 HOUSING, URBAN DEVELOPMENT,
 WATER SUPPLY AND SANITATION

HOUSING

12.1 In fulfilling the basic needs of the population, housing ranks next only to food and clothing in importance. A certain minimum standard of housing is essential for healthy and civilised existence. The development of housing, therefore, must enjoy high priority in a poor society such as ours where housing amenities are far below the minimum standards that have been internationally accepted. Housing activity serves to fulfill many of the fundamental objectives of the Plan: providing shelter, raising the quality of life particularly of the poorer sections of the population; creating conditions which are conducive to the achievements of crucial objectives in terms of health, sanitation and education; creating substantial additional employment and dispersed economic activity; improving urban-rural and inter-personal equity through the narrowing down of difference in standards of living and last but not least, generating additional voluntary savings.

12.2 The National Buildings Organisation (NBO) have estimated that the housing shortage in 1981 was around 21 million dwelling units (16 million in rural areas and 5 million in urban areas); the shortage at the begining of the Seventh Five Year Plan has been placed at 24.7 million units (1 8.8 million in rural areas and 5.9 million in urban areas)'.

12.3 The above estimates of backlog of housing shortage are only rough. But apart from the existing backlog in housing, the increase in population between 1985 and 1990 would generate roughly an additional requirement of housing units to the extent of 16.2 million, of which 12.4 million will be in rural areas and 3.8 million in urban areas. This means that even if the aim is only to prevent an increase in the magnitude of backlog in housing shortage, it would be necessary to build during the Seventh Plan period around 16.2 million dwelling units. This fact makes evident the gigantic magnitude of the housing problem. This problem cannot be tackled in a meaningful way, if housing activities are left to follow the past pattern of slow and unsystematic growth. There is need for radical orientation of all policies relating to housing. The most important among these are the provision of finance for house construction on a large scale, development of suitable land sites in urban areas, provision of house sites in rural areas, developing and applying low-cost technology in house construction and policies relating to rent control.

12.4 While all sectors of the economy-the Government sector, public enterprise sector, the private corporate sector, the co- operative sector and the household sector-would have to participate in housing activities in a coordinated manner, the major responsibility for house construction would have to be left to the private sector, in particular the household sector. Building houses according to the differing preferences and requirements of different households and economy in house construction can become possible only if the home owner himself participates or becomes responsible for house construc- tion. What has inhibited large scale house construction by households is the inadequate provision of institutional finance for the housing sector so far. Two major desiderata for a quantum jump in house construction in urban and semi-urban areas are the mobilisation of resources for the housing sector through the establishment of a proper set of institutions and the development of suitable housing sites on a large scale. The poorer sections of the society, however, would need subsidisation and also assistance in house construction from the public sector. In this context, the public sector's role should be three-fold. First, largely promotional, to initiate steps to mobilise resources for the housing sector on an adequate scale; second to continue the efforts to provide subsidised housing to segments of the rural poor and to other economically weaker sections (EWS) of the community like slum dwellers and dock and plantation workers; and third to undertake land acquisition and development in urban areas and providing house sites in rural areas. Housing authorities and Housing Boards should concentrate on the last activity instead of going in for direct construction of houses. The second activity would be performed mainly by the Housing and Urban Development Corporation (HUDCO) for the poorer sections of the society. For other sections this would be performed through a network of house financing institutions with an apex bank for re-finance.

12.5 Public sector Plan expenditure on housing during the Sixth Plan is estimated at Rs. 1,839 crores; in addition, public enterprises are estimated to have spent around Rs. 275 crores on housing. Thus the total expenditure on

1. The extent of shortage has been worked out in terms of certain minimum standards; therefore it should not be assumed that an equivalent number of families are entirely shelterless. Neverthless, the figures fairly reflect the great inadequacy of housing in the country.

