PROMOTING AN AFFORDABLE HOUSING MARKET An Institutional Analysis P a g e | 2 To Ashok, without whom Cambridge wouldn’t even be a dream! P a g e | 3 Declaration This dissertation is the result of my own work and includes nothing which is the outcome of work done in collaboration except as declared in the Preface and specified in the text. It is not substantially the same as any that I have submitted, or, is being concurrently submitted for a degree or diploma or other qualification at the University of Cambridge or any other University or similar institution except as declared in the Preface and specified in the text. I further state that no substantial part of my dissertation has already been submitted, or, is being concurrently submitted for any such degree, diploma or other qualification at the University of Cambridge or any other University of similar institution except as declared in the Preface and specified in the text It does not exceed the prescribed word limit for the relevant Degree Committee. ___________________ Padmini Ram Department of Land Economy, University of Cambridge P a g e | 4 Acknowledgement I am indebted to a number of people without whom this thesis might not have been written. I thank Professor Phil Allmendinger, for accepting me as his student, and welcoming me to the University. He provided invaluable support during the first two years of my work, and supported me well while applying for scholarships. I am grateful to my supervisor Professor Ian Hodge for guiding me in all earnestness during the final two years. His constructive criticism, and constant push to dig deeper and analyse further helped me reach farther than I thought I could ever go. I am truly grateful to Professor Barrie Needham whose wisdom, enthusiasm, encouragement and faith in me have been vital to my enjoying this journey as much as I have. He was always available to take my queries, and gave generously of his time and vast knowledge. I would also like to thank my first term assessors, Professor Peter Tyler and Professor Ian Hodge, and my seventh term assessors Dr. Sarah Monk and Dr. Maria Abreu, for their feedback and helpful comments. Thank you to the staff at the department of Land Economy for all their help and support. Also, thanks to the staff at the Mill Lane and Marshall Library – especially to Simon Frost, Ian Preston and Clemens Gresser for being so responsive and keen to help. My sincere gratitude to Clare Hall, for being such a family-friendly college, and for letting me fulfil my dream of studying here. Special thanks to my tutor Dr. Trudi Tate for all her encouragement and support. Thanks also to Irene Hills, for being the warm, kind person that she is, and for supporting me in so many ways at the college. I would also like to thank my fieldwork guide Sheetal Tandi, my interviewees and my survey participants; the PMU, JNNURM, Raipur who kindly provided me with office space and helped me with the fieldwork logistics. Special thanks to the staff there – Archana Bondriya, Komal Bhalla, Anand Deheria, Rana Thakur and our driver Ganesh. I gratefully acknowledge the funding sources that made my Ph.D. work possible. Financial support and scholarship grants were provided by Cambridge Political Economy Society grant, 2012 and 2013; Cambridge University Graduate Student Research Grant, 2011; Clare Hall, University of Cambridge, research scholarship 2011; Smut’s Memorial travel grant, 2011; Gilchrist Educational Trust, 2011. P a g e | 5 I am thankful for having found such good friends at Cambridge, especially Guta, Rene, SuLi, Jeffrey, Peter and Nestor, and for their friendship, advice and collaboration. Thanks also to Peter for having proof-read my thesis. Lastly, I would like to thank my family for all their love and encouragement: my grandma who proudly gave me a small grant and plenty of blessings for my PhD. For my parents who taught me to have an opinion, instilled in me a love for pursuit of knowledge and supported me in so many ways during my fieldwork. For my parents-in-law, who were probably the ones most proud of me for being here, and gave their unconditional support and encouragement. Most of all I am grateful to my husband Ashok, and our son Kunal for all their love, support, encouragement and patience. It was Ashok who suggested that I should apply to University of Cambridge for my PhD; his wise counsel has always served me well. Thank you all for making this journey so worthwhile! P a g e | 6 Abstract Insufficient provision of housing for a fast growing urban population is leading to squatter settlements and slums. Some view this informal sector as a way of fulfilling the shelter needs of the urban population. The informal housing market, however, is not an acceptable solution, as the urban poor are paying a cost without security of tenure or any insurance for their investment, not to mention the unhygienic living conditions. In India efforts to stimulate a formal affordable housing market by privatising and deregulating housing markets and promoting private sector funding for housing and infrastructure as an alternative to provision by the government has not resulted in a market for affordable housing. Scholars have argued that the approach was not successful, because it is not economically feasible, largely due to the institutional constraints of land and credit. This thesis reports on a case study of housing provision and the potential for a market in affordable housing in Raipur, India, an urban centre with a million-plus population. This included surveys of households living in slum areas, builders and developers and of facilitators in the public and private sectors. While this study finds support for the explanation that institutions do constrain the market, it also finds that the intended markets did not arise because the policy was overlaid on an existing institutional structure of housing provision (SHP). The practice of clientelism acts as a meta-constraint and therefore this study argues that just removing the institutional constraints will not automatically lead to the creation of a housing market for urban poor. Some initial recommendations are made regarding the pre-requisites for such markets, and how they could be designed by restructuring the SHP. In doing so, the study puts forth a theoretical and methodological framework that can be used for institutional studies of affordable housing, as well as for other sectors. P a g e | 7 Table of Contents Promoting an A fforda b le Housing Market .......................................................................... 15 1. Introduction: objectives, background and methodology ............................................................. 15 1.1 Introduction ........................................................................................................................... 15 1.2 Promoting a Formal Market in Housing: An Institutional Analysis ........................................... 16 1.3 The Central Question and Objectives of the study .................................................................. 18 1.4 The Selection Of The Case ...................................................................................................... 18 1.5 Research Methodology for the Case Study ............................................................................. 21 1.5.1 The Fieldwork ................................................................................................................. 22 1.5.2 Sampling ......................................................................................................................... 22 1.6 Research Output .................................................................................................................... 23 1.7 Significance of the Study ........................................................................................................ 23 1.8 Structure of this thesis ........................................................................................................... 24 2. Formal AH Market ....................................................................................................................... 25 2.1 AH Strategies ......................................................................................................................... 25 2.2 Enabling Strategy for a Formal Housing Market, internationally ............................................. 32 2.3 Urban Housing Policy and Practice in India and Chhattisgarh under the Global Influence ....... 35 2.3.1 Privatisation of Housing Market ...................................................................................... 36 2.3.2 Emerging State Enterprises ............................................................................................. 37 2.3.3 Commercialisation of Infrastructure And Urban Services ................................................. 38 2.3.4 Public Private Partnerships (PPP) ..................................................................................... 39 2.3.5 Criticisms of PPPs and the strategy of commercialization of urban infrastructure ............ 41 2.4 Constructing a Market for AH................................................................................................. 42 2.5 Housing Affordability Studies in India ..................................................................................... 44 2.6 Conclusion ............................................................................................................................. 46 3. The