses constructed under the assisted schemes during the past
ten years (1998-2007) worked out to be 718851.This shows the increased
involvement of the government in alleviating the acute housing shortage in the
state.
2.8.2 Financial Assistance by Various Agencies in Kerala
In Kerala both governmental and non governmental agencies have
been implementing innovative schemes by providing financial support to the
houseless and the weaker sections of the society. There are as many as
twenty agencies implementing housing programmes in the State. Besides,
local bodies are also executing housing projects for the poor. The
Governmental agencies funding the house construction of the lower and
middle income groups are: The Kerala State Housing Board, Kerala State Co-
operative Housing Federation, Kerala State Development Co-operation for
SC/ST, SC/ST Development Department, Rural Development Department,
Fisheries Department, Nirmithi Kendra, Nationalised Banks, Local Self
Governments etc. The Non Governmental Agencies financing house
construction include Habitat Technology Group, Canfin Homes and Housefed.
The financial assistance provided by these agencies during 1998-2008 is
given in Table 2.8.
Table 2.8
Houses constructed by various agencies in Kerala under major housing schemes during 1997– 98 to 2007– 08 (Numbers)
Sl. No.
Name of Schemes
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08 (30-09-
08) 1 SC/ST Devpt
Corptn 360 1584 618 311 139 31 44 24 33 14 0
2 SC Dev. Dept. 6215 8485 7183 0 718 18764 2090 5471 0 0 0 3 Fisheries Dept 900 900 1541 994 312 445 1500 1500 4000 1500 15004 KS Co-op
Agrl.&RDB 13919 10721 11038 14777 12311 13448 14794 16389 17495 17087 6635
5 Sainik Welfare 79 64 61 36 0 69 77 9 13 41 166 LIC HFL 1176 1105 3268 2682 2350 3000 4169 4396 4309 3346 11687 GIC HFL 350 475 595 0 671 741 1345 398 93 238 1178 Commr.of Rural
Devpt. 17803 14134 24358 21705 23892 32107 26375 43291 12990 30817 9886
9 Canfin Homes 775 524 299 693 0 413 156 149 80 157 5610 HOUSEFED 8228 7348 8934 11038 12311 7380 7612 6996 51119 5839 313311 KSHB 38520 52163 68245 78320 16614 8686 12933 2414 93 145 37412 Nationalised
Sch. Banks 4600 3538 6565 10099 8686 40620 54454 74327 25095 398686 0
13 HUDCO 0 0 0 0 0 13210 379 370 28681 0 27414 Kudumbasree 0 0 0 0 1220 1330 504 0 0 *15003 015 Nirmithi Kendra 0 0 0 0 0 189 92 91 134 201 22816 HDFC 5000 4575 2479 2944 3009 4880 5474 0 0 0 017 ST Dev. Dept. 820 500 310 0 0 1759 1132 104 508 1455 193 18 Local Bodies 0 0 28478 0 0 0 0 0 0 0 0 Total 98745 106116 163972 143599 82233 147072 133130 155929 144643 474529 23580
Source: Compiled from Economic Review, Government of Kerala, concerned years.
73
The financial assistance provided by various agencies in Kerala under
major housing schemes during 1997-98 to 2006-07 has shown a tremendous
increase every year. The total number of houses constructed by these
agencies was 98,745 in 1997-98 and 474,529 in 2006-07. During 2006-07 all
these agencies have given financial assistance to the tune of Rs. 154,981.42
lakhs. During the first half of 2007- 08 the total assistance was Rs. 24,946.39
lakh23 as per the available data.
2.9 Need for Public and Private Investment in Housing
The sub group on housing finance (1990-95) estimated the share of
formal sector in total housing investment as 16 percent in 1987-88 and that of
informal sector as 84 percent. The formal sector includes direct budgetary
allocations, net financial assistance through financial agencies like GIC, LIC,
UTI, commercial banks, PF and HFIs like HDFC. The informal sector includes
households themselves, and public and private sector employers extending
housing loan to their employees.
While emphasising the need to have a joint endeavour to create more
housing stock resulting in greater employment opportunities, Kumari Selja,
Hon. Minister of state for Urban Employment and Poverty Alleviation
Government of India, stated that ‘the role of house builders and providers has
now been passed on to the public sector, private sector, cooperative sector,
community sector and to the individual themselves24.
