Public Housing, not affordable housing

Public Housing, not affordable housing.

I laud the goal of Housing for All by 2022 as announced by PM Shri Narendra Modi. Many persons have taken it to mean that for the poor persons, we need to construct affordable housing. Given the wages for a large section of poor persons in India, any housing is not affordable for owning.

Take a person who is earning minimum wages of Rs 9000 per month. He spends about Rs 1500 for a room in Delhi in the poorer part of City. Given the other expenditure, this person has no way to squeeze out another 1500 to be able to afford an EMI of Rs 3000 per month. So even if we give a house for Rs 3 lakh, neither this person can afford to add the initial sum of say Rs 50000, nor can he service the loan. We need to remember that not all the persons get minimum wages.  

About 40 % of the population falls in this category. They can't even afford the "affordable houses."

For improving the life of these people we need to provide them with public housing at subsidized or affordable rents. Therefore, need is to construct a large number of government or Municipal houses and give a basic level of living to these people. And that is Public Housing. It needs to be extended to villages also. Because a clean and pucca house means less disease, better safety from the extreme cold /heat and better development of all the family members.  

What is termed as affordable housing is for Lower middle class. Even here we need to be cautious in developing policy in such a way that the subprime crisis of US in 2008 is not repeated in India in the year 2020 or 2025. This segment will need some calibrated support. Middle class and higher segments can be on their own. They can buy what they think they can afford. Free market will be the best solution albeit with better regulation for fair deal for customers.

If we do not pursue the above line, we will continue to have slums in cities.

 

Dated: 24 December 2015