8th Five Year Plan (Vol-2)
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Agricultural and Allied Activities || Rural Development and Poverty Alleviation || Irrigation, Command Area Development and Flood Control || Environment and Forests || Industry and Minerals || Village and Small Industries and Food Processing Industries || Labour and Labour Welfare || Energy || Transport || Communication, Information and Broadcasting || Education, Culture and Sports || Health and Family Welfare || Urban Development || Housing, Water Supply and Sanitation || Social Welfare || Welfare and Development of Scheduled Castes and Scheduled Tribes || Special Area Development Programmes || Science and Technology || Plan Implementation and Evaluation




14.1.1 The dimensions and problems of housing need to be viewed in the overall environment of human settlement. The physical dwelling unit is not the sole element of housing; equally important is the provision of basic services like potable water, sanitation, drainage and electricity. Further, the type and location of housing is inextricably linked to the employment and af-fordability of the occupant.

14.1.2 Housing has been primarily self-help activity for the majority of the households. Increasing population pressure on land and infrastructure and associated high cost have made proper housing inaccessible to the poorer segments of the population, necessitating State intervention initially as a welfare activity and now recognised as a vsocial and economic imperative. In a developing country like India, problems of urban housing have been more evident, both because of exponentially increasing land and construction cost and deteriorating quality of life in congested urban pockets. Sheer number of additional housing required to meet the needs of the growing urban population presents a formidable task. If we add to this the unserviceable housing stock in rural areas the task assumes frightening proportions. However, the facts that housing is one of the major employment generators and that motivation for ownership of housing is an important element in the mobilisation of domestic savings, make the task worth our endeavour. Housing is not to be treated as a marginal or welfare sector which is a drain on productive resources but to be recognised as a major economic sector.

14.1.3 In this context, the housing policies and programmes, while accepting that housing is essentially a private activity, have to recognise that State intervention is necessary to meet housing requirements of a majority of vulnerable sections as well as to create an enabling environment for accomplishing the goal of "Shelter for All" on a self-sustaining basis.

Housing Scene

14.2.1 Housing stock in urban areas was estimated at 54.1 million in 1961. This increased to 18.5 million in 1971 and further to 28.0 million by 1981. In the rural areas, housing stock grew from 65.2 million in 1961 to 74.5 million in 1971 and 88.7 million in 1981. The earlier projections of National Buildings Organisation (NBO) put the 1991 housing stock of rural and urban areas in 1991 at 106.2 million and 42.6 million respectively.

14.2.2 A comparison of housing condition in rural and urban areas over the last 10 years, as revealed from the different NSS rounds data, suggests that while proportion of pucca houses has increased over time, the service level has not improved. For example, between 38th and 44th round (1988-89) percentage of pucca house in rural areas has increased from 16.7% to 27.1% and in urban areas from 57.6% to 71.0 percent. In rural areas 'no latrine' households have marginally decreased from 91.4% to 89.2 percent.

14.2.3 According to the National Buildings Organisation the total backlog of housing is estimated at 31 million in 1991, of which 10.4 million is in urban areas. Taking into account the revised figures available from 1991 census, the backlog of housing shortage in urban areas is going to be little lower. Absolutely houseless families were, however, only 6 lakhs in 1981 and are likely to he only a little higher in 1991. Table-1 presents rural/urban distribution of households and housing shortages for the year 1991 and likely gaps by 2001. "

14.2.4 Service deficiency is equally alarming. In 1985, only 28 per cent of urban population had access to proper sanitation and 27 per cent of the urban population did not have a source of safe water within reasonable distance. Urban housing crisis has manifested itself in many ways of which the most significant is the growth of slums and squatter settlements. It is estimated^ that about 48.8 million persons are living in" slums in 1990. About 40 per cent of this population will be in million plus cities.

Table - 1 Households, Usable Housing Stock and Housing Shortages/Gaps in 1991 and 2001.
(in million)

Year 1991 Year 2001
Particulars Rural Urban Total Rural Urban Total
1. Households 113.5 47.1 160.6 137.0 72.2 209.2
2 . Usable 92.9 36.7 129.6 111.5 56.7 168.2
Housing Stock  
3 . Housing 20.6 10.4 31.0 25.5 15.5 41.0
Shortage (21.2) (9.6) (30.8) (26.5) (14.3) (40.8)

Source: The Handbook of Housing Statistics Part-1 1990-NBO Figures in bracket recomputed on the basis of 1991 census/projected population.