282

housing through agencies of the public sector amounted to Rs. 2,114 crores during the Sixth Plan period. The physical achievements have been reported in Table 12.1

TABLE 12.1

Physical Achievements during the Sixth Plan (1980-85)

      
        
                                          
        
        Sl.                                                    Number
        No.                                                    of houses/
                                                               tenements
        
        1.        Subsidised Industrial Housing                72260
        
        2.        Low Income Group Housing                     65132
        
        3.        Middle Income Group Housing                  33111
        
        4.        Village Housing Projects Scheme             159522
        
        5.        Rental Housing                               33108
        
        6.        Rural House-sites                          5430000

12.6 The major part of investment in housing is undertaken by the private sector. Reliable data on investment in private housing are not available. According to the estimates made by the Central Statistical Organisation (CSO), gross fixed capital formation in residential buildings in the private sector, including public sector undertakings, amounted to Rs. 3,054 crores in 1980-81. Assuming that the share of the public sector undertakings in this was of the order of Rs. 70-80 crores, gross capital formation in housing in the private sector would have been around Rs. 2,980 crores in that year. According to CSO figures, private sector investment in housing between 1974-75 and 1979-80 increased by about 62 per cent, or at about 12 per cent per annum. A 10 per cent growth rate could be assumed for the Sixth Plan period.

12.7 On this basis, the private sector investment in housing during the Sixth Plan would have amounted to Rs. 18,000 crores. A growth rate in private sector housing in the Seventh Plan period equal to that assumed for the Sixth Plan period would imply an investment of around Rs. 29,000 crores. In fact, if the backlog in housing is to be reduced to any significant extent by the end of the Seventh Plan, a much larger investment than Rs. 29,000 crores would be called for. This underlines the need for a major effort to mobilise resources for housing and for the Government to take other steps needed, such as to make available developed land on the required scale on the one hand and to make the necessary policy changes to remove obstacles in the way of housing activity, e.g., modification in the rent control laws, on the other.

12.8 The time has now come for the Government to set before itself a clear goal in the field of housing and launch a major housing effort: not so much to build but to promote housing activity through the supply of fiscal and financial infrastructure such that every family will be provided with adequate shelter within a definite time horizon. As far as possible, the public sector should not assume direct house construction except in the case of the weaker sections of the society. This is not to minimise the role of the Government. As stated earlier, the Government has to play an active role through developing the necessary delivery system in the form of a housing finance market and taking steps to make developed land available at right places and at reasonable prices.

12.9 The most crucial need for housing development at the present time is the establishment of a proper and diversified institutional structure for housing finance and construction. The strengthening of the existing institutions like Housing and Urban Development Corporation (HUDCO) and the creation of new institutions like housing co-operatives and building societies would be necessary. The expansion of the Housing Development Finance Corporation (HDFC) type of activities could also be considered. While HUDCO would concentrate on the provision of subsidised finance to the poorer sections of the society, the HDFC would continue to cater to the clientele coming largely from fairly well-to-do sections of the society. The vast majority of house-seeking individuals and families would have to be looked after through the creation of local level housing finance societies. These societies would raise deposits from the public, mainly from the would-be house owners, and thus stimulate private saving. In addition, they should have access to funds from the capital market through the intermediation of different financial institutions. For this purpose it would be desirable to set up a specialised housing finance institution. In course of time steps should also be taken to develop a secondary mortgage market in housing.

12.10 The apex housing finance institution should be able to draw funds from the capital market as well as from financial institutions. Commercial banks should be permitted to participate on a larger scale than hitherto in housing finance activities.

12.11 As stated above, the public sector has to concentrate on the provision of houses to the poorer sections of the society. HUDCO, in conjunction with the State Governments, would continue to play an important role in the provision of finance to these sections for house-building activity. In addition, the public sector has to play an important role in the provision of housing sites in the rural areas. There is urgent need to adopt low-cost housing techniques, particularly for mass housing schemes for low income groups. Use of alternative building materials like lime, mortar, surkhi, secondary species of timber, etc. in place of traditional building materials like cement, steel, bricks and primary species of timber should be widely adopted.

283

12.12 Prefabricated technology which has been adopted in some western countries requires to be considered for large scale adoption in our country provided the cost factor is favourable for its adoption. The relative advantages of factory production of prefabricated components of Indian Standards Institution (ISI) standards (like beams and blocks, roofing materials and doors and windows) vis-a-vis traditional building methods, may be assessed. If any fiscal measures stand in the way of adopting large-scale prefab. technology because of its being based on factory production, ways and means may have to be explored to overcome this handicap.

