Housing module 2

Rural and urban housing:

Rural housing has been marginalized both in wider policy discussions as well as
within the debate on rural issues because rural housing needs are generally
subordinated to urban housing needs in policy priority. Yet housing is essential
for the well-being and social security of rural households.
Compared to urban areas, rural areas suffer more from the concentration of
deprivation. With incomes generally lower than the urban areas and seasonal
unemployment, many households find it difficult to gain ownership of homes.
This has implications for social sustainability of rural communities and is causing
increased polarization as younger people migrate to the urban areas in search of
jobs resulting in negative impact on rural enterprise and economic viability.

Although the government has undertaken many one-off initiatives to promote

rural housing, these have had limited impact on the widespread shortfall.
A general lack of resources has led to a self-help culture within rural
communities and most of the houses are self financed and often self-built. In
rural areas 95.4 per cent of the households with homes, have ownership of the
property compared to a figure of 71.5 per cent in urban areas in 2001.
The word ‘rural’ encompasses villages, tribal areas and peripheral urban
areas.
There is so much heterogeneity across different regions that local dimension to
policy-making and devolution attains much greater significance. Most rural
initiatives have not succeeded because this key feature of the rural housing
sector has been neglected.
Awareness of local dimension in broad housing issues within the rural setting
is needed. We need to understand status of rural housing in India, its rural
demographic trends and discuss household asset and liability structure.
The role of financial institutions and various initiatives related to rural housing
undertaken by the government must be evaluated to arrive at policy options
available to improve the rural housing scenario.
The measure of housing construction activity, in rural India,is the number of
new housing completions.
During 1991–2001, 34.56 million new houses were added to the stock. The
number of new house construction, at 4.65 houses per 1000 persons, is still
quite low compared to urban areas where new completions are around 7
housing unit per 1000 persons.
The average area of a rural house is 64 sq. m. Around 35 per cent of the houses
had a plinth area of 50 sq m or more in rural India. Around 10 per cent of
dwelling units had plinth area of over 100 sq m.

Over time the plinth area of the houses has been reducing gradually.

Land holding per capita in rural areas is higher than the urban areas.
Rural households construct their houses on their own land.
This leads to variability in the quality of the houses with regard to materials used
for construction and the facilities available in the dwelling units.

Home ownership is the dominant form of tenure in rural India with more than
95 per cent households owning their homes.

The percentage of rental tenure is 4.6 per cent. These are mainly the houses
rented to farm workers by landlords.
Housing Conditions :

Mismatch between housing and the number of households represents only one
aspect of housing inadequacy. The other aspect of housing inadequacy is
reflected in the mismatch between desired and actual housing quality.
In rural India, mismatch between required and available housing is not as stark
as urban areas but the quality of house leaves much to be desired.

Based on building materials used for construction of structure, houses have

been classified as pucca (building materials used for construction are brick and
mortar and other permanent materials), semi-pucca (building
materials used for part of the construction of either the roof
or the walls are mud or thatch) and kutcha (materials used
for construction are mud and thatch).

Surveys indicate that the share of pucca houses has increased from
18.5 per cent in 1971 to 35.4 per cent in 2001.
The second measure of quality of housing is the number of rooms per house.
In 2001, 39.8 per cent of rural households lived in one-room houses, 68.5 per
cent of households were living in houses with one or two rooms. Though there
has been progress, the average size of rural homes is disproportionately small
compared to the average size of households. For an average household size of
5.2, the sizes of homes are small.
Overcrowding in existing homes is the main cause of new household formation
and this is driving the demand for new houses in the rural areas.

The third measure of housing quality is the structural

condition.
According to Census (2001), only 45 per cent of residential and 42.2 per cent of
nonresidential houses are in good condition. 48.7 per cent of residential and
53.3 per cent of nonresidential houses have been classified as livable. 6.3 per
cent of residential and 4.5 per cent of non-residential houses are in dilapidated
condition.
Replacement needs for dilapidated and a part of livable houses would add to
the demand for housing in rural areas in the future.
The fourth measure of housing quality is the presence of exclusive amenities
such as drinking water, toilet and electricity connection.
According to Census (2001), nearly 80.5 per cent of households had access to safe
drinking water in 2001. There has been steady progress in access to safe drinking
water over the two decades preceding 2001. In 1981, only 26.3 per cent
of households had access to safe drinking water.