Table - 2 Public and Private Investment in Housing

Plan Period Investment in Housing %age ofHousing
Public Private Total Inv. to total inv. in economy
1 2 3 4 5
1st 250 900 1150 34
2nd 300 1000 1300 19
3rd 425 1125 1550 15
4th 625 2175 2800 12
5th 796 3640 4436 9.3
6th 1491 18000 19491 12.5
7th 2458 29000 31458 9

Source: Prominent facts of Housing in India NBO and UN; Regional Housing Centre for ESCAP, 1990.

14.2.5 As against the above magnitude of shortage, it would be useful to understand the capital formation process in this sector and particularly the relative role of public and private .sector in the creation of housing stock. Table-2 showsthe investment in housing during the various Plan periods.

14.2.6 An attempt was made by the Sub-Group on Housing Finance (1990-95) to estimate the share of formal sector in total housing investment. The 'formal sector' includes direct budgetary allocations and also net financial assistance through financial agencies like GIC, LIC, UTI, Commercial Banks, Provident Fund and also HFIs like HDFC. This share was estimated at 16 per cent in 1987-88, which leaves a balance of 84 per cent to the 'informal sector' that includes households themselves and public and private sector employers extending housing loans to their employees.

Review of Seventh Plan and Annual Plans (1990-92)

14.3.1 Social housing programme in urban areas and rural housing programme for landless labourers and artisans under the Minimum Needs Programme (MNP) formed the thrust of the Seventh Plan. Role of institutional finance and promotion of building material technology was also given due priority in the Seventh Plan. However, the Plan outlay of the order of Rs. 2424.34 crores, comprising Rs.2168.34 crores in the State Sector and Rs. 256.00 crores in the Central sector, was only 1.1 per cent of total public sector Plan outlay. Including Indira Awas Yojana under rural development, the outlay works out to about 1.3 percent. Even within the social service sector, housing accounted for only 7.63 per cent of Plan outlay. During the two Annual Plans of 1990-91 and 1991-92, while the Central sector outlay was raised to Rs.128 crores, the State sector outlay remained at the same level. Tables 3 and 4 give the Statewise and the Central sector allocation of Plan outlays and expenditure respectively.

Table - 3 Statement showing the Total Outlays on Housing (inluding MNP) under State Sector
(Rs.in lakhs)

  7th Plan( 1985-90) 1990-91 1991-92
S.No. States Total Outlay of which MNP Outlay of which MNP Outlay of which MNP
1 Andhra Pradesh 25,740.00 21500 5150 4000 4514 3625
2 Arunachal Pradesh 1,100.00   550 50 721 100
3 Assam 5,000.00 1400 552 325 628 515
4 Bihar 8,860.00 1400 1200 200 1802 293
5 Goa 1,140.00 40 227 10 241 12
6 Gujarat 16,442.00 6300 3470 1050 3150 1305
7 Haryana 4,750.00 425 875 100 915 155
8 Himachal Pradesh 1,500.00   1150 5 435 20
9 Jammu and Kashmir 2,700.00 300 600   738 20
10 Karnataka 12,100.00 7500 2749 1500 4196 2060
11 Kerala 6,500.00 1200 1500 220 1445 270
12 Madhya Pradesh 10,749.00 4000 2074 800 2165 670
13 Maharastra 24,427.00 5000 8205 65 6645 451
14 Manipur 840.00   300   280  
15 Meghalaya 1,040.00 5 661 33 286 25
16 Mizoram 900.00 10 310 16 510 58
17 Nagaland 1,650.00   295   709  
18 Orissa 4,080.00 1000 1267 235 1052 235
19 Punjab 7,174.00 300 3094 33 2875 53
20 Rajasthan 4,846.00 800 1900 225 1322 306
21 Sikkim 460.00 100 15 120 20
22 TamilNadu 16,500.00 3500 4386 450 5531 450
23 Tripura 1,300.00 200 326 121 389 77
24 Uttar Pradesh 26,158.00 2000 5166 3355 5130 1973
25 West Bengal 10,075.00 600 1695 84 1452 100
Total (States) 196,031.00 57480 47802 12892 47251 12793
Union Territories    
26 A and N Islands 702.00   133 20 198.00 10
27 Chandigarh 2,860.00   560   590.00  
28 D and N Haveli 182.75 10 18.20   46.20  
29 Daman and Diu   + 40 3 44.26 3
30 Delhi 15,320.00 50 3605 15 3700.00 15
31 Lakshadweep 413.00   90   91.58  
32 Pondicherry 1,325.00 150 333.90 35 387.00 70
Total (UTs) 20,802.75 210 4780.10 73 5057.04 98
Total(States and UTs) 216,833.75 57690 52582.10 12965 52308.04 12891

4- included in S. No. 5 above.