12.13 Direct subsidy to urban housing should be avoided as far as possible. Where direct subsidies are absolutely unavoidable, they should be small and be in the form of insfrastructure facilities so as not to create large differences between the market values and the subsidised prices.

12.14 Against this background, the Seventh Five Year Plan (1985-90) has the following objectives:

(i) Promotion and encouragement of self-help housing;

(ii) Provision of house sites to the balance of rural families identified so far and assistance for con- struction of dwellings for those rural families already provided house-sites;

(iii) Cost of housing units under the social housing schemes should be such that they are within the paying capacity of the targetted groups, like Economically Weaker Sections (EWS), Low Income Group (LIG) and Middle Income Group (MIG);

(iv) Providing stimulus and support for private housing especially for the middle and lower income groups so as to channel increased savings into housing. This will have to be accompanied by steps needed for reducing the cost of urban land;

(v) Securing reduction in construction costs not only by adopting low-cost housing techniques and standards but also modifications in building byelaws, land use control, minimum plot requirements, etc.; and

(vi) Harnessing science and technology efforts for improving building technology and development of cheap and local building materials.

The programmes for achieving these objectives are as follows:

Rural Housing

12.15 The Minimum Needs Programme (MNP) and the 20-Point Programme give a high priority to the rural house-site-cum-house construction scheme. It is estimated that there were 12.2 million landless families as of March 1985. As against this, the number of families provided house-sites is estimated at 13.07 million. The "excess" achievement is due to the fact that in some states the scheme was extended to smaller municipalities, and in some states the beneficiaries included some belonging to the upper income strata of the rural community. However, state-wise analysis reveals that still 0.72 million landless families among the total estimated landless families of 12.2 million require to be provided with house-sites. It is felt that before extending the coverage of the scheme to smaller municipalities and to those belonging to the upper income brackets of the rural community, efforts should be made to provide construction assistance to those families already provided house-sites according to the original criteria of the scheme. The Sixth Plan envisaged provision of construction assistance to 3.6 million families; in fact only 1.9 million families could be assisted.

12.16 Even though the Sixth Plan envisaged a modest level of Governmental assistance under the scheme, many State Governments were providing substantially higher levels of assistance. In order to make the operation of the scheme more realistic, it is proposed to provide assistance to the extent of Rs. 500 per family for provision of developed house-sites of 90 sq.m. each and assistance of Rs. 2,000 per family towards construction cost. All labour inputs will have to be provided by the beneficiary. The Seventh Plan includes a provision of Rs. 577 crores for this programme. Of this, Rs. 36 crores would be utilised to provide house-sites in respect of those states where there are landless families still to be provided house-sites and Rs. 541 crores would be utilised for the provision of construction assistance to 2.71 million families. Needless to say that if the above targets are to be achieved during the Plan, the State Governments will have to adhere to the norms and standards envisaged in the Plan. These have been considerably liberalised compared to the Sixth Plan.

12.17 On account of the resource constraint, only a limited provision is made in this regard in the State Plans. Besides this, HUDCO has been providing funds for rural housing. This would continue. A specified proportion of General Insurance Corporation (GIC) funds are also earmarked for rural housing. Taken together, the funds for rural housing from public institutions (HUDCO and GIC) would roughly amount to Rs. 240 crores during the Seventh Plan.

Urban Housing

12.18 As already stated, Government's role in the field of urban housing has per force to be promotional. The major effort will have to come from the private sector. Government's role will have to be restricted to the improvement of slums, direct provision of housing to the weaker sections of the society and encouragement and support of housing finance institutions that promote

284

channeling of private resource into housing in a constructive way.

12.19 As in the Sixth Plan, direct public sector investment is proposed for housing the EWS of the community. The public sector would provide sites and services at cost price to the beneficiaries. In addition, the beneficiaries would be provided a loan of Rs. 5,000 per unit repayable over a period of 20-25 years at a concessional rate of interest. In view of the scarcity of developed urban land and the cost involved, it would be advisable to limit the area of developed land provided to 25 to 35 sq.m. per house. As the economic condition of the beneficiaries improves, they will be able to improve the quality of accommodation in due course.

