The government successfully launched the Amma canteens to ease the burden of spiralling food prices. It ingeniously intervened when vegetable prices soared, created special shops, and provided low-cost green produce. Recently, it spread its welfare programmes and offered a cost effective Amma mineral water.
In the same vein, can the government address the pressing problem of housing? Can it provide Amma flats at reasonable prices to the needy? Most apartments are beyond the reach of many.
With the market catering to people who earn more than Rs. 60,000 a month, a large section below this income level has no option but to live in cramped rental houses. Rental charges have exceeded the affordable threshold — 30 per cent of the monthly income.
This situation would not have resulted had the Tamil Nadu Housing Board (TNHB) delivered on its commitments. The TNHB did a commendable job until the 1970s and gave Chennai some of the best-planned residential areas in the city, such as Anna Nagar and Ashok Nagar. It helped many to acquire homes for the first time at reasonable prices.
However, in the recent past, TNHB has lost sight of its social objectives. It is functioning like a profit-driven real estate company. The new project in Indra Nagar is a case in point: a 650-sq. ft. apartment meant for the low-income group (those who earn about Rs. 2 lakh annually) is priced at about Rs. 49 lakh.
Government policies too have failed and the number of ‘house poor’ is increasing.
Those living in slums have some hope in the slum development board, but the lower and middle-income groups remain ignored. Amma flats can effectively address their needs.
There are two ways to go about this. One is to use the land with the TNHB and build only smaller units.
If the State finds TNHB inadequate to meet the challenge, private developers could build them on terms set by the government.
Second, the government can procure units from private builders on an agreed price and specification. These units can then be given to first-time home owners.
The flats can be priced based on universally-accepted guidelines for affordability: five and four times the gross annual income for middle and lower-income groups respectively.
A differential registration charge for second and third home buyers is an option to increase revenue.
The difference between the cost and affordability price would not be much and would not be difficult to absorb. Adjusting infrastructure charges, building fee and a host of other payments to the State could reduce the cash outflow.
The government, following some of the best practices abroad, can easily ensure benefits given through Amma flats are passed on to subsequent buyers.
For example, if the market rate in an area is Rs. 3,500/sq. ft. and the Amma flats are provided at Rs. 1,500/sq. ft., the deserving buyer saves about 60 per cent.
Tamil Nadu has been a pioneer in welfare schemes and providing affordable housing would be an extension of this legacy.
When he or she sells the flat after 10 years, the condition would be to sell it at 60 per cent less than the then prevailing market rate. If the market rate of the flat after 10 years, say, is Rs. 8,000, the beneficiary can sell it only for Rs. 3,200. This allows owners to benefit from the price appreciation, and the government ensures the benefits are passed on to others.