Table - 4 Scheme-wise Outlays on Housing - Central Sector
(Rs.in lakhs)

S.No. and Name of Scheme 7th Plan(1985-90) 1990-91 1991-92
  Outlay Actual Expenditure Outlay Actual Expenditure Outlay
1 General Pool Accomodation 13500 10627 2200 2220 3000
2 HUDCO (Equity for Housing) 6000 5777 2000 2000 2600
3 Hindustan Pre-fab Ltd. (Equity and Loan) 200 196 100 100 150
4 National Buildings Organisation and Management Information System     50 50 50
5 Building Materials and Technology
Promotion Council - Support
i) Grants-in-aid to Building Materials and Technology Promotion Council   100 93 300
ii)Science and Technology and Grants to Institutions and other Programmes (Building Centre Programmes) 300 188 100 100 100
6 Footpath Dwellers Rehabilitation Scheme (Pavement Dwellers Scheme) 5000 485 800   400
7 I.Y.S.H.(International Cooperation Activities) 200 71 - 14 10
8 Support to Co-operative and Regional Housing Finance Organisation - NCHF (Transferred from M/o Agriculture) •       15 15
9 Central Government Employees Housing Welfare Organisation (Seed Capital) 400 194 200 200 500
10 Scheme for Urban Development,, Urban Housing and Urban Water and Sanitation Grants to Urban Local Bodies, through HUDCO         100
TOTAL 25600 17538 5550 4792* 7225

* Excluding scheme at S. No. 6

Rural Housing

14.3.2 The scheme of allotment of house sites and construction assistance to rural landless workers and artisans including SCs and STs was initiated in 1971 as a Central sector scheme which was later transferred to State sector in 1974. This scheme is a part of the Minimum Needs Programme. Under the MNP, higher priority was accorded to this scheme during the Seventh Plan, setting apart a sum of Rs.576.9 crores. As many as 43.2 lakhs house sites, as against the target of 29 lakhs, were allotted and construction assistance provided to 22.5 lakhs families. During 1990-91 and 1991-92 the outlay provided was Rs.129.65 crores and Rs.128.91 crores respectively. An estimated 7.74 lakhs additional beneficiaries got House-sites in 1990-91 and 4.24 lakhs received construction assistance.

Indira Awas Yujana

14.3.3 The Ministry of Rural Development is operating this fully subsidised rural housing scheme as part of rural employment programme for providing houses to the SCs/STs and freed bonded labour. It now forms a part ofJawahar Rozgar Yojana (JRY). The objective of this scheme is to develop a viable micro- habitat, provide housing and ensure a base for higher level of earning for the beneficiaries. A sum of Rs. 12,700 per unit for plain areas and Rs. 14,500 per unit for difficult hill areas is given as grant under this scheme to the State Governments for housing, sanitation and infrastructure. During the Seventh Plan, 6.87 lakh dwelling units were constructed at an estimated expenditure of Rs.699.58 crores and for the year 1990-91 the target achieved was 1.71 lakhs, at an anticipated expenditure of Rs. 187.96 crores.

14.3.4 Housing and Urban Development Corporation (HUDCO) has been financing several rural housing schemes by earmarking 15% of its resource allocation to such schemes. Till June 30, 1991, 2.15 million houses entailing project cost of Rs. 1247.80 crores were sanctionedunder these schemes. The loan releases worked outtoRs. 503.17 crores. About 1.6 million units were completed which accounted for 46% of the total units funded by HUDCO. In addition, HUDCO is financing other shelter options like village abadi improvement and building materials.

Urban Housing

14.3.5 Housing schemes in the urban areas were as under:

  1. Social housing schemes for different income groups, operated by the States and city level agencies with budgetary -support and loans from HUDCO, LIC and other financing agencies;
  2. Housing and shelter upgradation scheme for the urban poor, as part of Nehru Rozgar Yojana (NRY) introduced in November, 1989 in cities with population between 1 and 20 lakhs;
  3. Footpath Dwellers Night Shelter Scheme introduced in 1988-89 to provide shelter, and later on also sanitation facility, to the pavement dwellers in cities;
  4. Scheme taken up by the cooperatives for different income groups with the help of Apex Federations and loans from LIC, HUDCO and scheduled banks;
  5. Various other schemes including ownership housing scheme for Central Government employees, working women scheme, environmental improvement of urban slums and home improvement schemes, rental housing schemes for employees of public sector undertakings, sites and services schemes operated by various State Governments.

