Dr Ashwani Mahajan
According to census 2011, population of Mumbai Island City declined by 5.75 percent between 2001 and 2011. Though population of Delhi did increase by 21 percent during this period, it has actually decelerated significantly from 47 percent decadal growth between 1991 and 2001, and rate of growth has declined to less than half now. Population of New Delhi Municipal Council (NDMC) area, declined by 25 percent, during this period.
Deceleration in the rate of growth of population of Delhi and Mumbai is raising questions about future of population growth of metro cities. Urbanisation is a natural phenomenon of economic growth. Though economic development and urbanisation cannot be considered synonymous, it does play an important role in improving living standards and thus human development.
Urbanisation may bring improvement in the lives of the people, provided there is sufficient provision of food, shelter, clothing, education, health, transportation etc. Today governments are washing their hands off from their basic responsibility of providing these services. Education, health transport etc. are becoming costlier, as in absence of government; private sector is entering into these sectors for profit. Housing is the biggest problem today. Earlier slums, even which are no less than hell but which used to be the hope for housing poor people are not much available as option. Non-affordability of housing rentals and non availability of building jhuggis as option, are behind slowing down of population growth in big metro cities. Metros like Delhi, Mumbai, etc. are no longer habituating poor people.
After partition of India, those who migrated to Delhi could easily purchase a house with merely five hundred rupees. Despite their limited resources, they used to manage the amount by selling their family gold and silver. Today this is not possible. To purchase a small flat one needs equivalent of 2 to 3 Kilograms of gold, which is beyond the imagination of an ordinary household. Today no ordinary person with a package of even 10 lakh annually, can think of owning a house (flat or plot). Even unauthorised colonies carry a price tag of rupees one lakh a yard. In authorised colonies, prices vary between two to five lakh per yard. Flats carry a price tag of fifty lakh to 2-3 crores. Barring a few rich people, house is beyond the reach of commoners. Situation is no different in cyber centers like Bengaluru and Hyderabad; and other metros.
Even in small cities, it is becoming more and more difficult to own a house for commoners, as property prices are multiplying there too. A cursory look at all 53 big cities with population of 10 lakhs and more, as per Census 2011, we find that in the last 5 years or so property prices have gone manifold; killing the dream of mango man to own a shelter of his own.
Scenario Changed in Last Two Decades
Though building a house in Delhi and Mumbai, has never been an easy task, however there has been a sea change in the last two decades. It is notable that price of plot in authorised colonies of Delhi was between three to four thousand rupees per yard. Whereas today, despite so called ‘recession’ in the last 3-4 years, land prices are keeping around 4 to 8 lakhs per square yard. That is, more than 130 times increase in the last two decades. Flats prices have also undergone a big increase, though less than proportionate to land prices. Owing a house in Delhi is no longer a possibility for an ordinary person. The reason for such a trend is growth of black money generated through unassuming scams. It is no secret today that black money is generally invested in property or gold. In property deals 50 to 80 percent of the deal money is in ‘cash’ (black) and rest 20 to 50 percent in cheque (white). ‘Loot money’ from commonwealth scam, 2G scam, coal scam and host of other scams has diverted to property in Delhi, Mumbai and even in small towns; leading to an unprecedented increase in property prices in the last few years. In the meanwhile, many foreign investors have also started investing in property in India, which has fuelled fire to this trend.
Learning from Other Countries
It is notable that in US, whose per capita income is 35 times that of India, a 1000 square feet flat is available for US$ 5 lakh, that in rupees 3 crore only. In national capital of India, same 1000 square feet flat is available between rupees sixty lakh to one crore (that is 1 lakh to 1.8 lakh US$) or even more, which is highly disproportionate, when compared with per capita income.
Developed countries have judicious land price policies to keep housing within the reach of commoners. For instance Singapore, which has attained the status of a developed country recently, has a wonderful land price policy. Despite being a capitalist country, Singapore government does not allow capitalists to play with land prices. Nearly 90 percent of the housing needs are fulfilled by the government, which opens registration for new houses from time to time. Government sells houses of reasonable sizes at government determined prices, which range between 2.5 lakh Singapore dollars to 5 lakh Singapore dollars. Given exchange rate of rupees fifty per Singaporean dollar, it mean people get houses at a price ranging between 1.2 crore rupee to 2.4 crore rupees, whereas income of an average Singapore citizen is 24 times that of an Indian.
Imperative to Adopt Pro-People and Policy
Under the circumstances, government has to adopt pro-people policies in housing. Firstly we need to discourage use of black money transactions in property deals. We can fix circle rates (land price, at which property registration are made), in tandem with the market rate. This would necessitate people to show their full property transactions legally. Some may argue that this step may increase the prices of properties due to higher registration cost. But in fact by discouraging involvement of black money, this would help property prices to decline in the long run. Moreover, this problem can easily be overcome by reducing the registration fee proportionately. Thus government revenue will remain intact and black money will be avoided in property transactions.
Secondly, government should itself distribute land at reasonable prices, after acquiring the same. Banks may finance such purchases of land by common people. Dream of poor for shelter cannot be realised unless government actively engage itself in this task, with proactive pro poor land policy. We cannot leave this task to the private sector.
(The author is Associate Professor, Dept. of Economics, PGDAV College (University of Delhi)
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