Economics | Mains Paper 3: Infrastructure: Energy, Ports, Roads, Airports, Railways Etc.
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From UPSC perspective, the following things are important :
Prelims level : Nothing much
Mains level : Model Tenancy Act - analysis
Context
A draft of the Model Tenancy Act, 2019 was released by the Ministry of Housing and Urban Affairs. Finance Minister stated in the Budget 2019 speech that the rental laws in India are archaic and do not address “the relationship between the Lessor and the Lessee realistically and fairly”.
Features of the act
It aims to promote rental housing and balance the interests of landowners and tenants.
It covers residential and non-residential properties.
It is largely aimed at the urban residential sector.
Positive Impact
Constitution of Rent Courts and Tribunals – Thousands of rent cases clog the lower judiciary and the process is lengthy and time-consuming.
Time-bound procedures – The Act provides for a time-bound process with dedicated courts for tenants and landlords.
Limitations of the act
Limited scope – The Model Tenancy Act has a limited understanding of the tenant-owner relationship. It fails to take into account that a majority of tenancies in India are informal. These agreements are based on trust, word of mouth, and social kinship networks.
Challenge in implementation –
Either a majority of the rental agreements will continue to be unregistered
The Act might formalise existing arrangements -> an increase in rents. It will be the opposite of what it sought to achieve.
Jurisdiction
The jurisdiction of these courts to hear cases is limited to the tenancy agreement submitted to the Rent Authority.
All future tenancies that have been submitted to the Rent Authority shall be eligible to approach these courts.
Older tenancies and informal tenancies will still not fall under its jurisdiction. These problems will continue.
Way ahead
The Act needs to respond in a realistic manner to actual housing market practices in our cities.
Focus on the upper end of the housing market
The vacancy is higher in the upper segments of the housing market. Across urban India, vacancy rates in urban areas is 10.1% while in slums it is 7.3%.
Implementation of the Act in the upper segments of the housing market will allow some of these vacant houses to enter the rental market.
This will relieve the pressure and demand on the lower segments.
Commercial – Residential –
Commercial tenancies attract a lot more institutional investment.
Residential tenancies are largely held between individuals and households.
The two markets are very different from each other.
The outcomes required of the two sectors are entirely different — while commercial real estate underpins economic development, residential arrangements in urban areas offer the security of tenure and access to livelihoods, health, and education.
More investments
Increase the supply of formal affordable rental housing.
This requires investment on the part of the Central and State governments.
Publicly provided rental housing will need structured efforts in management, planning, and design to achieve its inclusive agenda.
Central and State governments to develop schemes for the supply of formal affordable rental housing.
This could be in the form of housing built to rent for migrants, low-wage informal and formal workers, and students; rent-to-own housing for unsteady low-wage households; and even rental housing allowances/vouchers for the most marginalised in the housing market.
Wider ambit – The Act needs a wider ambit along with renewed efforts and investments.
From UPSC perspective, the following things are important :
Prelims level : Features of act
CONTEXT
The Ministry of Housing and Urban Affairs has drafted a ‘Model Tenancy Act’, 2019 which envisages to balance the interest and rights of both the owner and tenant and to create an accountable and transparent ecosystem for renting the premises in disciplinedand efficient manner.
Benefits
It will enable creation of adequate rental housing stock for various income segmentsof society including migrants, formal and informal sector workers, professionals, students etc. and increase access to quality rented accommodation, enable gradual formalization of rental housing market.
It will help overhaul the legal framework vis-à-vis rental housing across the country.
It is also expected to give a fillip to private participation in rental housing for addressing the huge housing shortage across the country.
The Draft MTA will also promote growth of rental housing and investment in the sector and promote entrepreneurial opportunities and innovative mechanism of sharing of space.
Features of Act
MTA stipulates a robust grievance redressal mechanism comprising of Rent Authority, Rent Court and Rent Tribunal.
It has been proposed to cap the security deposit equal to a maximum of two month’s rent in case of residential properties and, minimum of one month’s rent in case of non-residential property.
