[Continued from yesterday's Part 2 and the previous Part 1.]

As we continue reviewing where urban Indians live (a companion to my previous two-part snapshot of India’s housing situation), and where they will live in the future, we started at the bottom, where the poor are making their own housing and communities entirely independent of government, then looked at all the affordable homes being delivered, in one way or another, with some government assistance. Now, finally, we come to the purely market solutions:

Ad for Ambuja cement: such billboards are ubiquitous throughout India

[Unless otherwise noted, all photos in this multi-part post were taken by David Smith on visits to India.]

7. Market walk-up

Most Indian cities are expanding rapidly.  The market’s fastest means of creating additional formal housing is for low-skilled labor to build two and three-story homes.  Neighborhoods like this are common all over Gujarat and Rajasthan:

Indian sprawl: expanding Jaipur

Sprawl is nothing unique to America – it happens whenever people have the chance to urbanize across land that is not too expensive:

Like many Indian cities, Jaipur keeps expanding until it hits natural barriers like mountains

When land is cheap, by far the easiest form of construction is a walkup, and in India, with its wealth of cement and sun, walkups are easy to build, hence cheap to buy:

However built, that’s a structurally credible three-story house

Once built, they become homes and neighborhoods:

Pride of ownership in the paint and stucco, and more homes coming behind

In most of the world – and for that matter, throughout most of history – a home is a process, something to be continuously improved:

Behind the streetscape, people keep building informally

The home is also the boundary of private space:

People make their own private urban spaces

8. Middle-income high-rise

As the city grows, its core becomes progressively more valuable, and that means it has to go further up:

High-end apartments, Mumbai: protected by concertina wire

Much of these are high-end:

Your enclave in the air: Mumbai

Much of Indian affordable housing is in the form of co-operatives, and judging by at least this one sign, the problem of free riders is universal:

A remarkable testament to ineffectuality: co-op fee defaulters

Throughout India, we see mid-rise and even high-rises springing up in the newer districts of growing cities:

High-rise, Ahmedabad

I didn’t go inside so I cannot be sure, but I expect these flats to be much larger than the low-income, perhaps 45 square meters to 70 square meters:

Balconies, piazzas, wide staircases: external signs of luxury

The goal is always the same: ownership.

A universal happy face: homeowner with keys to the new home

9. Market-plus subdivision

Name that country?

By now you might be forgiven for thinking that something in the Indian national character compels either a small flat or at minimum residence in a high-rise.  Prepare yourself for a surprise:

You’d think you were in Abilene, not Ahmedabad, wouldn’t you?

These apartments not only look Western-style on the outside, they are the same in the inside – anywhere from 80 to 120 square meters (850 to 1,300 square feet), laid out in a form and with amenities that would make any American feel completely at home.

These will still be quality homes in twenty years: Ahmedabad

I was personally agog at seeing them, they seemed so thoroughly incongruous – but then I asked myself, what housing will still be market-quality in twenty years?

High physical density but low people density: Ahmedabad

10. Havelis and palaces

Back in the eighteen and nineteenth century, when India underwent its first wave of urbanization, the great textile merchants and import-exporters lived in sumptuous townhouses called havelis.  Bikaner and Mandawa, two towns in western Rajasthan, have large concentrations of them.  Most are today crumbling into ruin – the caravan routes having been severed after the India-Pakistan partition created a barrier to land traffic – but a few are being restored, such as Haveli Nadine Le Prince:

Urban luxury, nineteenth-century style

A few have been converted into historic or heritage hotels:

Pal Haveli, Jodhpur

They are right in the center of town, meaning all of organic India is just outside the front door:

Pumping water right outside Pal Haveli, Jodhpur

Inside is private serenity:

In the afternoon cool …

And that is my takeaway from housing in India.  The outside is nothing, it is the grimy and weatherbeaten face one shows the world at large.  One keeps one’s soul inside:

Urban luxury, nineteenth-century style

Yet, just outside the gates, lies rambunctious India:

Exit your gated community, and you’re back in India

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[Continued from yesterday's Part 1.]

Does Does it matter where they live if they all go to the same school?

In yesterday’s post laying out a typology of where urban Indians live – a companion to my previous two-part snapshot of India’s housing situation – we started from the bottom up, looking initially at the purely private, purely informal solutions that people create out of necessity.  The photos demonstrate that given enough incumbency, people acquire an implied political legitimacy, and the municipality takes small steps to rationalizing the public-space aspects of the urban infrastructure. 

