Date: 03/10/2022

Relevance: GS-2: Government policies and interventions, welfares schemes

Relevance: GS-3: Issues related to mobilization of resources, growth, development and employment.

Key Phrases: Affordable Rental Housing Complexes (ARHCs), Urbanization challenges, Housing in Urban areas, Pradhan Mantri Awas Yojana- Urban, Floor Area Ratio (FAR), Floor a Space Index (FSI)

Context:

• The COVID-19 pandemic-induced lockdown and mass reverse migration of urban migrants in its aftermath highlighted the deep-rooted problem of access to safe and affordable housing spaces in urban areas.

Why is non-ownership housing essential?

• Non-ownership housing is essential and pragmatic for urban areas because
  • It is vital for both horizontal and vertical mobility of people as it allows them to access suitable accommodation without buying it.
• It is observed across the country that housing policies are skewed towards ownership-based housing which leads to exploitation and harassment of tenants.
• Migration and economic activity are intertwined and to keep the economy moving, emphasis on the supply of rental housing is crucial to these workers.

Urban migrants and need for affordable rental housing complexes

• Urban areas attract seasonal urban migrants who work in the construction and industrial sector.
• Most of these areas are concentrated and aggregated and require access to rental housing.
• Many migrant workers and urban poor stay in slums, informal settlements, and peri-urban areas because
  • Absence of a proper housing supply leads to large-scale mushrooming of ill-planned, low-quality housing.
  • Local governments lack resources to provide basic civic infrastructure for these areas, leading to poor housing conditions.
  • Migrants generally prefer to stay closer to their place of livelihood and near their community network.
• There is a need for rental housing closer to the workplace at affordable rates to address the need of this segment.

Implementation of ARHC: Model 1

• Utilizing existing government-funded vacant houses to convert into ARHCs through Public Private partnerships or by Public Agencies
  • Under this model the government seeks to utilize the existing inventory of vacant houses to address the demand for non-ownership housing.
  • It has identified over 80,000 vacant homes owned by public agencies/enterprises across the country.
  • The aim is to repair these houses and fulfill the infrastructure gap such as electricity, water, sewer, sanitation, road and related works.
  • Both public and private agencies can participate in the management of ARHCs.

The data can be used to infer the following:

• There are approximately 108,000 government-constructed vacant houses of which 83,000 potential homes were identified for conversion to ARHCs.
• Only 13 states and union territories of the 36 have joined the scheme.
  • The rest may not have vacant houses or are not participating in the scheme.
• There is an urgent need to incentivize ‘pull and push’ mechanisms for states with vacant homes to participate.
• This model of the scheme has showcased slow progress (7 percent).
  • It highlights the systemic failure of the non-conversion of identified vacant houses into ARHCs.
  • Also, it does not show the complete information such as visibility on the occupancy of converted houses.

Implementation of ARHC: Model-2

• Construction, Operation, and Maintenance of ARHCs by Public or Private Entities on their vacant land
  • The model seeks to promote rental housing construction on vacant land by public and private agencies.
  • It aims to increase the supply of rental housing to meet the excess demand resulting in over and above Model-1.
  • It will encourage private and public entities to efficiently utilize their vacant land for developing ARHCs.
  • The government has given several incentives such as exemption from income tax and GST on any profits from these operations, offering lower interest rates for project finance, loans, etc.

The following conclusion can be drawn from the above table

• Just six states have showcased results under Model-2 and most states and UTs are not participating in the scheme.
• Tamil Nadu and Telangana contribute 92 percent of the housing supply and only 6,000 houses are being constructed under Model-2 by other states.
• Despite participating in the scheme the other states have not utilized their full potential.
• Most of these houses will be constructed, they will take years to enter the market.

Way Forward

• The government has accepted and recognized the need for affordable non-ownership housing and developed suitable policies.
• It has provided many incentives which include
  • Floor Area Ratio(FAR)
  • Floor a Space Index(FSI)
  • Income tax and GST exemption
  • Single-window approval etc.
• However, the current policy does not address foundational issues in the rental housing space.
• In Model-1, the government must address pressing problems of quality construction, trunk infrastructure, and municipal services.
• The Model-2 needs to focus on high land costs and the lack of substantial land size in required areas to develop ARHCs.

Conclusion

• It has been more than two years since the ARHC scheme was launched in July 2020 but it is progressing at a snail’s pace.
• In the aftermath of COVID-19 as the urban areas are flooded with migrant workers there is an urgent need to revise the existing policy to bring an enhanced focus on rental housing so that these people can really contribute to the development of the nation.

Source: ORF-Online

Mains Question:

Q. “There is an urgent need to provide access to safe and affordable rental housing complexes in urban areas to migrants and economically weaker sections of the society to enhance urban mobility”. In light of the statement discuss challenges of urban migration and solutions thereon. (150 words).