A step towards affordable housing for garbage workers
The Clean-Up foundation is a non-profit organisation founded in 2016 by Sanjana Runwal, that strives to improve the lives of garbage workers and rag pickers in Mumbai. While investigating the issues faced by garbage workers and rag pickers in Mumbai, the foundation carried out extensive research to find what are the key challenges and what solutions could meet those hurdles. Looking at the research work, Maharashtra government awarded a letter of appreciation to Sanjana Runwal for her research paper on 'Affordable Housing Solutions for Garbage Workers’.
Sanjana Runwal discovered that one of the most significant challenges in improving the living conditions of garbage workers is poor housing conditions. Solid waste workers find difficulties in seeking affordable housing or obtaining housing ownership.
As industrialisation increased, the number of migrants started relocating from rural to urban regions in pursuit of better job prospects, higher education, and health care. However, this has increased population pressure on scarce urban resources. The shortage of developable land for residential buildings is one of the primary difficulties that these urban amalgamations face. This has resulted in poor housing conditions, homelessness, and other difficulties. Looking at all these factors, a study was conducted by The Clean-Up Foundation to examine the housing problems encountered by solid waste workers. The research data was collected from solid waste workers in Mumbai through survey method, which is analysed using descriptive tools, and from data analysis, it is observed that housing conditions of solid waste workers are deplorable, structures of the government houses are very old and sanitation facilities are not up to the mark. Only 39 percent of the total sample reside in self-owned homes while others stay in rental or government-provided houses. One of the major problems inhibiting home ownership amongst solid waste workers is financial. In most cases, they are not aware of government schemes available to them and how they can avail benefits of these schemes.
According to the Urban affairs ministry, the housing shortage in 2018 was estimated to be 11 million in urban areas, expected to again reach 19 million by 2022. Amidst the rising population and increasing urbanisation, the country’s total urban housing shortage is projected to be about 38 million by 2030. The demand is huge but the shortage of supply in the affordable housing segment is so huge that it is forcing people to live in slums and informal settlements. While the government tried to incentivise private players by offering tax incentives and access to low-cost capital, initially they depicted limited interest in the affordable segment due to thin margins, high land cost and delay in project approvals.
However, government has increased its focus on the overall infrastructure development of India. By announcing “Housing for All” by 2022, private players are now increasing their participation in the affordable housing segment.
Highlights of the Survey
The Clean-Up Foundation conducted an extensive survey. Let us understand various factors before concluding.
This research is based on the primary data collected by The Clean-Up foundation using the survey method. Solid waste workers from different wards in Mumbai were interviewed and their housing conditions were examined through an extensive survey. The descriptive analysis and data visualisation through graphs are used to answer the research questions.
The following chart provides data on the type of houses solid waste workers live in.
Analysis of housing conditions
The researchers also collected data on housing conditions as well as the structure of the houses of solid waste workers. The following data explain why there is a need to examine the housing conditions and to improve the living standards of solid waste workers.
Analysis of affordable housing scenario in Maharashtra
Maharashtra has launched multiple PMAY projects in urban and rural parts of the state. The estimated urban housing shortage of India is 18.78 million houses of which Maharashtra targets to develop 1.94 million housing units by 2022. MHADA is expected to set up Rs 7,000 Cr shelter fund to support affordable housing. With financial and policy support coming from central and local the government, affordable housing projects in the state are looking for private participation to reach its target. This can be observed from the following figures.
Trends across India
The total supply of affordable housing across the top 7 cities between 2013 to 2018 was around 7.65 lakh units while total absorption is estimated to be 5.95 lakh units. NCR, MMR, and Pune account for the top three active markets in terms of supply and absorption owing to the high rate of urbanisation and industrial developments. Note: Unsold Inventory as of December 2018
Mumbai has continually offered affordable housing units to the Indian real estate market, primarily due to the city’s expansion towards the peripheral suburbs. The share of affordable housing in MMR has increased from 30% in 2017 to 40% in 2018. This indicates that the developers have focussed on this segment to tap the appropriate market. Nearly 80% of the supply in Peripheral Central Suburbs and Peripheral Western Suburbs are in the affordable housing segment from 2013 to 2018 as a result of PMAY. However, the significant improvement in the living conditions of lower-income groups, specifically solid waste workers in Mumbai, has not been observed.
Findings of the survey
In a survey of 121 solid waste employees, 61 percent reside in rented or government-provided housing, while only 39 percent own their homes. Houses are too small to accommodate all family members, families use shared filthy washrooms, walls contain cracks that are hazardous to occupants, there is no adequate water supply. Workers also encounter challenges such as commuting to the workplace since they live a long distance from the job.
Also, they are unable to save a part of their income which can be channelised into housing expenditure. This implies that lack of housing literacy results in a lack of housing expenditure. In the past few years, the availability of affordable housing in the Mumbai Metropolitan Region has risen. Though there is an increase in the overall supply of affordable housing, the advantages have not reached the lower-income groups. Despite the government's expanded supply of affordable housing, the problem of affordable housing for solid waste employees persists.
The research paper also has some demand side and supply side recommendation.