[Unless otherwise noted, all photos in this multi-part post were taken by David Smith on visits to India.]

4. Slum-relocation community

As slums are a place where private investment outpaces public infrastructure, with continuous urbanization there usually comes a moment when the informal settlements have overrun the available transportation or utility infrastructure, and a portion of the slum must be demolished to create space, such as for a railroad right-of-way.

Alleyway through a slum: that’s a train going by

Commuter train, Mumbai – the municipality required ten meters right-of-way either side of the tracks

Under Indian law applicable to Mumbai, the slumdwellers had a right of access to housing, meaning that to relocate them required their consent, and to obtain it, the government promised to build them new affordable high-rise co-operative flats (which we’ll see later in this post).  But that would take time, and in the meantime, the right-of-way had to be cleared, so the municipality built relocation flats – transitional housing:

Relocation flats, Mumbai

Naturally, people living in transitional housing have little motivation to beautify their public space:

Relocation flats, Mumbai, the trash does tend to pile up

Yet they keep clean their interior space:

Flats arranged around a courtyard, and it is fairly clean

When in their relocation settlement, they conduct business.

Pipe scavenging and recycling business

5. Affordable co-op

Because housing – its location, quality, production, and affordability – will be a driver of Indian global urban competitiveness, at some point a government – usually a municipal government – decides as a kind of civic economic self-defense that it must create affordable housing. 

Mankhurd co-operatives, funded through World Bank Loan repaid by railway surtax (see below)

As cities densify, there is only one direction to go – up. 

Oshiwira 1, affordable co-operative built by SPARC, Mumbai

The city becomes vertical, and to become vertical, that requires structural framing, which implies formality. 

The scaffolding may be casual but the building is reinforced concrete

Similarly, cities mean traffic jams, and bad cities have worse traffic jams, so the municipal competitiveness – to say nothing of quality of life – requires the addition of public transportation, and depending on location, that often means railways.

In Mumbai, for instance, people relocated away from municipal infrastructure (previous grouping) benefitted from affordable new-construction high-rise co-operatives whose principal loans were repaid through a surtax on railway tickets – thus drawing a direct financial link between the improvement of middle-class infrastructure (in this case, the railroad right-of-way) and increased affordability for the poor.

Once the government is involved, formality also implies certain basic amenities.  Even though the flats are tiny, they have all the necessities, such as a flush toilet:

Toilet, which will be two footprints in the floor

The toilet lacks fixtures – for the time being, it is merely a ceramic hole into which people make their deposits – but the configuration allows for a later retrofit of an individual seat toilet.  The apartments are extremely small, averaging 25 square meters (about 270 square feet), which compels design-size limitations such as showers rather than tubs:

Bathroom: designed for just a handheld shower

Concrete, though strong, is brittle, and extremely difficult to retrofit.  (Ever try drilling into concrete?) 

Wiring running outside the structural concrete, Oshiwira 1

[We see a similar phenomenon in pre-WW1 English homes and apartments, where the plumbing and electrical run outside the structure because there is no room inside the building – and its narrow walls – to accommodate hiding the piping.]

Because increasing lower-income Indian affluence changes people’s housing consumption expectations, the embryo apartment that is an acceptable size today may be functionally obsolescent in a decade, and if so the retrofitting will be a challenge.  Even though I am delighted to see these high-rise flats going up, I worry just a little about their eventual economic or physical obsolescence. 

6. Affordable high-rise market flat

With such an enormous shortage of housing – of all configurations, particularly the affordable ones – it’s no wonder that major Indian conglomerates are rapidly entering the field of new housing production, such as with the Tata nano-house.  Sometimes it seems as if the entire nation is one gigantic construction site:

Affordable high-rise in construction, Ahmedabad, January 2010

Built, building, and planned to be built: Ahmedabad

)

Affordable new-construction high-rise flats, south Ahmedabad

Affordable new-construction high-rise flats, south Ahmedabad

Remarkably, much of the construction is being done by women:

Women are a large portion of the construction workforce

The goal is a fully formal, mortgageable house in the price range of Rs 150,000 to Rs 300,000 [Roughly $3,500 to $7,500 US – Ed.], an income band for which there is already a huge demand, one showing no signs of abating.

)

Recently built affordable market flats, Ahmedabad

The developments are well designed and highly dense:

Site plan and floor plate, Ahmedabad affordable high-rise

Though small, the apartments are fully formal:

On the inside, it’s fully formal

They have a modest but serviceable toilet:

Two footprints today, a ceramic bowl tomorrow?

