Sunday, March 9, 2008

Special housing zones?!?

Giving land for low-cost housing will create human wealth

What would make a real estate developer or any construction company build affordable houses for the poor? Well, the answer is – ‘nothing’!! Nothing can make them do so as with ever increasing land prices it is logical to construct high-end luxury homes as then they can demand a premium and earn adequate margins. So in the existing free market, those who dream that ‘someone’ ‘someday’ would take the initiative to construct those 25 million (and ever increasing) houses for those low income families, who are currently dotting the slums across our cities, is at best, hallucinating!

The question is – what happens to these people then? Is it that they have to continue to live in their shacks, which are bereft of any basic survival infrastructure like sanitation, potable water, drainage, hospitals or schools for that matter, with a relentless dream in their eyes to own that dream home of theirs? In fact, it is not just about the dream of owning the house, as, a home in a healthy environment is imperative to basic human sustainability. And as per an ASSOCHAM study there are currently almost 190 million (which is almost 50% of total urban dwellers) who are living in either slums, under bridges and flyovers, or on pavements, completely denied of any healthy sustainable living. What more, this figure is ever increasing and is expected to touch almost 225 million in another seven years!! Moreover, it is not just about the numbers which in itself is growing at a dangerous pace, what is even more intimidating is the state of children in these urban ghettos. Reports state that almost 80,000 babies from the urban slums don’t even get to see their first month, and for those who manage to survive, some 10% do not live to see their sixth birthday. 50% of the children are underweight and some 30% suffer from diarrhoea and malaria! So in the given condition a solution is imperative as then it would not just mitigate this crisis but by provisioning of healthy and affordable homes would go a long way in reaping rich dividends in the form of human capital for the future. A small effort in Mexico justifies that how by just replacing dirt floors with cement; adults have reported 69% more satisfaction and children’s educational development had indicated an improvement by a staggering 69%. Imagine the impact if an entire home in a clean environment is constructed and that too for the 190 million people!! No doubt, with private initiative not forthcoming, the solution has to be necessarily initiated by the government. But then as suggested by experts just by providing tax holidays to construction companies to construct low-cost affordable homes would also not work as there is so much asymmetry in the real estate market that tax incentives hardly excite anyone.

So to make a real difference, the government should initiate mini SHZs (Special Housing Zones) around all cities and towns, wherein the land would be given at a token price to only those builders who would build affordable housing societies for the low income groups. This should be rather easy as the government anyways has been giving away land at throw away prices for the SEZ scheme, for private gains, and this is a national gain for 200 million people!!


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