Government housing Vs Low Cost Housing

The recent budget announcements to provide rebate for low-cost or nano housing started an interesting debate . Some of the people were skeptical of the way such policy measures would be abused. Their key submissions were

  • In most metros one cannot get a “decent” house for under Rs 10L. This itself was very debatable as the idea of decent size is at best a very vague one. In my defense I showed them that the Tata Nano housing project was between Rs 4.5L to Rs 7L for Shubh Griha (in a Mumbai suburb) and if I remember correctly, it was sold out.
  • Historically the subsidized housing that government has provided to the poor, have been misused. They claimed that in most cases these houses were either sold or leased out by the original allotees who returned back to the jhuggis where they originally were- the sore sight that government probably wanted to clean in the first place. While I dont know how much of this is true, but I think direct subsidy to the beneficiary would lead to such instances. Its best to cater to those who want to pay for a better housing infrastructure and make it easier for them to get credit.
  • The target segment for these low cost housing project is typically one which is self-employed and do not have most of the identification/residential proofs, except maybe the ration card. Most of them are also unbanked currently. I might be wrong here, but I feel my friends at Shubam are not really targeting the self-employed unbanked segment, but rather the employed clerks, junior managers who want to own a house. They surely must have access to some reports indicating how this huge segment has aspirations to own a piece of roof in metros and sub-metros and are willing to shell Rs 10-15L for a 400-700sqft house.
  • The builders do undertake such projects as it would allow them to look good – socially responsible housing but they typically divert the subsidy into completing more commercially viable projects. No data so let it be.

While we couldnt reach a common ground, one thing was very clear, the government policies would define the fate of low-cost housing as an industry – whether it goes the way traditional government housing projects have gone or not.