In addition to the utilities – water, electrical, and heat if required (often it is not) – there is a fully practical if tiny kitchen:

Everything including the kitchen sink

Indeed, so rapidly is India urbanizing, and so inexpensive is large-scale small-apartment construction, that just above the government’s level, the marketplace is exploding with new housing:

[Concluded tomorrow in Part 3.]

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Where do urban Indians live?  In almost every configuration and tenure imaginable, from living in ramshackle sticks-and-tents to Texas-style-subdivisions, with everything in between.

Tents in the foreground, gated subdivision in the background: Ahmedabad

A little while back, returning from my three-week trip to northern India, I posted a two-part snapshot of India’s housing situation, focusing on the confluence of events across political, economic, and urbanization dimensions.  This mainly visual post will slice through the onion by income and tenure configuration levels, giving a typology of the different forms of housing now present in Indian cities.

At the South Asian Housing Finance Forum, Delhi, January, 2010

[Unless otherwise noted, all photos in this multi-part post were taken by David Smith on visits to India.]

In a country of a billion-plus people, undergoing what is probably the highest rate of urbanization (measured in total population moving to cities), we can certainly expect to discover every imaginable type of urban residential accommodation – and that the nation is in fact greatly short of quality affordable housing.  Indeed, the Government of India officially estimates a ‘quantitative deficit’ of more than 25,000,000 homes. 

Further, because housing demand is elastic, as India becomes richer and as more new homes are created, people will consume more housing, household size will shrink, and households will increase much faster than the population does.  The result is that over the next 10-15 years India will have the ability to absorb the all-but-unthinkable number of more than 100,000,000 new homes, mostly in urban and urbanizing areas. 

Where does he live?  Where does his family live?

The India we see today is a nation in transition – exploding through the carapace of nineteenth-century soot, filth, pollution, and bustle into a twenty-first century powerhouse. 

If slums are a phase through which rapidly urbanizing cities pass – as I think they are – then we have to expect and calibrate India’s urbanization from the bottom of the pyramid on upward, starting with housing built entirely by poor people, for poor people, in the face of government indifference or hostility:

1. On the streets: pavement dwelling

We start with those who have come to the city despite having nothing whatsoever, and who live on the streets.  In Mumbai and in Delhi, one can find small or larger families some of whom live on the streets.

Family gathered on a Mumbai sidewalk

In America and the European cities, one can find the homeless, but in these developed nations, being homeless is always accompanied by a mental or behavioral problem; in India, it can be a condition of simple urban poverty. 

I’ve taken only a few photographs of Indian pavement families, because there is something so intrusive about using a long lens to peer into a household’s workings, even if the family has chosen to live their lives in public.  Still, there is also something homelike and practical, such as cooking:

Pavement family rice pot

Living on the street necessarily means evacuating on the street:

Man urinating discreetly into the gutter, Bikaner, Rajasthan

Men and boys urinating in public are so commonplace that a convention has evolved: if you turn your back to the street and hold yourself still, it is somehow understood that people should look away.    But male urination is the least of the sanitation challenges, for it can be done relatively discreetly and relatively hygienically.  More challenging is the effort to protect women and the related campaign to eliminate open defecation, which is not just a matter of esthetics but also of health – both for the evacuator and for the water supply, a risk that has been known since the dawn of history.

2. Impermanent slum (’landing paid for urban immigrants?’)

Pavement dwelling is the lowest economic form of urban existence because it is the least safe, the least private.  One notch up is the ramshackle urban slum, made entirely of found materials, and invariably located on publicly owned low-value land – usually next to the river, the stream, the paper mill, the cement factory, or the dump – where people can settle and create their own intra-community, a world of their own inside the world of the city.

I profile one such in A day in the life of a slum [Post to come – Ed.]:

Ahmedabad and the Sabarmati River

Throughout history, people have been lured to cities by the promise of higher money income, a promise that is usually true, and they imagine that when they move to the city, they will be able to keep the animals they have raised in the countryside.  That was true of the Irish who came to Boston during the Potato Famine, and it seems evidently true of the Gujaratis coming to Ahmedabad whom I photographed outside my hotel room window:

Keeping goats, most likely for milk

Critical to these households is that by moving to the city, they can earn money, give their children a better education, and expand their horizons, if not for themselves then for the next generation.

