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NPTEL course: Housing Policy and Planning

Dr. Uttam K. Roy, IIT Roorkee: January-March 2017 Week 2

NPTEL course on
Housing Policy and Planning

Week-Two Lectures consist following topics

1) Urban Reforms & Housing

2) Housing Policies
3) Legal Framework for Housing
4) Land for Housing (1,2)

1. This notes have five sections corresponding to five lectures
2. This lecture note is to be referred along with the video lectures for better understanding

1.0 Urban Reforms

In the first week it was discussed that India faced multiple barriers and difficulty in implementing the
government sponsored housing schemes. In spite of wishful conceptualization and futuristic project
planning, many projects and government scheme could not see the success as it envisaged. The major
barriers faced by the government in achieving housing for all people has been listed as under:
Housing affordability
Speedier technology and system
Availability of land
Institutional and policy framework
Building materials
Skilled and unskilled labor
Lack of appropriate standards, norms and schedules

In order to cope up with such constraints governments role has been shifted slowly from a provider to
enabler and then enabler to facilitator. The basic intent is to bring and mobilize all other players of
the housing market in a concerted and converged way. It includes the private housing and infrastructure
developers, manufacturers & assembler, NGOs, PSUs etc. However, in this journey, to facilitate others in
a common objective it was inevitable to bring some changes and amendments in functioning of the
government too. To bring this change a set of reforms in terms of legal, process, systems, technology,
delivery etc were mandated at every level through various programmes and schemes. Such reforms are
basically the institutionalized form of new approach and methods of discharging a public service. For
housing sector following major reforms are important to before before we proceed further

100% FDI in housing projects

Urban Land ceiling act is repealed
Reform in land acquisition act
Real estate investment Fund/trust and Developers Act
Reform in property tax and stamp duty
Interest subsidy in housing finance
Facilitating private developers & JVs

Weekly Lecture Notes /8
NPTEL course: Housing Policy and Planning
Dr. Uttam K. Roy, IIT Roorkee: January-March 2017 Week 2

1.1 100% FDI in housing projects

Following the open economic policy of government of India post 90s to bring more investors and
business with other countries, 100% funding by any foreign investors was allowed. The basic intent was
to bring more fund inflow in the housing market to enable the existing housing developers in an
competitive way. Many states could get the advantage in bringing such funding for housing and
infrastructure projects. However, the most important critics it received for such funding was that it
attempted mostly the higher income groups in housing delivery.

1.2 Urban Land ceiling act is repealed

Urban Land Ceiling and Regulation Act (ULCRA) is a state act frame in 70s in most of the states to
ensure the equitable distribution of urban. Through this act the bigger land parcels are vested to the
government beyond a certain ceiling (like 500 sqm etc). Government can utilize such vested land for
further development and distribution as the rural land reform in India. However, in spite of achieving
such objective in few cases the Act failed to generate larger chunk of land to ensure greater housing and
infrastructure development.

1.3 Reform in land acquisition act

Reform in Land Acquisition and related act also were attempted to address the streamlining the process of
making available urban land for large infrastructure development. The revised Right to Fair
Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act (2013) and
Ordinance (2014) were created to ensure the land acquisition with more transparent and equitable process.

1.4 Real estate investment Fund/trust and Developers Act

Concept of Real Estate Investment fund/Trust was to create a corpus of fund in order to facilitate the
funding of the real estate projects with the accumulated fund from the prospective investors. This is yet to
institutionalized in India

1.5 Reform in property tax and stamp duty

Reform in property tax and stamp duty was envisaged to achieve rational and convenient system of
property tax and differential provisions of stamp duty for different income group housing to ensure
affordability for the poor.

1.6 Interest subsidy in housing finance

Interest subsidy for the housing for the poor was very important demand side intervention which came a
reform firs during JNNURM and later is was also continued during PMAY.

1.7 Facilitating private developers & JVs

Facilitating private developers and joint venture company with more streamlining approval process of
development schemes and more access to government was also very important reform in housing

Weekly Lecture Notes /8 2

NPTEL course: Housing Policy and Planning
Dr. Uttam K. Roy, IIT Roorkee: January-March 2017 Week 2

2.0 Housing Policies

A housing policy is set broad and long term guiding principles which provides a conceptual and futuristic
direction of housing development of country. A housing policy document is followed by several other
programmes, schemes and actions in the local and regional level. A housing policy must indicate a
direction in the following elements:

Land supply and land tenure

Legal and regulatory frame
Housing Finance
Participation of partners
Institutional and operational framework
Enabling/demand side strategy
Technology Interface

In India, to satisfy the shelter needs of the underprivileged groups has always been on the national
housing agenda, reflected in the welfare programs mentioned in the Five Year Plans. However, prior to
the 1980s, they were mostly eluded from the programs designed for them due to unorganized nature of the
housing markets, lack of formal finance and a dedicated policy to regulate the events. Post 1980 the
following policy documents were made by the government of India:

National Housing Policy 1988, 1994

National Housing and Habitat Policy 1998
National Urban housing and habitat Policy 2007
State Model Affordable Housing Policy 2015
Draft National Urban Rental Housing Policy 2015
The first concrete step taken by the government to govern the housing sector was the formulation
of National Housing Policy (NHP) and National Housing Bank (NHB) in 1988. Through this initiative,
the government attempted to tackle two of the stated issues regulatory framework and financing,
respectively. The NHP laid the foundation of housing policy in India and was modified or upgraded in
future as a response to more identified issues. This resulted in the amendment of NHP in 1994 and
formulation of National Habitat and Housing Policy (NHHP) in 1998. While evolving as a facilitator of
housing development, the approach towards the constituent policy parameters also underwent
transformation and is documented in Table 1.
This laid the foundation of the National Urban Housing and Habitat Policy, which was directed
towards tackling the rising housing issues in the urban areas. For the first time, it introduced the concept
of community participation in housing sector. A major breakthrough was achieved with the introduction
of cross-subsidization, an indirect rather than direct form of subsidy, to encourage the private developers
to enter the market and construct low-cost housing in lieu of added advantages. The NUHHP postulated
the de-centralization of housing delivery and encouraged the states to formulate their customized housing
It envisaged that the states would prepare a State Urban Housing and Habitat Policy and a State
Urban Housing and Habitat Action Plan. It empowered the States to include passing of specific Acts by
the States to achieve the housing policy objectives through institutional, legal & regulatory reforms, fiscal
concessions, financial sector reforms and innovations in the area of resource mobilization for housing and
related infrastructure development including promotion of cost effective building materials and
technologies at the State level. This was to be overlooked by a state level nodal agency. Additionally,

Weekly Lecture Notes /8 2

NPTEL course: Housing Policy and Planning
Dr. Uttam K. Roy, IIT Roorkee: January-March 2017 Week 2

NUHHP also explored and encouraged supply of rental housing as an alternative option to ownership, to
reduce the pressure and enhance affordability. Hence, the policy envisioned a multi-pronged multi-
stakeholder approach to provide affordable housing delivery for all.

In order to provide the states a technical guidance for preparation of State Housing Policies,
emphasizing on the affordable housing segment, a Model State Affordable Housing Policy was prepared
and its draft copy was circulated for stakeholders consultation. The aim of MSAHP, prepared in 2015, is
to create an enabling environment for providing affordable housing for all with special emphasis on
EWS and LIG and other vulnerable sections of society such as Scheduled castes/Scheduled Tribes,
Backward Classes, Minorities and senior citizens, physically challenged persons in the State and to ensure
that no individual is left shelter less.

The Policy further aims to promote Public Private People Participation (PPPP) for addressing the
shortage of adequate and affordable housing. The target group for the said policy would be urban poor i.e.
persons belonging to the Below Poverty Line, Economically Weaker Sections (EWS) and Lower Income
Groups (LIG) and would be applicable to all cities and towns including that of Census Towns, to enable
planned affordable housing provision. The policy covers various options of housing viz. Ownership,
incremental, rental/social, shelters and other forms. The key interventions and action points are focused
on land, finance, legal and regulatory reforms, technology support and its transfer, provision of
infrastructure, satellite/integrated townships, institutions, capacity building and sustainability concerns.
Providing home ownership to over 18 million households, identified as housing shortage, can prove to be
a challenging task. In an attempt to tackle the issue of growing number of families in urban areas, mostly
with low paying capacities, the National Urban Rental Housing Policy for formulated in 2015.

The above discussion highlights the paradigm shift in the policy approach to increasingly
encourage the stakeholders and market players to collaboratively participate in the process of housing
provision through various mechanisms. The same is envisaged to be carried out in a decentralized manner
to suit the finished product to the local needs, preferences and capacities. Thus the importance of
localized study of housing markets has been virtually established by the series of housing policies
introduced in India.

3.0 Legal and Institutional Framework for Housing

Housing is primarily a state subject since as per the constitution of India the land and building
construction for housing is mandated in State list and twelfth schedule (list of urban local body). Central
government can frame the housing policy and programmes at apex level however the interventions are to
be done at the state level or ULB level organisations. In the three tire government system central
government provides legal framework like land acquisition Act, Real Estate Act etc. Besides it also
provides and policy and reform input time to time to facilitate the development process. Whereas state
government operate with the more interventional acts like town and country planning act, housing board
act, land registration act, slum clearance and related act, municipal act etc. It provides the necessary
organisational capacity to deliver the housing for all categories. The local governments are mandated to
implement all social housing schemes designed by central/state governments. They ensure development
control and building regulations to achieve orderly growth of housing and infrastructure. ULBs can frame
local rules and regulations time to time also if required.

The table below will describe the legal policy and organisational frame for developing housing
and housing infrastructures.