14.3.6 The EWS housing was the most significant component of social housing scheme, as part of the 20-Point Programme during the Seventh Plan. It was contemplated that the public sector would provide sites and services to the beneficiaries. In addition, the beneficiaries would be provided a loan of Rs.5,000 p^r unit repayable in a period of 20-25 years at a concessional rate of interest. In practice, however, the scheme operated in a different manner - State agencies either promoted housing units on HLJDCO norms or plots plus cost loan up to HUDCO prescribed ceiling. During the Seventh Plan, 7.14 lakh EWS and 1.67" lakh LIG units have been constructed under the 20-point programme.

14.3.7 Achievement under NRY has also been quite significant. Total subsidy and loan through HUDCO under this component are estimated at Rs. 196 crores for the period 1989-90 to October 1990 covering 5.73 lakh units. The impact of Night Shelter Scheme has so far been limited with an estimated outlay of only Rs.2.27 crores during the last two years benefitting 26,200 pavement dwellers.

14.3.8 During the Seventh Plan, 2.3 lakhs dwelling units have been completed under cooperative housing schemes with a total investment of Rs. 1087 crores.

14.3.9 It has been estimated that under the various programmes in Public Sector about 10 lakhs houses have been constructed/upgraded each year during Seventh Plan.

New Initiatives in Housing Finance

14.3.10 There has been a marked growth in the flow of credit from the financial institutions and banks to the housing sector during Seventh Plan period. The contribution ofLIC increased from Rs.185 crores in 1984-85 to Rs.825 crores in 1990-91, Provident fund advances from Rs. 153 crores to Rs.478 crores during the same period and banking sector's contribution from Rs.186 crores in 1986-87 to Rs.387 crores in 1990-91. The most important development in strengthening the housing finance in recent years has been the setting up of an apex institution - the National Housing Bank (NHB) - as a subsidiary of the RBI under the NHB Act, 1987. The important activities of the NHB are:

  1. establishing Home Loan Account System - a contractual deposit scheme linked to guaranteed loan from scheduled banks. Till December 1991, 5.5 lakhs accounts have been opened in various commercial banks and housing finance institutions;
  2. liberalised lending guidelines and increased funding from banks; .
  3. refinance at less than commercial rates of interest of HUDCO and bank's scheme as well as land development and shelter programme of public and private agencies;and
  4. guidelines for regulation of housing finance.

During 1990-91 total refinance of'HFIs was put at Rs.478.39 crores including Rs.161.10 crores for rural housing.

14.3.11 Larger flow of institutional finance has been most evident in relation to the phenomenal growth in HUDCO's operations during the Seventh Plan as well as two Annual Plans. During the Seventh Plan, HUDCO's sanctions for various shelter related schemes totalled Rs.2834.18 crores and loan release Rs. 1796.85 crores, facilitating construction of about 20 lakh dwelling units. Loan operations of HUDCO registered a growth of-133.5 per cent compared to previous Plan.

14.3..12 The Life Insurance Corporation of India (L1C) has also emerged as an important contributor to the housing finance. The contributions by LIC comprising of direct lending, hulk loans and assistance to State Governent apex bodies and loans to its own housing finance subsidiary totalled around Rs. 1570 crores during the Seventh Plan. The contribution was as high as Rs. 825 crores during 1990-91.

14.3.13 A number of specialised housing finance subsidiaries have been floated by the scheduled commercial banks. There has also been spurt in the number of housing finance companies operating in the private sector.

Building Materials, Technology Promotion and Extension

14.3.14 Efforts to effect savings in construction cost through promotion of low-cost and innovative building materials and technology are important as building materials account for a major part of the total cost of construction. Some of the efforts made during the Seventh Plan and two Annual Plans in this direction were:

  1. setting up of Building Materials and Technology Promotion Council (BMTPC) to provide an appropriate platform for technology transfer and application in the shelter sector and promoting commercial production of innovative materials, with use of industrial wastes like flyash, red-mud, phospho-gypsum as well as agricultural wastes;
  2. conducting experimental housing projects in different geo-climatic regions by NBO and developing appropriate design and safety measures in zones prone to land slides;
  3. setting up a network of building centres as a Centrally Sponsored Scheme, under which over 200 Building Centres have been identified out of which 77 are operational; and
  4. increasing involvement ofnon Governmental organisations in supplementing Governmental efforts in the field of technology transfer.