Slums adjacent to Mumbai Airport

3. Permanent slum (’informal settlement’)

Slum community built on the infill outside a truck distribution warehouse

Slums improve, though; given time, people gain a perception of security of tenure, and as they come to expect that they will be there longer, they bring more durable found materials into buildings and rebuilding their informal settlement.

Informal settlement, Mumbai

The house is made into a home, with a waterproof roof, laundry drying on the line, and herbs being cultivated in plants:

Note the plants being grown in pots

Characteristic of these slums is that they are, in general, ground-floor:

Self-built settlement, Oshiwira neighborhood, Mumbai

Buffalo yard in the Oshiwira informal settlement

People keep animals immediately outside the family home.

After a while, the slum becomes sufficiently permanent that people invest in structural materials to add a second story:

Work on the ground, live a flight up: Mumbai

Often a residence over a business:

New urbanism, home-grown: Dharavi, Mumbai

Given time, these neighborhoods become physically formalized:

Would you call that a slum?  After having seen the previous photos?

Sometimes the municipality also recognizes the legitimacy of a long-standing urban settlement, by adding public infrastructure like paving:

Jadibanagar, Ahmedabad: note paving and water tank (blue)

Jadiabanagr, Ahmedabad

Have you noticed what’s happened in this sequence of photographs?  All within the realm of purely informal housing – self-built, self-organized, self-perpetuated – we have the first faint stirrings of a civic response.  It starts with tolerance – visual aversion of their presence – and then rises to the gradual formalization of public space, for community hygiene or out of charity, it moots not.

What happens when the community decides it has a duty to these urbanites, whether or not it wished for them to arrive?

Ahmedabad: community center in informal settlement

[Continued tomorrow in Part 2.]

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[Continued from yesterday's Part 1.]

Now they know how many holes it takes to fill the Albert Hall

– The Beatles, A Day in the Life

If all you took from the February 11 Economic Times of India were the clips we highlighted yesterday, one could be forgiven for being depressed about India’s potential – so it’s time to look on the bright side of things.

Ahmedabad home-sales billboard: February, 2010

4. The Economic Times on loan pricing

Finance is the engine of housing improvement, and transparent information is the handmaiden of finance:

MUMBAI: Borrowers can now look forward to a more transparent pricing of their loans, with the Reserve Bank of India (RBI) proposing to introduce a new benchmark from April that will more accurately reflect movement in interest rates.

The Bank is also trying to remove barriers to banks going down-market:

At the same time, banks have been granted the freedom to price loans below Rs 2 lakh [$4,000 – Ed.], which effectively paves the way for their entry into microfinance at commercially-viable rates. 

That’s a start, and the Rs 200,000 floor is significant because a great many semi-formal houses can be purchased in roughly this price range, but it will take more than merely small-loan permission to get the banks to move down. 

SEWA Bank in Ahmedabad, February 2010

The central bank plans to introduce a so-called ‘base rate’, which will be computed on a cost plus basis by each bank and which will now be the floor price for all lending by it. The ‘base rate’ system seeks to replace the prime lending rate (PLR), the present benchmark used by banks. 

The RBI on Wednesday announced that the new base rate system would be made applicable from April 1. The guidelines are not yet finalised, but a draft circular issued on Wednesday evening has the broad contours of the new regime. 

“All categories of loans should henceforth be priced only with reference to the base rate. The base rate could also serve as the reference benchmark rate for floating rate loan products, apart from the other external market benchmark rates,” the RBI said in its circular. 

If a bank chooses to base its floating rates on external benchmarks, it should ensure that the external rate is equal to or above the base rate at the time of sanction or renewal of the loan. 

Although there’s a long way to go — as in lending for home improvement, not just on new-build with mortgageable title – it’s a step in the right direction.

Nancy with Indian girls at Chittaugarh, Rajasthan, February 2010

5. The Times of India on development of accurate slum data

NEW DELHI: Aiming to meet ambitious target of making India slum-free, the government has embarked on a plan of remote mapping to get a ‘‘reliable figure’’ of people living in slums by collecting foolproof data on both notified and non-notified slums across the country. 

As I’ve posted before, among the many definitions of a slum is when the physical reality and legal records are wildly at odds.  Thus, when they are brought into harmony, the place is no longer a slum, it’s not merely a low-income neighborhood.  Moreover, in reconciling the two, it is always the law that moves, not the physical reality.

While the current estimate of slum dwellers is based mostly on surveys of notified slums, most non-notified slums have been left out. 

Notification is a legal process both granting rights (to slum dwellers) and giving powers (to government).