Inefficiency in providing affordable housing to solid waste workers can be improved through a public-private partnership. Thus, incentivising the private sector by providing credit facilities and tax exemption on fundraising for affordable housing projects would contribute to tackling the shortage of supply in the housing market. The government can also promote schemes like The government-Land Based Subsidised Housing (GLSH), which incentivise private developers in constructing houses at lower costs.
Optimisation of taxes levied on affordable housing projects through the execution of schemes like Low Income Housing Tax Credit (LIHTC) would encourage real estate developers to invest more in affordable housing projects.
Unlimited Floor Space Index (FSI)
Floor Space Index (FSI) which is also popularly known as Floor Area Ratio is the ratio of floor area to the area of the land on which floors are built.
FSI in Mumbai is 1.33, while in London it is 5.5., in Singapore, it is 25. Lower FSI in Mumbai decreases the amount of living space in the city. This causes a rise in the development of informal dwellings like slums in urban areas where the cost of living is very high due to a shortage of supply in the housing market. Thus, the restriction on FSI should be removed and unlimited FSI should be given for the construction of affordable houses. This would encourage the developers to build more houses in a given plot of a land
Tax exemption on Interest
Higher interest rates on home loans are one of the important reasons behind housing unaffordability. Therefore, the government should have fiscal policies targeted at providing tax exemption on interest paid on home loans by solid waste workers. Not only interest rates but reducing the processing fees would also encourage solid waste workers to invest in housing assets.
Abolition for Coastal Regulation Zones (CRZ)
Coastal Regulation Zones, as previously noted, contribute to the scarcity of land accessible for residential buildings in Mumbai. The civic property department has identified 3.7 lakh square metres of land within the CRZ that could have generated revenue of Rs. 60 crores in the form of tax if these sites are approved for development by the government.
Land reclamation of the coastal region should be allowed so that the areas for constructing affordable houses can be increased. As seen previously, shortage of land is the major concern in building affordable houses for lower-income groups. Thus, it is necessary to remove the restriction on the reclamation of land.
Utilisation of saltpan land
The use of salt pan lands as a resource for developing affordable housing is another reproductive strategy. The salt pans in Mumbai, which cover 1,781 acres (721 hectares) and are estimated to be worth approximately Rs. 53,000 crores are almost double the size of Mumbai's main commercial area, Bandra-Kurla Complex (BKC), which covers 914 acres. Utilisation of such a huge area for affordable housing developments will alleviate Mumbai's land shortage problem.
The Rent-to-own scheme is self-financing since it does not require additional government grants but development loans. This scheme works like an options contract where tenants will agree to buy a house at a specific price in the future (after 3-4 years) and the cost will be paid in instalments.
No GST on the cost of construction
Goods and service tax on factors of production used in affordable housing projects would reduce the cost of construction. These multiple layers of taxation increase the cost of final output in the housing market and therefore it is necessary to remove GST on the raw material used for construction.
Allocation of Green Development Fund
Since affordable housing for solid waste workers will help in improving their living conditions as well as increase their efficiency in waste management, thereby contributing to the sustainable development of the country.
RBI can frame monetary policies in a way to provide financial assistance to affordable housing projects like it provides credit facilities to the agriculture sector. Loan at subsidised rate, lower interest on home loans, low-cost EMIs on home loans, the easier process of applying for loans, short duration in getting loans processed, such initiatives would incentivise lower-income groups to take home loans and buy houses at affordable rates.
Demand Side Recommendations
Financial literacy programmes should be aimed at addressing and solving financial problems faced by solid waste workers in buying affordable houses like financial assistance, awareness about prevailing interest rates, etc. whereas housing literacy programmes should be aimed at addressing all those challenges encountered in buying affordable houses like the procedure of buying an affordable house, decision making after collecting adequate information on affordable housing, etc.
Housing Literacy can be considered as knowledge about managing housing expenditure, a part of income to be allotted to housing expenditure, where to buy a house (location), how to buy a house, awareness about the procedure for buying a house, how to apply for home loans or financial assistance for purchasing a property.
Use of Advanced Technology:
Easy to use software, mobile apps like Arogya Setu for instance, “Griha Setu” (Griha means home and setu mean bridge) can be developed., which may help bridge the gap between the government and low-income people.
The Clean-Up Foundation believes that housing problems of solid waste workers can be resolved with government action and the cooperation of the private sector. Demand for houses can be encouraged by reducing the price paid by consumers from lower-income groups. For instance, subsidising housing prices will encourage more solid waste workers to purchase houses. The welfare loss caused by underconsumption is the rationale behind the necessary government intervention in the affordable housing market. It can be observed that, despite an increase in the supply of affordable housing, the advantages have not reached solid waste workers. This implies that resource allocation is inefficient, necessitating government intervention through fiscal stimulus, subsidised home loans, tax credits to private investors, price ceilings on houses provided to lower-income groups, financial literacy campaigns for solid waste workers, credit facilities for solid waste workers, and lower interest rates on home loans. Therefore, appropriate measures and effective execution of those measures can help in solving housing issues of solid waste workers.
Source: Clean-Up Foundation