74
2.10 Housing Investment and GDP
The accelerated growth of housing finance has resulted in an increase
in its share in the GDP. Outstanding housing loans as a percentage of GDP
has risen from 3.4 percent in 2001 to 7.25 percent in 2005 and 8.50 per cent
in 2006 (estimated). In view of the increased investment in the services
sector, which contributes about 50 per cent to the nation's GDP, and growth in
urbanization, it is expected that the share of housing in GDP would go up
substantially in the coming years25. S. Sridhar, Chairman and Managing
Director, NHB, stated that the real estate industry had an estimated market
size of Rs. 47,200 crore contributing 14 percent to India’s GDP26.
The proportion of investment in housing to the GDP is 54 percent in
USA, 57 percent in UK, 40 per cent in the European Union, 17 percent in
Thailand, 34 percent in Malaysia and 7 percent in China27. The Gross
Domestic savings as a percentage to GDP increased from 28.9 percent in
2003-04 to 29.10 per cent in 2005-0628. All these show the potential
development in the housing sector and the consequent need to increase
investment in this sector. The housing loans outstanding as a percentage of
GDP during 2001-06 are given in Table 2.9.
75
Table 2.9
Housing Loans Outstanding as a Percentage of GDP
Year 2001 2002 2003 2004 2005 2006(E)
Housing loan as % of GDP 3.44 3.95 4.72 6.08 7.25 8.5
Source: Report on Trend and Progress of Housing in India, NHB, 2005,p.11.
The housing loan outstanding as a percentage of GDP during 2001-06
has been increasing steadily from 3.44 in 2001 to 8.5 in 2006. The sectoral
distribution of GDP shows that agriculture and allied activities as percentage
of GDP has decreased from 59.2 percent in 1950-51 to 23 percent in 2004-
05. As against this, services as percentage of GDP has increased from 27.51
percent to 53.2 percent during the same period. Manufacturing and
construction as percentage of GDP has increased from 13.29 percent to 23.8
percent during the period30. All these all show the increasing importance of
the housing sector.
2.11 Investment in Housing During Five Year Plans
Taking into consideration the importance of housing in the economic
development and the gravity of housing shortage in the country, the
government has allocated sufficient funds in the successive five year plans.
Till the beginning of the Ninth Five-Year Plan in 1997, all public sector
agencies had together assisted 9.3 lakh households in the State. About 80
per cent of the housing support provided by the State has been targeted at
EWS. During the Ninth Five-Year Plan period, assistance under various
76
schemes was provided to construct 5.74 lakh houses. During the plan period,
an amount of Rs. 1,063 crore was mobilised from financial institutions for
housing.
The total number of houses that would be required cumulatively during
the Tenth Plan period (2002-07) was estimated at 22.44 million dwelling units
and the urban housing shortage is estimated at 8.89 million dwelling units in
2002 itself. The investment requirement during the Tenth Plan period from
public and private sector institutions would be estimated at Rs.726,300
crore. During the first four years of the Tenth Five-Year Plan period, the public
agencies provided assistance to construct 5.05 lakh houses.
During 2000-05, the Nationalised Banks have assisted house
construction on a large scale to the extent of 48 per cent of the houses.
Similarly, Rural Development Department under Indira Awas Yojana assisted
43,291 (28 percent) households to construct their house during that year.
Since the launching of the participatory planning process in 1996, Local Self
Governments (LSGs) have been actively involved in house construction for
EWS. During the Ninth Five Year Plan LSGs assisted in the construction of
5.71 lakh houses and in the repair of 1.86 lakh houses30.
Since the housing problem could not be solved by the Government
itself, the private sector is also induced to participate in housing and habitat
development initiatives. The growth in investment requirement (public and
private sector) for housing during the Five year Plans is given in Table 2.10.
77
Table 2.10
Investment Requirement for Housing During Five Year Plans (Rs.in Crore)
Public investment Private investment Total investment Five year plans Amount % Amount % Amount %
1st (1951-56) 250 21.74 900 78.26 1150 100.00
2nd (1956-61) 300 23.08 1000 76.92 1300 100.00
3rd (1961-66 425 27.42 1125 72.58 1550 100.00
4th (1969-74) 625 22.32 2175 77.68 2800 100.00
5th (1974-78) 796 17.94 3640 82.06 4436 100.00
6th (1980-85) 1491 7.65 18000 92.35 19491 100.00
7th (1985-90) 2458 7.81 29000 92.19 31458 100.00
8th (1992-97) 31500 32.31 66000 67.69 97500 100.00
9th (1997-2002) 52000 34.44 99000 65.56 151000 100.00
10th(2002-07)* 415000 57.14 311300 42.86 726300 100.00
Source: Report on Trend and Progress of Housing in India, NHB, June, 2003, p.81.