Local office of SAATH, Ahmedabad: February, 2010

Serving about 2,000 households on government’s behalf

Maps of cities prepared through remote sensing would give a clearer and more authentic picture of slums in a city and would include non-notified slums.

It’s critical; knowing where the people are is a first step both to enumeration and citizenship, and also to providing financial and physical dimensions on the problem. 

Housing minister Kumari Selja

Housing minister Kumari Selja said: “Most of the time the plans are based on projections rather than hard data. We plan to map the entire country so that we know about slums in each town and city. This would also include non-notified slums which are usually not accounted for.” 

Once you have counted them, you cannot ignore them.

The ministry, which has set a target of making India slum-free in the coming five years with the launch of the Rajiv Awas Yojana (RAY), expects to get the exact figure by GIS mapping and including non-notified slums too.

The GIS mapping will have to be supplemented by on-the-ground enumeration, but when the two are combined, the findings will be well-nigh indisputable.

With involvement of Isro in this project, the land-mapping and slum surveys are being done through remote sensing with GIS-enabled software. 

I read this with encouragement and no small sense of recognition, since two weeks earlier, at the beginning of my trip, I participated in a two-day a World Bank sponsored workshop on Rajiv Awas Yojana (RAY).

The ministry has also asked states to develop a Slum Information System and the Centre has provided them funds for the purpose. “We want the mapping to be completed in two years,” Selja said. 

Riverfront slums, Ahmedabad, February, 2010

As we saw when reviewing The Ghost Map and The Blackest Streets, ever since we created modern urban sums – which I date from the Industrial Revolution – they have been corrected with a combination of tools, including liberal social reformers, enumeration and surveys, vote power, and eminent domain.  India is harnessing twenty-first century technology to accelerate its addressing of a nineteenth-century problem.

However, the ministry says it is facing delays in implementing its plans due to slow response from the states to its draft guidelines for which their opinion has been sought. The ministry has sanctioned more than 1.4 million houses for the poor. As many as 1,327 projects of affordable housing and basic amenities to the urban poor with an outlay of more than Rs 34,791 crore have been approved. 

That’s $7 billion in funding – a meaningful sum, even for massive and populous India.

As further explained in an accompanying DNA India story:

The ministry of housing and urban poverty alleviation (Hupa) will do satellite mapping of all slums in the country under the slum-free cities initiative of the government. Indian Space Research Organisation (Isro) will be collaborating in the project.

Any resemblance to the Star Fleet logo?

Mumbai will be among the four metros to be mapped first.

Hupa believes mapping will help governments find new slums taking shape and prevent their illegal spread.

That I doubt – but it may accelerate their remediation.  Evidently the article’s author shares my skeptical optimism (that revealing ‘besides’):

Besides, it will be effective in analysing slum communities, providing them sanitation and other amenities, and relocating them to suitable locations.

This I believe.

A similar satellite mapping done by Indian Institute of Remote Sensing on Dehradun’s slums showed that the number of slums in the city had increased from 75 in 1996 to 113 in 2000.

Less important than the number of slums – which, after all, can grow and meld into one another – is the overall scale, particularly including the number of people living in them.

Toward the future: Chittaugarh, February, 2010

Hupa is working with experts for a model legal regulatory framework for according property rights to slum dwellers.

I would love if it we at AHI were part of that activity.

A total of 5,161 towns are being surveyed to prepare a profile of household poverty and livelihoods of the slum dwellers. According to data available, Maharashtra has the highest number of slums in the country (32%), followed by West Bengal (15%) and Andhra Pradesh (15%).

Undoubtedly this directly correlates with the rate of urbanization.

The expanding blue city of Jodhpur: February, 2010

6. The Times of India on binding Public Sector Undertaings (PSU’s) into corporate social responsibility

Norms to bind PSUs with social duty in a month 

The department of public enterprises (DPE) will soon come up with norms on corporate social responsibility (CSR) for central public sector enterprises (CPSEs). 

This is how it begins; when government creates what the Economist calls quangos – quasi-non-governmental organizations, in effect state enterprises – it imbues them with unique powers, resources (such as large sums of money) and responsibilities.  Over time, as the PSU’s and CPSE’s become large and successful, government is within its rights to charge Rumpelstiltskin’s fee, and demand that the corporation take some of its profits – all of which derive ab initio from government largesse – and redeploy them into further expanding their social mission.

As per the proposal, cleared by the committee of secretaries (CoS), profit-making PSUs may have to set aside up to 2-5 % of their net profits for CSR activities.