12.20 The various social housing schemes in the Plan were introduced in the fifties. The income limits for eligibility, the ceiling cost of construction as also the ceiling for Government assistance were fixed in the fifties and no revision has been made since then. With substantial rise in costs of construction, real costs have gone up. Thus an EWS house which once cost Rs. 7,500 may now cost Rs. 12,000 and consequently calls for higher instalments. It may then become even more out of reach for the EWS category with monthly income upto Rs. 350. Therefore, more realistic criteria have to be formulated. The Seventh Plan accordingly proposes the ceilings as indicated in Table 12.2.

                                      TABLE 12.2
        
          Seventh Plan Norms and Ceilings for Various Social Housing Schemes
        
                                          
        Sl.       Scheme              Income         Ceiling       Ceiling of
        No.                           eligibility    cost of       Govt.
                                           (Rs.)     Construc-     loan
                                                     tion (Rs.)    assistance
                                                                   (Rs.)
                                          
        1            2                     3              4           5
                                          
              
        1.   Economically Weaker
             Sections                 up to 700      5000           5000
        
        2.   Low Income Groups        701 to1500    30000          23500
        
        3.   Middle Income Groups    1501 to2500    75000          40000

National Housing Bank

12.21 The success of self-help housing would depend to a large extent on the availability of funds through institutional sources. As pointed out earlier, the biggest weakness of the housing sector is the non-availability of long-term finance to individual house builders on any significant scale. To fill this lacuna, it is proposed to establish a specialised financial institution in the form of a National Housing Bank (NHB) on the lines of NABARD. For seed capital of NHB, a Plan provision of Rs. 50 crores has been made. Given the large needs of the housing sector, the NHB would have to seek funds from the capital market besides exploring the possibility of obtaining contributions to equity capital from some of the financial institutions. But mobilisation of resources for the housing sector would have to come in a large measure at the local level from house holds particularly from those seeking to build houses. For this purpose, a network of local level institutions would be needed in the form of building societies or savings and loans associations. Ultimately, the housing finance structure should be based on an expanding number of local institutions in towns and cities across the country which should draw resources from the households and would be re-financed by the NHB which would act as a conduit for institutional finance.

Housing and Urban Development Corporation (HUDCO)

12.22 The major chunk of public sector investment in housing in the Central Plan is to be channelled through HUDCO. As to March 1985, HUDCO had sanctioned 3587 schemes in 669 cities and towns covering almost all the states and involving loan assistance of about Rs. 1,662 crores, of which it had disbursed about Rs. 992 crores. These projects will provide about 20 lakh dwelling units and about 1.73 lakh developed plots and a number of shops and commercial buildings. Of these, about 88 per cent of the dwelling units and 79 per cent of plots are for the benefit of the EWS and LIG.

12.23 If a substantial dent is to be made on the problem of housing for the poor, it is essential that HUDCO's activity in future should largely be devoted to housing for EWS and LIG and not to MIG houses or commercial activities. The Plan proposes an increase in the equity of HUDCO from the present Rs. 75 crores to Rs. 135 crores. Including the recovery of loans, HUDCO would be able to invest about Rs. 800 crores during the Seventh Plan. Besides HUDCO, another public financial organisation which has provided finance for housing is the Life Insurance Corporation (LIC). LIC is statutorily required to invest 25 per cent of the net accretion to its controlled funds in socially oriented schemes like housing, electrification, water supply and sewerage and road transport corporations. Upto March, 1984, LIC had provided Rs. 1,593 crores in loans for various housing programmes. During 1983-84 it advanced Rs. 146 crores. The biggest loans so far have been to Apex Cooperative Housing Finance Societies (Rs. 720 crores) and the State Governments (Rs. 516 crores).

12.24 Keeping in view the objective and strategy discussed above, the Seventh Five Year Plan provides for the outlays in the public sector as shown in Table 12.3.