The situation of access to exclusive toilet is shabby and in 2001, only 21.9
per cent of households had access to toilet facilities.

As for electricity connection, only 43 per cent of houses had electricity

connection in 2001, though this proportion has increased from 14 per cent in
1981.

Besides the absolute shortage, if congestion and obsolescence are taken into
account, rural India has a shortage of 24 million houses (NHB, 2005).
Rural Housing Finance

Rural houses are financed by formal and informal sources of finance. At present,
a house being an asset of a household, people build their houses gradually as
their savings and availability of funds from informal sources
permit them.

Sources of finance for Rural Housing

Households spend monetary and non-monetary (materials from home, own
labour, and free material) resources to complete their construction.
Monetary component is financed by households through their own resources or
through interest bearing or interest-free loans from different sources.
The presence of private financial and non-financial institutions in residential
construction remains restricted to 2 per cent in rural areas and 4.5 per cent in
urban areas .
The role of private moneylenders is more apparent when the construction is
classified by the type of structure.
Private moneylenders contribute as much as 15.2 per cent of the total finance
required for kutcha constructions in the rural areas an overwhelmingly large
population of households has borrowed against personal guarantee.
Mortgage on immovable property has been the second largest security in
rural and urban areas.

In short, the role of finance companies/institutions in providing credit for

housing has been low in rural areas.

Scheduled commercial banks and cooperative banks have played rather similar
roles in rural and urban areas.

Insurance companies and provident funds have not been a major provider
of finances for households.
Indira Awas Yojana (IAY)
is being implemented since 1985–6.
The focus of this scheme is to provide assistance to rural households who are
economically classified as below poverty line or belong to schedule
caste/scheduled tribe or are freed bonded labourers.
The Planning Commission allocates the funds for this scheme to states based on
set criteria. Since 1993–4, the scope of the policy was extended to all households
who are below poverty line subject to the condition that not more than 40 per
cent of the allocated fund could be utilized for non-SC/ST households.
The scheme has also been extended to families of ex-servicemen killed in action.
Three per cent of total houses are reserved for physically and mentally
challenged persons who are below poverty line.
Other guidelines for assistance under this scheme are: (i) the maximum amount
of construction assistance should not exceed Rs 20,000 for plain areas and
Rs 22,000 for hilly areas, (ii) limit on improvement from kutcha to semi-pucca or
pucca houses is Rs 10,000, (iii) the allotment of house should be in the name of
female member of household, and (iv) Gram Sabha (Village Council) is
empowered to select the beneficiaries.
Since inception Rs 13,840 crore have been spent under this scheme. A total of
10.34 million units have been constructed/upgraded under this scheme up to
2003–4 .
Innovation Scheme for Rural Housing and Habitat Development

This scheme was launched in 1999–2000 with the objective of promoting cost
effective, environmentally sound construction technologies.
Potential beneficiaries under this scheme include recognized
educational/technical institutions, corporate bodies, government, autonomous
societies, development institutions, and credible non-government
organizations with proven record in the field of rural housing.
Maximum limit for assistance for non-government organizations is Rs 20 lakh
and for government institutions the limit is Rs 50 lakh.
Nearly 125 projects have been approved for funding under this scheme.

Setting up of Rural Building Centre

Government provides an assistance of Rs 15 lakh to set up rural building

centers.
Objective of rural building centers is to provide technology transfer and
information dissemination, skill enhancement, and to produce cost effective
building materials. Since 2002–3, ninety-four project proposals for setting up of
rural building centers have been approved.
Samagra Awaas Yojana

This scheme was launched in 1999–2000.