Indian CSR is about to grow teeth.

 
The new norms will be formulated within a month and there will be no escaping from CSR, which will no longer be a photo opportunity for the chairman, said DPE secretary Bhaskar Chatterjee. “I would put a timeline of two to three weeks,” he added. 

Chatterjee looks implacable and inescapable

I love the phraseology, and the implicit political capital behind it.  Will there be follow-through, I hope?

There ought to be, as these are government entities, not purely private companies.

New construction residential: metropolitan Ahmedabad, February 2010

Even though most CPSEs earmark funds for CSR activities, most of them are on a voluntary basis.

Allowing them to arbitrage visibility against cost to maximize the headline-to-rupee ratio –

The CSR would no more be confined to organising blood donation camps or some charity event.

– which is less cost-effective than maximizing the impact-to-rupee ratio.

The proposal is now awaiting approval by heavy industries and public enterprises minister Vilasrao Deshmukh.

Deshmukh is the decider

The CPSEs with net profit of more than Rs 100 crore may be asked to contribute up to 2% of the amount, Mr Chatterjee said.

In other words, roughly $450,000 annually.  That’s enough for each CPSE to undertake initiatives of some reasonable municipal or local scale.

Of the 244 PSUs, 160 earned a net profit of Rs 91,083 crore in 2007-08, 2% of which amounts to Rs 1,821 crore. 

 
Based on their 2007-08 results, PSUs would have to spend at least Rs 1,500 crore.

Or $300,000,000 – enough to represent a major set of flows, structured in a manner similar to the so-far-stillborn housing trust fund intended to be funded with GSE profits.  [You remember alleged GSE profits, don't you? – Ed.]

The CPSEs would be obliged to take up specific projects to help people affected directly or indirectly by their businesses. This would be their primary obligation, out of the profits that they make. “You (CPSE) must recycle it to help the society,” the DPE secretary said.

For these enterprises, housing is a natural.  They have a vast pool of employees, for whom better quality employer-assisted housing is an employee loyalty and employee productivity issue.

 
Chatterjee said the guidelines would provide for measurement of the CSR. “This is happening not just in India but across the world,” he said. These obligations would be set in the memorandum of understanding, which sets targets for an individual CPSE.

Echoes of South Africa’s Financial Sector Charter.

Community organization, Ahmedabad-style: February, 2010

The performance evaluation would also have CSR as one of the parameters. 

The world’s largest democracy is serious about tackling its challenge of slums.  That’s heady stuff.

Bikaner, February 2010: I command the PSUs to dance to my tune

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I read the news today, oh boy

– The Beatles, A Day in the Life

One day’s newspaper clippings – in this case, The Times of India, Thursday, February 11 – represent an info-montage of the world’s largest democracy muscling its way into the twenty-first century, and along the way the world’s largest and most urgent national affordable housing and slum upgrading challenge.

Ahmedabad retail street, February, 2010

[Recently Nancy and spent three weeks in India, a week of it for AHI at the South Asia Housing Finance Forum (Delhi; two days), a World Bank sponsored workshop (Udaipur) on India's new slum upgrading initiative Rajiv Awas Yojana (RAY), and then (z) in Ahmedabad with our customer SEWA Housing Finance and our working partner the Ashoka Foundation. 

Listening with interest at the SAHF Forum, January 27

Along the way and afterwards, we went all over Rajasthan, the old Rajputana or the India of princely states.  I will have a post forthcoming on the range of Indian housing alternatives, complete with pictures – truly remarkable.]

Boy musician, Jaswand Tanda, Jodhpur, February, 2010

India will overwhelm you – at least, it overwhelmed us.  It’s too large, too rambunctious, too cacophonous, too pungent to be absorbed into any totality in any short interval.  I can see why people hate the place, and I can also see why people become enraptured by it. 

Downtown Jodhpur, rush hour, February, 2010

What follows are representative clips from one day’s Economic Times of India.  They are related an unrelated, consistent and contradictory, serious and silly.  All of them are India, and all of them are now.

Start with the challenges:

1. The Economic Times on the housing deficit in homes and rupees

NEW DELHI: The government on Wednesday said the country needs investment to the tune of Rs 3,61,000 crore [Roughly $7.0 billion – Ed.] to meet the shortage of nearly 25 million housing units. 

That’s called paying the piper!

“There was approximately housing shortage of 24.7 million dwelling units at the beginning of the 11th Five year plan…”

Government bodies love quantifying a housing ‘deficit,’ if only to give a macro scale to the problem.  Personally, I think the deficit has to be even larger than this, since it must include people living in inadequate housing, people living in too little housing, and people who are moving to India’s cities at an unprecedented rate.