National Housing Policy

14.4.1 The Global Shelter Strategy adopted by the United Nations in November. 1988 calls upon different Governments to take steps for the formulation of a National Housing Policy (NHP) to achieve its goals. The Ministry of Urban Development prepared a draft NHP which was tabled in both Houses of Parliament in 1988. Subsequently, another draft was prepared and widely circulated and discussed and broadly endorsed by Urban Development and Housing Ministers' Conference held in Delhi in October, 1990. The objectives of draft NHP and the major components are described below:-


14.4.2 The basic objectives of the policy are:

  • to assist all people and in particular the houseless, the inadequately housed and the vulnerable sections, to secure for themselves affordable shelter through access to developed land, building materials, finance and technology;
  • to create an enabling environment for housing activity by eliminating constraints and bv developing an efficient system for the delivery of housing inputs;
  • to expand infrastructure facilities in rural and urban areas in order to improve the environment of human settlements, increase the access of poorer households to basic services and to increase the supply of developed land for housing;
  • to undertake, within the overall context of policies for poverty alleviation and employment, steps for improving the housing situation of the poorest sections and vulnerable groups by direct initiatives and financial support of the State;
  • to help mobilise resources and facilitate expansion of investment in housing in order to meet the needs of housing construction and upgradation and augmentation of infrastructure; and
  • to promote a more equal distribution of land and houses in urban and rural areas and to curb speculation in land and housing in consonance with macro-economic policies for efficient and equitable growth.

14.4.3 In the following sections the critical areas under the NHP relating to (i) supply and management of land; (ii) rural housing; (iii) legal and regulatory framework and (iv) housing finance are discussed.

Supply and Management of Land

14.4.4 Inadequate and inequitable supply of serviced land particularly in urban areas has been the most significant bottleneck for the promotion of housing activities and urban development at large. The aspect of supply and management of land needs to be viewed both from a larger dimension of regional development and city/town level growth. It would imply that all development in city/region should take place within the framework of a comprehensive development plan with spatial linkages and with planned provision of basic services. At the local level, an appropriate policy package incorporating the following is envisaged: (i) control of unregulated peripheral development on agricultural lands; (ii) optimising overall land use; and (iii) appropriate urban redevelopment policy.

Rural Housing

14.4.5 The two central measures with regard to rural housing are:

a) Promoting use of local building materials and technologies suited to different geocli-matic regions and preventing indiscriminate and commercial exploitation of such materials;

b) Creating an enabling environment for primarily self-help housing including new construction, additions and upgradation by the rural people through enactment and effective implementation of laws for conferment of homestead rights and provision of house sites with minimum infrastructure.

A few other specific measures suggested as a part of NHP are :

  1. Prevention of alienation of homestead on tribal lands;
  2. Avoidance of unnecessary displacement of rural settlements due to developmental projects;
  3. Rehabilitation of households affected by natural calamities;
  4. Rural housing/development agencies for supply of credit and materials on flexible terms suitable to local requirements;
  5. Giving special attention to the needs of Scheduled Castes, Tribes and other disadvan-taged groups;
  6. Linking Rural housing with the programmes of IRDP and JRY for accentuating the pace of rural housing and also other related programmes of asset creation and employment generation; and
  7. Setting up of a suitable institutional structure for strengthening existing rural development agencies at State, district and local level to meet the needs of the housing sector.

Legal and Regulatory Framework

14.4.6 Creation of appropriate legal and regulatory framework is perhaps the must important contributing factor for enhancing supply of landand housing. The NHP has taken cognizance of it while specifying measures under each component (eg. Rural Housing, Supply and Management of Land). Specified measures suggested in draft NHP are:-

  1. Provision in the land reforms and other relevant acts for conferment of homestead rights to the occupants, and ensuring proper rehabilitation of those dehoused;
  2. Review of slum improvement laws to provide for conferment of occupancy rights;
  3. Revision of Master Plan standards, buiidmg byelaws, laws and infrastructyral standards to reduce cost of land and construction and promote low cost materials and technology;
  4. Amendments to the Land Acquisition Act for quick acquisition of land in public interest and negotiated compensation to the landowners, delinking provision of land from determination of compensation;
  5. Amendments to Urban Land (Ceiling and Regulation) Act, to remove inhibiting effects of legislation on enhancing supply of land without diluting its social purpose and also as a specific measure, imposing vacant land tax;
  6. Amendments to Rent Control Laws to promote investment in rental housing; and
  7. Procedural simplification measures including building approval procedure, flexible collateral requirements, amendments to NHB Act to provide for speedy foreclosure of mortgages of HFIs refinanced by NHB and introduction of a secondary mortgage system.