Weekly Lecture Notes /8 2

NPTEL course: Housing Policy and Planning
Dr. Uttam K. Roy, IIT Roorkee: January-March 2017 Week 2

Acts/Legal frame Policy/ Organization Role


Central Constitution of India NUHHP (MoHUPA) Facilitator

Govt. Land Acquisition act NURHP NHB Streamlining
Developers act BMTPC funding
Other related acts on HUDCO Monitoring
environment, infrastructure HPL
State Town & Country Planning SAHP Dept./Directorate of Enabler
Govt. act PPP Policy Housing/ UD Implementer
Municipal Act Land Policy -Housing Boards Monitoring
Slum Dept./Directorate of T&CP
Clearance/improvement Act -State Planning Board
Developers Organization
Local Local building by-laws/ Housing Dev. Authority Implementer
Govt. regulations strategy/ Master Municipal Corporation Feedback and
plans SPV Evaluation
Land Banking Private Developers

4.0 Land for Housing

land is most important resource associated with the development of housing. It is essential for a
professional working in housing sector to have an idea about land cover and land use and its relation with
housing, land value, land tenure and rights and land supply. The land represents following features
because of which it takes so important roles in housing development.

Most important limited resources

Water, air and other resources are tied with
Provides living spaces with primary products
Frequent wars were fought for land in history
Key factor in production
Right of land determines status
Viewed as input for the scheme of values
Conversion of land is inevitable due to population increase
Outward sprawl in urban centres makes land a scarcely commodity in fringes

Naturally making land available in urban or semi urban areas is a very challenging task. There are
four approaches which can be taken to assemble the developable land.

1. Land acquisition
2. Land use and Development Control
3. Land Assemble using readjustment/pooling/reconstitution
4. Guided land development with Partnership
In India, land use has been identified as a state (provincial) subject matter. Whereas any public
authority can acquire land for public purpose as defined in Land Acquisition Act, 1894. Traditionally
compulsory acquisition of land has been a major source of land assembly by the public agency for all

Weekly Lecture Notes /8 2

NPTEL course: Housing Policy and Planning
Dr. Uttam K. Roy, IIT Roorkee: January-March 2017 Week 2

categories of housing and infrastructure development. In 70s, almost all the state governments came up
with Town and Country Planning Acts in order to control over use of land for a sustainable development
and significant numbers of such planning authorities were framed accordingly. However, in 90s, control
over use of urban land was further percolated to the urban local bodies (ULBs or municipalities). On the
other hand, in order to maintain an equitable distribution, the land ownership under any individual has
been restricted for decades. As a result, until 2000, bigger land parcels were scarce, especially in urban
areas for large housing and other projects. Realizing these, governments started exploring various models
(see Table below) for mobilizing large land for mass housing.

Therefore, the land management in India has been flown into two directions. Firstly the control
over use of land has been decentralized up to the ULB level and secondly the extent of ownership of land
has faced multiple restrictions with single ownership, causing scarcity of large land parcels in urban areas.
Through various reforms and interventions as discussed above which government attempted to deregulate
the land and to make it more market friendly to enable developers to develop large housing projects. In
the recently launched PMAY, government is encouraging similar approach in JV models through the sub-
scheme called Affordable Housing in Partnership (AHP). However through the state level housing
policies, other approaches like reforms and indirect interventions are applicable for housing.

Sl Model Description of Model
1 Joint Venture Cross subsidy based approach started in the state of West Bengal in the year 2000
(JV) Model and later adopted in the scheme named Affordable Housing in Partnership under
JNNURM and PMAY. This model encourages private companies to form JV with
public agencies like municipal authorities, housing boards and development
authorities. Land is acquired by government partner and development right is given
to private partner for developing housing with 50:50 sharing of profit.
2 Land Reform Various legal and policy initiatives taken by government of India towards making
Model land available from the market avoiding any legal and institutional barriers by doing
Repeal of Urban Land Ceiling and Regulation Act (making large land parcels
Amendment of Land Acquisition Act (making the process simple, shorter,
inclusive and effective)
3 Indirect Various tools like Transferable of Development Right (TDR), Variable Floor Area
intervention Ratio, and Reservation for affordable housing and rental housing has been attempted
Model to increase the total supply of homes in piece of land. Rental housing has been
identified in PMAY as a preventive mechanism for the slum formation.

Few questions to think and further study

1. Why is it so important to bring set of reforms for housing development? Are the current reforms
appropriate or sufficient for the desired housing in India?
2. What is the visible change in housing policies in last decades? What is the implication of real estate act?
3. Is the concept of state model policy appropriate in bringing the contextual intervention? What are the areas
of specialization where state government should look into?
4. Is the local government capable enough to deliver housing for all? What is the futuristic role of state
housing boards in India?
5. Which approach of land assembly is most suitable for housing in India? What are the strength and
weakness of all such approaches?

Weekly Lecture Notes /8 2