“The investment requirements would be to the tune of Rs 3,61,000 crore for overcoming this massive housing shortage,” Minister of State for Urban Development Seagate Roy said at the CII real estate concave here. 

Ray thinks it’s 3.6 lakh crores of rupees

Of the total housing requirement, about 99% is constituted by the economically weaker section and the low income groups, he added. 

Housing demand being elastic, as these people become less poor, they will want more housing, so even if India magically conjured up 25,000,000 homes tomorrow, the nation would need an equal number the day after.

“The massive urbanisation in the past few decades has led to severe housing shortage for the urban poor… providing affordable housing is one of the most formidable challenges that our country faces today,” Roy said. 

As I said in my World Bank presentation, I’ve previously hypothesized that not only are slums economically rational, they may be an inevitable phase in urbanization, a phase that governments and cities escape by investing their way out.

Pushing a bicycle carrying petroleum, Jodhpur, February 2010

He said availability of land at cheap rates is the greatest challenge in providing affordable housing in the country. 

We know that the value of urban land is a residual, so as India urbanizes (today it is only 28% urban), those land prices will only rise – unless something is done to head them off.

Measures like increasing density by [a] hiking the floor-area ratio and [b] encouraging public-private partnership, should be considered in fulfilling the housing need of the country. 

It’s important to distinguish the potential utility and impacts of these two. 

A. Floor-to-area-ratio (FAR) and its close Indian cousin the floor space index (FSI) are the principal means by which India controls its formal development.  The effect, not necessarily a desirable one, is that developable urban land rises dramatically in price.  Tweaking the FSI and FAR can add value to selected land – in the right location, almost as much value as one wants – while at the same time inflating the value of all other land.  (And on the third hand, managing the preservation of open space for municipal infrastructure such as highways, urban rail lines, and even public green space.)

Good thing Lord Ganesha has four hands

B. Public-private partnership is merely a means by which the public sector can get technical functions – land development, construction, ownership – performed faster, cheaper and better.  Public-private partnership cannot conjure up subsidy or value from thin air, nor will the private sector embrace and internalize essentially governmental functions – like owning public-policy imperatives – unless it is very well paid to do so.

“The government has sought to create an enabling and supportive environment for expanding credit flow to the housing sector and increasing home ownership in the country,” Roy said.

Absolutely, creation of the enabling environment is one of government’s four essential roles.

Schoolgirls on a field trip: Jodhpur, February 2010

2. The Economic Times on land grabbing

Her Excellency’s husband a land grabber?

You’re just electing me, not my brother

NEW DELHI: In a major embarrassment to President Pratibha Patil, her husband Devisingh Ransingh Shekhawat has been asked to return over two acres he grabbed from a poor Dalit  [Untouchable – Ed.] farmer in Amravati of Maharashtra. 

She’s India’s first woman president

The president, the First  Gentleman, and the Queen

The farmer, Kishore Bansod, had last year found that most of his land had been transferred to Mr Shekhawat in the government records. The President’s spouse was accused of forging papers to grab 2.5 acres near the highway in Chandrapur two years ago. The farmer went to court in June, 2009. The Daryapur court gave its verdict in the case in December stating that the land belonged to Kishore Madhav Bansod and not Mr Shekhawat and that it be returned to the farmer. However, Mr Bansod got the copy of the judgement only earlier this week. 

Later that day, I read elsewhere that Mr. Shekhawat vigorously disputes the characterization of his land transaction.  All I know is what I read in the newspapers …

The President’s husband took the help of local revenue officers. An inquiry by local officials revealed that five others — all his relatives — colluded with him. 

Though the Rashtrapati Bhavan [The Indian White House – Ed.] has refrained from commenting saying that the President’s husband is a private citizen and enjoys no special privileges, the allegations against him are bound to haunt the President. 

Government buildings, Rajpath, Delhi, Republic Day, 2010

Following the farmer’s complaint last year, SDM Ashok Amankar had issued notices to Shekhawat and seven others, including his nephew Bhanwarsingh Lalsingh Shekhawat and brothers Kishorsingh, Omsingh and Raghusingh. The then revenue inspector was also served a notice. 

The farmer had said that officials who went for land measurements had told him that his land was in the name of the Shekhawat family. The three-acre farm was purchased by his father Mahadevrao in 1985-86 from a Bapurao Chaudhary, he had said.