Housing Finance

14.4.7 The measures to he taken with regard to housing finance are as under:

  1. Evolving, over a period of time, a non-subsidised housing finance system a the integral linkages of the housing sector with the rest of the economy.
  2. Targetting of the available capital and interest subsidies to rural and urban poor.
  3. Introduction of innovative savings and lending instruments to help integrate the housing finance system into the capital markets, by enabling HFIs'access to the funds on a competitive basis with other financial institutions.
  4. Creating innovative banking/institutional arrangements to cater to the housing credit needs of low income groups in the informal sector through community based system.
  5. Creation of a suitable environment for developing a secondary mortgage market in order to attract funds from a wide range of investors, including insurance and provident/pension funds and to integrate housing finance with the overall financial system.

The Perspective

14.5.1 According to the estimates made by the Sub-Group on the "Magnitude of Housing Problems" 64.4 million new houses will be needed by 2001. Besides in 1981, there were 14 million units needing upgradation, 1.23 million requiring renovation and 7.5 million needing extension/expansion. To achieve the goal of elimination of houselessness by the turn of the century, it would be imperative to step up investment, public and private in housing.

14.5.2 Taking into account the availability of physical inputs, the Sub-Group had concluded that it would be feasible to construct 21.77 million units with an investment of Rs.77,590 crores at 1989-90 prices during 1990-95. Forthe same number of units assumed for 1992-97, the investment requirement would be of the order of Rs. 97,530 crores at 1991-92 prices. Table-5 gives the break-up of the physical target for upgradation of existing stock and creation of new stock in rural and urban areas alongwith the corresponding financial requiremnts. If adjustment for 1991 actual population and projected urban population for the year 2001 is made, the target for urban areas will require to be marginally reduced with corresponding increase in rural areas. The requirement of investment in housing (public and private) works out at 12.2 percent of the total outlay during Eighth Plan.

Table - 5 Physical Projections and Financial Requirements
(According to Sub-Group on Magnitude of Housing Problem)
(units in million,, Amount in Rs. Crores)

  Rural Urban Metro Total
No.of Units Amount No.of Units Amount No.of Units Amount No.of Units Amount
I Upgra-
4.07 1,970 1.75 1,130 5.82 3,100
11 New Stock
EWS 6.45 6,765 2.17 5,245 1.18 3,810 9.80 15,820
LIG 1.34 4,340 1.90 6,150 1.04 5,020 4.28 15,510
MIG 0.25 2,445 0.58 5,580 0.31 5,060 1.14 13,085
HIG 0.10 4,280 0.40 16,305 0.22 8,880 0.72 29,465
Total 8.15 17,835 5.05 33,280 2.75 22,770 15.95 73,885
l and II 12.22 19,800 6.80 34,410 2.75 22,770 21.77 76,980
Houseless 610
Total (1989-90 prices)
Total (1991-92 prices)

14.5.3 As against the projected requirement of Rs.77,590 crores for housing during 1990-95, the overall flow from the formal sector as per existing norms is estimated at around 16 per cent and the Sub-Group on Housing Finance had recommended that the credit support may be increased to at least 20 per cent. It is expected that a large part of the credit flow from the formal sector would come from LIC followed by the commercial banks and provident funds. The total flow of credit from the formal sector during the Eighth Plan is projected in the range ot'Rs. 20,000 to Rs. 25,000 crores (at 1991-92 prices).

Core Strategy of Eighth Plan

14.6.1 In line with the National Housing Policy which is a statement of the long term objective, the core strategy of the Eighth Plan consists of creating an enabling environment for housing activity, viewed as an important component of the national economy, by eliminating various constraints and providing direct assistance to the specially disadvantaged groups including rural and urban poor households, SC/ST, physically handicapped, widows and singie women. The first objective is intended to be achieved through a set of sub-tasks or instruments as specified below;-

a) Expand the provision of basic infrastructure facilities in rural and urban areas in order to improve the overall environment of habitat and enable appropriate conditions for the majority of the households to have access to housing;

b) Remove major legal constraints to increase supply of serviced land as well as rental housing by way of substantially amending the existing statutes like Urban Land (Ceiling and Regulation) Act, Land Acquisition Act, Transfer of Property Act and Rent Control Act;

c) Provide stimulus and support for housing on expanded scale through enhancing the flow of credit both by way of mobilisation of additional resources for housing by tapping capital markets and additional savings and by directed credit from public financial institutions. The Planning Commission had set up a Working Group on Finance for Housing sector for the Eighth Five Year Plan (1992-97) to consider ways and means to step-up flow of institutional finance to the housing sector. The group has made a number of recommendations in its report including projection of flow of credit from various financial institutions and HFIs and greater accss of EWS rural households to the institutional credit. Fiscal incentives, procedural simplification and setting up of a wider network of HFIs particularly in remote areas will act as enabling factors to achieve the objective.