After coming into force of this Act, no person shall let or take on rent any premises except by an agreement in writing.
The Model Act provides for its applicability for the whole of the State i.e. urban as well as rural areas in the State.
Within two months of executing rental agreement both landowner and tenant are required to intimate to the Rent Authority about the agreement and within seven days a unique identification number will be issued by the Rent Authority to the both the parties.
A digital platform will be set up in the local vernacular language of the State for submitting tenancy agreement and other documents.
Once finalized the Model Act will be shared with the States/Union Territory (UTs) for adoption.
Need for such an act
As per Census 2011, nearly 1.1 crore houses were lying vacant in the country and making these houses available on rent will complement the vision of ‘Housing for All’ by 2022.
The existing rent control laws are restricting the growth of rental housing and discourage the owners from renting out their vacant houses due to fear of repossession.
One of the potential measures to unlock the vacant house is to bringing transparency and accountability in the existing system of renting of premises and to balance the interests of both the property owner and tenant in a judicious manner.
Mains Paper 1: Social Issues | Urbanization , their problems & remedies
From UPSC perspective, the following things are important:
Prelims level: GHTC
Mains level: Housing for all
News
To make the construction of houses cost-effective and innovative, the Ministry of Housing and Urban Affairs launched the Global Housing Technology Challenge (GHTC).
Global Housing Technology Challenge (GHTC)
The aim of the initiative — under the Pradhan Mantri Awas Yojana Urban (PMAY-U) — is to fast-track the construction of affordable housing and meet the target of constructing 1.2 crore houses by 2022.
GHTC-India challenge is a well-conceptualized and designed programme to bring out the most innovative, simple, effective and appropriate solutions for making housing available and affordable to the common man.
Under the challenge, a grand expo-cum-conference on GHTC will be organised in March which will be a unique platform not only for the stakeholders but also for the States/Union Territories and technical institutions.
Affordable Sustainable Housing Accelerators
GHTC-India challenge will also focus on identifying and mainstreaming proven demonstrable technologies for lighthouse projects and spotting potential future technologies for incubation and acceleration support through ASHA (Affordable Sustainable Housing Accelerators) — India.
Mains Paper2: Governance| Welfare schemes for vulnerable sections of the population by the Centre and States
The following things are important from UPSC perspective:
Prelims: MahaHousing Initiative
Mains level: Housing for All
News
MahaHousing
The Maharashtra state cabinet has approved the formation of MahaHousing (Maharashtra Housing Development Corporation), a dedicated housing corporation to implement the PMAY in the state.
It plans to build 19.40 lakh houses by 2022.
A separate mechanism was needed to speed up the process of building houses in the stipulated time frame.
The projects are being implemented by the Housing Department, Maharashtra Affordable Housing and Development Authority (MHADA), and local civic bodies.
The projects also include public-private partnership and joint ventures.
Projects for economically backward classes, low income and middle income groups will get an FSI (floor Space index) of 2.5, while those in green zones or no-development zones will get 1 FSI.
Structure and Functioning
MahaHousing will work till 2022, or till the time PMAY continues.
The CM will be its president, while the Housing Minister will be the additional president.
A non-government member will be joint president.
A government-appointed CEO will work as its managing director. The entire staff of the corporation will be outsourced.
Funding for MahaHousing will be raised from share investment by MHADA, Slum Rehabilitation Authority, Shivshahi Punarvasan Prakalp Ltd. and other interested government bodies.
Besides, the corporation is allowed to raise money through loans from banks and financial institutions.
Mains Paper 1: Social issues | Urbanization , their problems & remedies
From UPSC perspective, the following things are important:
Prelims level: PMAY, Floor Space Index, PMAY
Mains level: Measures for increasing affordability of Housing for all initiative
News
Carpet (floor) Area has been increased by 33% to qualify for Pradhan Mantri Awas Yojana (Urban) Subsidies
The initiative, ‘Housing for All by 2022’ is the central pivot around which the government’s efforts are concentrated. This, in turn, covers different aspects like rental and affordable housing.