Indian land use records are an infinitely recursive tangle of documents.  At the India RAY conference, Bimal Patel of HCP Design in Ahmedabad gave a superlative presentation illustrating the land-use and legal history of Jadibanagar in Ahmedabad, a public infrastructure project of our customer SEWA Bank.  It would have been hilarious had it not been so real.  Because land history is inevitably lost in the mists of time, land-use disputes are common. 

Informal neighborhood with municipal infrastructure (streets) added, Ahmedabad, February, 2010

Mr Shekawat is a member of the Congress and has also served as the Mayor of Amravati. This is not the first time that the President’s family has come under a cloud over financial dealings. 

In 1973, [President Patil] had set up a co-operative bank named Pratibha Mahila Shahkari Bank to empower women but its license of the bank was revoked in 2003 by the RBI over alleged financial irregularities. According to reports, one of the reasons listed by RBI for cancellation of the license was the faulty loan policy of the bank and waivers on loan interests given, among others, to Ms Patil’s relatives.

Everyone I talked with bemoans corruption in India.

A new currency created to try to shame people into refusing bribes

3. The Economic Times on the black-market economy

11 Feb 2010, 0542 hrs IST, Mythili Bhusnurmath , ET Bureau

Can you see her tongue in her cheek?  Mythili

The Great Recession might have laid mightier economies than ours struggling but the Indian economy has emerged relatively unscathed. Yes, you’ve heard that before. But chances are that as the global economy lurches from one crisis to another while the Indian economy gathers speed, you will hear that repeated in many quarters, especially in official fora. 

To hear it from government sources, there are many reasons for the Indian economy’s resilience: the Goldilocks fiscal stimulus, monetary easing, our large domestic market, demographic dividend, calibrated opening up of the economy, and so and so forth. But before we pat ourselves on the back, could there be another, no-so-happy reason why the Indian economy has been less affected by the Great Recession? 

If research by Deutsche Bank economists is to be believed, yes, our black economy! 

Doors for sale, Ahmedabad, February, 2010

A vast portion of India’s economy and employment is informal – meaning in cash transactions.

Paper money has no memory

Now, black money has long been regarded the bane of our development process. It results in huge wastage of resources , lowers the rate of growth, leads to criminalisation in society and breakdown of institutions, undermines the capacity of Indian businesses to face the challenge of globalisation, jeopardises our security, leads to poor governance, in short, to every conceivable ill we can think of. 

But there just might be something to be said for it. According to researchers at Deutsche Bank, empirical analysis shows countries with a very high or very low share of activity in the shadow economy appear to be much less affected by growth fluctuations in the world economy than countries that have an average-sized shadow economy. 

Because they have a much larger economy, and its financing is countercyclical.  Thus the formally conducted economy – the one we can observe – may be only the tip of the iceberg of economic activity.

What’s under the surface is more important

Alas! Countries where ‘the population cannot really decide whether it wants to offer its labour ‘honestly’ in the official economy or rigorously off-record are hit particularly hard’ . So, countries such as Germany, Ireland and some Scandinavian ones whose shadow economies are around 15% of GDP, saw their GDP plunge by around 5% in 2009, and in the case of Ireland and Finland, by over 6.5%. 

The report does not include India, but there’s no disputing which end of the scale we occupy when it comes to the share of the black economy. At close to 40% of GDP, i.e., $400 billion, according to Arun Kumar, professor of economics at the Capital’s Jawaharlal Nehru University, who has done a great deal of work on black money, black money vitiates every aspect of our life. 

Kumar tracks the black economy

I’ve posted extensively that lack of electronic – hence, formal and reported – financial activity is a huge barrier to bringing the poor into the formal city – and hence to enabling them to claim their economic citizenship. 

Self-employed food vendor, Ahmedabad, February, 2010

So, is the report a vindication of the rampant corruption and growing scourge of black money? Not at all! The downside of black money far exceeds any possible upside. To the rhetoric question of where would we have been without the black economy shoring up growth, the answer could well be, like the Scandinavians, perhaps! With a growth rate far lower than our present 7-8%, but guess what! I have a feeling that given a choice, most ordinary Indians might happily swap their present lot for that of the Scandinavians, 9% growth be damned! 

If urbanization is a process, and housing formalization is a process, then too the visible manifestation of money is a further process. 

From Nancy’s and my India trip: Friendly tuk-tuk driver and passenger, Ahmedabad

[Continued tomorrow in Part 2.]

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