d) Role of private developers in fringe area development of metropolitan region/large cities, while keeping safeguards including environmental standards for the majority of present residents, not only in housing hut also in trunk infrastructure needs to be explored;

e) Promote use of low cost building materials and cost effective technologies intended for both saving in use of scarce resources like brick, cement and steel and provision of affordable housing to poor segments of population;

f) Promote self-help housing as well as shelter upgradation, which is as important as creation of new housing stock, by providing better access to finance, land, materials and technology through appropriate delivery systems to the poorer segment of the rural ixipuiation;

g) Establish links between formal and informal credit network including community level association and voluntary agencies operating in the housing sector;

h) Provide financial and institutional support,* through both formal and informal systemsto environmental improvement and in-situ upgradation programme in the slum areas and other low income congested pockets in urban areas; and

i) Establish an effective Management Information System for housing and urban infrastructure accessible to both private and public development agencies With regard to the second objective of direct assistance ',' disadvantaged groups;

j) Evolve special assistance programme in the form of subsidy preferably in kind, differential rate of interest and delivery support system for specially disadvantaged groups including vulnerable sections ofSCs/STs, widowed women of poorer sections of the society and also those affected by natural calamities. Such assistance should include both in-situ upgradation and new sites and house construction.

Eighth Plan Priorities And Programmes

14.7.1 The most significant aspect of the Eighth Plan, compared to the Seventh Plan, in respect of housing sector is that it is set against a definite National Housing Policy, Thus, the priorities and programmes of the Eighth Plan are to be viewed as a sub-set of the long-term policy document. Two other related dimensions that need to be taken into account are: the focus on liberalisation of the economy in the recently announced macro economic policy and directed attention to rural housing.

14.7.2 With the above mentioned thrust ar is, the important programmes in the housing sector are described in the following sections. Some of the programmes overlapping with urban development and water supply and sanitation sectors, e.g. NRY, Environmental Improvement of Urban Slums (EIUS), Low Cost Sanitation Programme need to be cross referenced.

Rural Housing

House Sites and Construction Assistance

14.7.3 The scheme was included in the State Sector as a part of MNP and formed the core of the rural housing programme during Seventh Pian. This scheme has two components - provision of free House Sites and construction assistance with varying proportion of subsidy and loan in different States. Construction assistance is planned to benefit 3.5 million families directly as part of MNP. This is exclusive of other special rural housing programmes intended for specific beneficiary groups.

14.7.4 While the scheme will be continued in the Eighth Plan, it would be appropriate to take up fresh surveys and enumeration of the landless families to assess the need for continuing the scheme in the light of the fact that at the beginning of the Seventh Plan, as against the balance of 13.67 lakhs identified (in 1971) landless labourers and rural artisans, the coverage during Seventh Plan was much higher at 43.21 lakhs. However, construction assistance programme of the component seems to be lagging behind and thus needs stepping up. There is also a need to revise the cost norms of dwellings, the subsidy and beneficiary component of the most of the rural housing schemes of the State Government so as to bring an element of uniformity and achieving the intended coverage of rural households. The following specific measures are suggested during the Eighth Plan:-

a) Construction assistance (subsidy component) to the poorest section of the rural poor should preferably be given in kind supported by an appropriate delivery system covering all regions of the country;

b) All schemes should have loan and beneficiary contribution to promote self-help;

c) This programme should he tied with that of building centres so as to promote low-cost housing and locally available material/ap-ropriate material and technology. Training of masons and other construction workers should be an integral part of this scheme;

d) Innovative housing finance system should be set up in rural areas and more difficult regions like North Eastern States not only for facilitating supply of credit but also to mobilise the rural savings.

Indira Awas Yojana (IAY)

14.7.5 The Indira Awas Yojana was introduced in the Centra! Sector in 1985-86 as part of the Rural Landless Emp'soyment GuaranteeProgramme and has continued as part of JRY. The objective was to enable the construction of houses for SCs/STs and freed bonded labourers based on the wage-employment programme.

14.7.6 The endeavour during the Eighth Five Year Plan period will be towards evolving an approach to rural housing which leads to setting up of truly integrated micro-habitats and address this scheme to specially disadvantaged group including the poorest segment of SC/STs and freed bonded labour.

Housing and Urban Development Corporation (HUDCO)

14.7.7 HUDCO was incorporated in 1970, with the mandate to ameliorate the housing conditions of low income and weaker sections. HUDCO finance is available to institutions like State Housing Boards, Development Authorities, Improvement Trusts, Cooperative Societies etc. HUDCO is earmarking 55% of its sanctions for EWS and LIG housing projects and balance 45% for MIG, HIG, rental and commercial housing projects. HUDCO is the only national agency with predominant consideration for EWS both in terms of loan operations and design/technology adoption.