It is aimed at comprehensive development of shelter, sanitation, and drinking
water facilities.
In its first phase, one block each from twenty-five districts of twenty-four states
and one union territory was identified for implementing the scheme.
A central assistance of Rs 25 lakh was provided for each block to undertake
overall habitat development, information, education, and communication
activities with the requirement that 10 per cent contribution should come from
people.
These blocks are selected in consultation with state governments for
instutionalising community participation in rural water supply and sanitation.
The programs are monitored by Ministry of Rural development through the
state governments / district authorities.
During 2002–3, thirty-three proposals were approved and
an amount of Rs 0.43 crore released.
Assessment of Rural Housing Initiatives
One of the main objectives of the rural housing policy is to make a contribution
to wider rural development process and to raise income and living standards.

Decisions about rural housing would have implications for rural employment,
opportunities, and for maintenance of rural services such as schools, hospitals,
and shops. Traditionally, in rural areas, the home and the workplace are linked.

The rural housing initiatives, which have been undertaken by the government
lack connectivity with wider rural development policies such as rural
employment guarantee schemes or various other agriculture policies.
It would be imperative for the success of housing initiatives that various agencies
collaborate and formulate a housing policy that fits squarely within rural
development policies.

If one of the objectives of rural housing initiatives is to contribute towards

development of the rural economy, this should be explicitly stated and reflected in
concerted approach towards rural area development and the linkages
strengthened with the help of gram panchayats .
The second most important objective of housing initiatives undertaken has been to
directly help poor households in a focused way. It is important, therefore, for the
policy makers to have clear knowledge of the pattern of rural housing
disadvantage.
The success of rural policies can only be gauged if it is known which sections of
rural society are facing difficulty in accessing adequate accommodation and such
policies can only be formulated once the mechanism of access to rural
housing is understood.
As discussed earlier, the dominant tenure in rural areas is homeownership,
nearly 95 per cent. Kutcha and semi-pucca houses constitute nearly 64.6 per cent
of housing stock. The common mode of house construction is self-building leading
to poor quality of houses. Housing inadequacy in terms of lack of amenities is
also pressing.
Houses are small compared to the requirements of household size. Housing
disadvantage is not only limited to SC/ST or EWS (economically weaker
sections)/LIG (low income group) households but to a much larger proportion of
rural households.
Many of the groups who have been barred from accessing good housing in rural
areas have been constrained either by low income or by their ineligibility in formal
lending market.
Acquiring land is not easy in rural areas and this has posed a constraint to the
development of private rental housing.

Social housing does not exist in either rural or urban India. Absence of other
forms of tenure such as private rental or social housing has put immense
pressure on households to build own houses irrespective of the quality.
Young families, in particular, are disadvantaged in their pursuit for housing
because of their lack of purchasing power.

Private sector developers have displayed a uniform lack of interest in providing

rural housing except for a few states like Kerala, primarily because of lack of
availability of formal sector finance for rural households.

There are no effective regulations pertaining to building standards in rural areas

as there are in urban areas. A large proportion of houses lacks structural
quality and basic amenities. Initiatives, so far, have been marked by a fragmented
approach with multiplicity of institutions at centre, state, and
local levels which are responsible for the formulation of objectives, criteria,
delivery and monitoring mechanisms.
Limited scope of these initiatives and weak linkage with broad rural
development and agriculture policies have led to only partial success of these
initiatives.

It must be emphasized here that rural areas are highly diverse and capable of
considerable adaptation, which are difficult to easily encompass within general
policies and the ‘sectoral’ organization of government.

Existing governmental administration hinders the holistic perspective that must

be taken for rural communities.

A housing policy for rural areas must recognize special circumstances of existing
dwellings, identify local problems, recognize small scale of schemes and local
housing and incorporate flexibility linked to broader socioeconomic problems and
opportunities, providing financial resources from public and private lending
institutions, setting up building bylaws and standards for rural housing and
facilitating the development of other forms of tenure in rural areas.