*Estimated figures as per the Plan Document. It is evident from the above table that the share of private investment to
total investment for housing is more than the public investment during all the
Five Year Plans except in the Tenth Plan. The share of private investment to
total investment for housing constituted about 65 to 92 percent of the total
investment.
78
2.12 Conclusion
India is facing acute housing shortage. As per Censes 2001, the
housing shortage in the country was 24.68 million units and in Kerala it was
6.4 lakhs units. The reasons for the ever increasing shortage of housing stock
in the country are due to: population increase, rate of urbanization, quality of
home, natural calamities and slow growth of house construction activities due
to increasing cost of materials, availability of materials, hike in land prices,
financial constraints etc. The need for housing finance at affordable terms is
another important reason for the total backlog of housing in India especially in
Kerala.
The National Housing and Habitat Policy (NHHP) 1998 had envisaged
eradication of houselessness, improvement in housing conditions of the
inadequately housed people and providing a minimum level of basic services
and amenities to all. The Policy recognized the role of various agencies in
Government, co-operative and private sector and aims at enabling strong
public-private partnerships for tackling housing related problems by
participating the private and co-operative sectors in a collective endeavour.
Housing is a very expensive service which needs huge capital outlays,
testifies the vital role of finance in housing sector. In Kerala, governmental
and non- governmental agencies have been implementing innovative
schemes by providing financial support to the houseless and the weaker
section of the society.
79
REFERENCES
1. Charles Abrams, Housing in the Modern World, (London: Faber and
Faber, 1966).
2. Borge Brende,“The Commission on Sustainable Development Focusing
on Urban Slums” UN- Habitat, 9, No. 3 (2003).
3. The Hindu Business Line: November 21, 2007; p.6.
4. LIC Housing Finance, Annual Report 2001-02, (Mumbai: LIC Housing
Finance), p.30.
5. Shyama Rajagopal, “Real Estate Having a Good Run in Kochi”, The
Hindu– Property Plus, October 6, 2007; p.1.
6. National Housing Bank, Report on Trend and Progress of Housing in
India, (Mumbai: National Housing Bank, 2004), p.77.
7. National Housing Bank, 20th Annual Report 2007-08, (Mumbai: 2008),
p.18.
8. National Housing Bank, Report on Trend and Progress of Housing in
India, (Mumbai: National Housing Bank, June 2004), p.75.
9. Census Commissioner, “Census of India 2001” (New Delhi: Government
of India, 2001).
10. Planning Commission, “Eighth Five Year Plan1992-97”( New Delhi:
Government of India).
11. National Housing Bank, Report on Trend and Progress of Housing in
India, (Mumbai: National Housing Bank, 2008), p.18.
80
12. National Building Organisation, The Handbook of Housing Statistics
(New Delhi: Government of India, 1990), p.2.
13. Ibid.p.3.
14. Ibid.p.2.
15. Ibid.p.3.
16. Census Commissioner, Census of India 2001 (New Delhi: Government
of India, 2001).
17. Government of Kerala, Economic Review 2007, (Thiruvananthapuram:
State Planning Board, Government of Kerala, 2007), p.372.
18. Government of Kerala, Kerala Housing and Habitat Policy -2007. (Thiruvananthapuram: Government of Kerala, 2007), p.8.
19. Ibid. p.6.
20. Ibid.
21. Manorama Year Book 2003, (Kottayam: Manorama publications, 2003),
p.672.
22. Government of Kerala, Economic Review 2007, (Thiruvananthapuram:
State Planning Board, Government of Kerala, 2007), p.372.
23. www.hsgcomr.keralagov.in
24. Kumari Selja, “Housing the poor”, National Co-operative Housing
Federation Bulletin, 17, No. 6, (December 2004), p.3.
25. National Housing Bank, Report on Trend and Progress of Housing in
India, (New Delhi: National Housing Bank, 2005), p.11.
26. Business Line, November 21, 2007; p.6.
81
27. National Housing Bank, Report on Trend and Progress of Housing in
India, (New Delhi: National Housing Bank, 2005), p. 7.
28. Ibid. p.10.
29. A.N Agrawal, Indian Economy- Problems of Development and Planning,
(New Delhi: New Age International Publishers, 2006).
30. Government of Kerala, Kerala Housing and Habitat Policy -2007. (Thiruvananthapuram: Government of Kerala, 2007).