14.7.8 HUDCO is supporting the State Plan programme in housing and urban infrastructure sector through the following broad components:

  1. Rural housing;
  2. Urban housing;
  3. Slum upgradation; and
  4. Urban infrastructure schemes.

14.7.9 HUDCO has been getting equity support from the Government of India. Upto the end of Seventh Plan period, the equity support to HUDCO by the Government totalled Rs. 457.77 crores and another Rs.46 crores during 1990-91 and 1991-92. The subscribed capital upto November'91 was Rs. 165 crores. HUDCO has also built up reserves and surpluses. In addition to this, HUDCO has been getting funds from LIC, GIC, UTI, and NHB. HUDCO has been permitted to raise funds through tax free bonds from time to time.

14.7.10 From 1989-90, HUDCO is undertaking lending for the following Plan schemes:

  1. Shelter Upgradation Component of Nehru Rozgar Yojna.
  2. Low Cost Sanitation Scheme for Liberation of Scavengers.
  3. Night Shelter Scheme for Pavement Dwellers

The subsidy component in case of the above mentioned schemes is also being routed through HUDCO. so that loan releases can be linked with the release of subsidy. The total amount sanctioned for the schemes between 1989-90 to 1991 -92 (upto October 1991) are given below:

Table - 6

Name of Scheme Loan Sanctioned (Rs.in crores)
a)Shelter Upgradation component of NRY 196.00
b)Pavement Dweller/Night Shelter Scheme 2.27
c)Low Cost Sanitation Scheme 5.79

14.7.11 Eighth Plan Perspective for

HUDCO: With the public sector going in for less and less of direct house construction activity and with emphasis on its role as facilitator and enabler, the lending activities of HUDCO during the Eighth Plan are expected to concentrate more on land and infrastructure development and direct support to EWS schemes in rural and urban areas. After taking into account the repayments of loan receivable during Eighth Plan and also internal reserves, equity support to HUDCO and its access to Internal and Extra Budgetary resources (IEBR) would need a step-up during the Eighth Plan.

14.7.12 With manifold step-up in bar. operations for urban infrastructure including io'r-cost sanitation, there is a need for adopting a finalised approach to this activity, h has bee n "proposed to strengthen the infrastructure wing of HUDCO, create a specialised technical and management group and eventually set up a separate organistaion in near future.

Income Norni.s and Ceiling Costs

14.7.13 The income limits for eligibility and the existing cost of construction have been revised for various housing schemes for the Eighth Plan as compared to those in the Seventh Plan. The details are indicated in Table 7.

Cost Reduction Measures

14.7.14 Scarcity of conventional building materials like cement, brick and steel and the high energy intensity of the modern construction activity have pushed up construction cost. Thus, the average cost of construction at 1990-91 prices of the lowest design housing in urban areas using the traditional building materials is estimated at Rs. 15,000 and Rs.30,000 for EWS and LIG category respectively, which may be well beyond the means of the poorer segment of this group of population. Therefore, it is imperative to change over to appropriate and cost-effective technologies which bring down the costs.

14.7.15 Large scale application of low-cost technologies has been hindered by lack of inter-

Table - 7 Income Norms and Ceiling Costs for various Housing Schemes
(In Rupees)

Sl. SchemeNo. Seventh Five Year Plan Norms and Ceilings Eighth Five Year Plan (1992-97) Norms and Ceilings
Income Eligibility Ceiling
( Co.st of 01 Construction)
ceiling of Govt. in/assistance Category Monthly Cost ceiling includingcost Household of land income
1.EWS Upto 70C) 5000 (Sites and Services) 5000 EWS Upto l250a)12,700 Sites and Services in Rural Areas
    10000(Rural)**     h)22,000 Dwelling Units in Rural/Urban Areas
    15000 (Urban)**   c) 2,000 Village Abadi/repairs in Rural Areas
        d)l 1,000 Repairs in Urban Areas
2.LIG 701-150C) 30000 23500 LTG 1251-2650 50,000
25,000 (Repairs/Additions)
3.MIG 1501-250C ) 75000 40000 MIG 2651-4450 1,75,000

** for EWS (Rural, Urban) during the Seventh Five Year Plan for complete dwelling units, there were no cost ceilings. There figures are of HUDCO.

The above norms would be reviewed after two years.

The loan ceiling/assistance and the rate of interest and repayment period would he decided hy the Empowered Committee, face between developers of technology and users, lack of standardisation, and lack of an incentive structure.


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