Roping in the private sector under the Public-Private Partnership (PPP) model is the key solution.
What more is needed to increase affordability?
Among other initiatives, the government needs:
to grant infrastructure status to the entire real estate industry making long-term financing easy for the industry
fix GST rate for all types of housing at 6%
revise carpet area to 60 sq. mt including in metro cities (to qualify for subsidy)
make land available at subsidized rates in metros and tier 1 cities so that the projects can be viable
reduce premium on additional FSI (floor space index) to encourage affordable housing within metro cities and
also reduce time taken and cost of permissions and clearances.
Permitting higher Floor Space Index
Land in metros forms a significant proportion of the project cost and renders such projects unviable for the affordable segment.
Policies should be formulated wherein land can be provided at rates that make the affordable projects viable.
Land can be provided to develop composite projects where one segment, say, LIG (lower income group) is cross-subsidised by the revenues earned from the other segment, say HIG (higher income group).
If such corridors allow for high density development, a higher FSI can be permitted, with an incremental benefit of FSI being applied towards affordable housing.
The government should provide incentives to private players who use technology to deliver quality product.
Such standardisation may further improve efficiency and make construction of homes like a manufacturing set-up.
Rewarding developers for last mile connect
Availability of land in cities at affordable pricing is one of the major challenges.
The government could facilitate the development of affordable housing by making surplus land held by PSUs (Public Sector Undertakings) available for affordable housing projects.
Land is a state subject and that adds another layer of complexity.
The central government should guide the states on programmes to allocate and incentivise the usage of land for affordable housing, while also incentivising state governments to facilitate engagement and implementation.
It is also recommended to incentivise developers for infrastructure and last mile connectivity development in semi-urban centres.
Allotting land parcels at subsidized costs
The recent move to raise the carpet area and the RBI’s revision of housing loan limits for priority sector lending (PSL) eligibility will help bring most of the under-construction dwelling units in urban India under the purview of the CLSS.
This will not only bolster homebuyer sentiments, but also further propel construction activity in the affordable housing sector. However, the next steps for the government should be:
Look at the benefits for developers. Elements like reduction in construction inputs should now be a priority.
To make optimum use of the initiative from a consumer’s standpoint, the land allotment should be at better locations and subsidized costs.
Focus should be on building a holistic environment that incorporates infrastructure and social facilities. Access to holistic livelihood facilities will be key in determining the success of the initiative
Ministry of Housing and Urban Poverty Alleviation along with other ministries will set up a system through which affordable housing projects are cleared at a faster pace.
The govt. is battling a housing deficit of 18.78 million units, of which economically weaker population requires 95% of housing units.
The Centre is urging states to reduce stamp duties, registration and conversion fee.
This will help in quickly filling the housing stock for the poor and low-income people across 989 cities.
The main hurdles in filling the housing stock are :
Shortage of land in urban areas
Stringent land use regulations
Inadequate infrastructure to support more housing neighbourhoods
Without devolution of powers and funds to urban local bodies as per the 74th Amendment, urban schemes cannot be successfully implemented.
The 14th Finance Commission has granted Rs. 87,143 crore against Rs. 23,111 crore by 13th Finance Commission which is a substantial increase of four times for urban local bodies.
Cities are struggling with huge infrastructure deficits: congestion, lack of affordable housing, poor sewage facilities, inadequate water supply.
Delhi is choking on toxic air. Bangalore is submerged in garbage. Chennai is parched & Mumbai is running out of space.
Things are worse in Tier II, III and IV cities, where adherence to norms and standards is poor and monitoring and punishment for violations, non-existent.
Essentially, JNNURM has been rebranded as the Atal Mission for Rejuvenation and Urban Transportation.
JNNURM was stymied by issues like land acquisition and the incapacity of city officials to handle large projects.
India is the only G-20 country that does not have empowered or elected mayors, despite the 74th Amendment.
More local autonomy is a must if cities are to fix themselves and invest wisely in creating the infrastructure they need.
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