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Social Housing: Best Solutions to help the poor

On assuming power in 2014, the BJP Government set out to improve housing conditions for the urban poor, and launched Housing for All (HFA) by 2022 — ‘Pradhan Mantri Awas Yojana Urban’. 
 
New analysis examines the efficiency of three possible paths to achieve this goal. It shows that some approaches are stronger than others, and the result can help the Housing and Urban Affairs Department to re-think the delivery of the HFA by 2022 agenda for large cities. It also prompts the broader question as to whether non-housing policies might better help the urban poor. 
 
The comprehensive report on costs and benefits from housing policies is written by Amitabh Kundu, Distinguished Fellow at the Research and Information System for Developing Countries and Arjun Kumar, Visiting Fellow at the Institute for Human Development. 
 
The first approach examined is Beneficiary-led Construction (BLC), where households with land or a house can claim a subsidy of ₹1.5 lakh for construction or an extension. This initiative is effectively driven by the beneficiaries. Costs include land and construction, and managing and supervising the construction. 
 
The benefits are many — like better living quarters, better health and better opportunity for a family to live together. All of these — and more — benefits are explicitly priced through the increased market value of the property. 
 
In large cities in Andhra Pradesh, the total cost of building a 300 sq. feet house is estimated under this scheme at ₹10 lakh, while Researchers find that the benefit — the increased mar-ket price — works out at nearly ₹13 lakh. Each rupee creates benefits worth a little more than one rupee. 
 
The second approach is the Affordable Housing in Partnership (AHP) scheme, where projects are undertaken by public and private sectors in partnership, and 35 percent of houses are to be reserved for the economically weaker. 
 
This is a “supply-side” intervention to be led by private developers. The total cost of constructing a 300 sq. feet house under AHP in large cities in Andhra Pradesh is estimated at about ₹7 lakh, with construction accounting for more than half. 
 
In addition to the market price rise, there is also a profit gained by the builder, which should be considered as part of the benefits to society, but given less weight because the builder will be in a different income group than poor beneficiaries. 
 
The new analysis shows that total benefits to society come to nearly ₹12 lakh, so this achieves more than BLC, at nearly two rupees for each rupee spent. 
 
The final approach examined by Dr Kundu and Kumar is In-situ Slum Redevelopment (ISSR), which leverages the land currently locked by slums, and involves re-housing slum dwellers in better accommodation in the same place, with the participation of private developers. 
 
This has no land cost, as the land is effectively already occupied. Consequently, the only costs are those of construction; internal and external infrastructure; community mobilization; project management; and providing transit accommodation. 
 
Under this approach, the cost of a 300 sq. feet house in a large city in Andhra Pradesh comes to just over ₹4 lakh. In addition to the market price rise, slum dwellers get additional benefits, including a reduction in death and healthcare spending, along with time savings because of access to basic amenities, especially water and sanitation. Taking this into account, the approach generates benefits worth nearly ₹11 lakh, so each rupee achieves about two-and-a-half ru-pees in benefits. 
What are the lessons? For the Housing and Urban Affairs Department, it seems clear that among social housing approaches, ISSR should be top priority to achieve the most. 
 
But there is perhaps a broader lesson, too. Other articles published earlier on The Better Andhra find policies helping the urban poor — such as investment in improved Tuberculosis screening and treatment, or improved water and sanitation access — that generate many, many-times more rupees of benefits, for every rupee spent. 
 
Having a safe, secure home provides dignity and protection against life shocks, and is a noble, important goal for the government to deliver; but if the goal is to help the urban poor as effectively as possible, governments should consider all of the data, including this economic evidence. 

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