285

      
                                      TABLE 12.3
        
                           Seventh Plan Outlays on Housing
        
                                                                (Rs. crores)
                                          
        Sl.            Schemes                            Sixth     Seventh
        No.                                               Plan      Plan
                                                          outlays   outlays
                                          
        1                 2                                 3         4
                                          
        
        A. States and Union Territories
        
        1.        Rural house-site-cum-house
                  construction Scheme (MNP)               353.50     576.90
        
        2.        Social and Departmental
                  housing schemes                         837.37   1,276.02
        
        3.        Police Housing Scheme                      @       315.42
        
                  Total: States and UTs                 1190.87     2168.34
        
        B.   Central Sector
        4.        Housing & Urban Development
                  Corporation                             50.00       60.00
        
        5.        National Buildings Organisation          2.00        4.00
        
        6.        Hindustan Prefab Ltd.                    0.05        2.00
        
        7.        General Pool Office and
                  Residential accommodation               142.00     165.00
        
        8.        Plantation Labour Housing                10.00       2.00
        
        9.        Science and Technology                    2.00       3.00
        
        10.       Dock Labour Housing                       0.20       0.21
        
        11.       CPWD Training Institute                   0.50       1.66
        
        12.       House Building Advance                   93.25         -
        
        13.       National Housing Bank                      -        50.00
        
        14.       International Year of Shelter for the 
                  Homeless and International cooperation     -         2.00
        
                  Total: Central Sector                   300.00     289.87
        
                  Grand Total: States and UTs
                  and Central Sector                     1490.87    2458.21
                                          
        
             @Included in 2 above.

URBAN DEVELOPMENT

12.25 The Sixth Plan recognised that although the share of urban population of India was small, estimated to be only a little over 20 per cent of the population of the country, the absolute size of about 107 million people living in urban areas in 1971 was large by any standards. The urban growth registered in 1971-81 has followed the pattern of growth in the previous decade. As a per centage of total population, the increase has been from 20.22 per cent to 23.73 per cent. In absolute terms it has meant an increase in urban population from 107 million in 1971 to 156* million in 1981 (provisional). Certain important aspects of this increase require to be noted. While the growth of urban population as a whole was 3.86 per cent, Class I cities grew by 4.6 per cent and Class II cities by 4.2 per cent. The number of towns increased from 2581 in 1971 to 3245 in 1981. Class I cities having a population of 1 lakh and more increased from 145 to 216. The number of million plus cities increased from 9 to 12. It is note-worthy that the biggest 12 cities account for about 27 per cent of the total urban population of the country. Another significant characteristic that may be noted from the 1981 Census is the increased contribution to the urban population by Class I towns and a marginal increase in the contribution of Class II towns. Whereas in 1971 the share of Class I towns in the total urban population was 56.2 per cent, it increased to 60.4 per cent in 1981. In the case of Class II towns, however, the increase in the share, from 11.24 per cent in 1971 to 11.65 per cent in 1981, was insignificant. There was a decline in the shares of Class III, IV and V towns in the total urban population in 1981 compared to 1971. As of 1981, Class I and II towns together contributed more than 72 per cent of the total urban population of which over 60 per cent came from Class I towns alone. The relative contribution of the remaining Classes of towns was very small. The populations of Class V and VI towns which had recorded a negative growth rate in 1961-71 have shown an increase of 15.44 per cent and 60.80 per cent, respectively, in 1971-81.

12.26 There has been a large expansion in the urban population of super-metros, namely, Delhi, Bombay, Calcutta and Madras followed by Bangalore, Ahmedabad and Hyderabad. The distribution of the urban population among different size classes of towns in 1981 along with the inter-censal rates of growth is given in Table 12.4.

12.27 The absolute magnitude of the growth of urban population is so large that a close new look at the existing policies concerned with housing and urban development is warranted. No doubt agricultural and rural development will continue to command priority attention in planning. But in spite of our best efforts to ameliorate the condition of rural masses, there would continue to be large-scale migration from rural to urban areas in the coming decades. The urban population which in absolute terms is already very large (156 million as of 1981) is expected to grow around 3.6 per cent per annum and to reach 315.4 million by 2000. The urban conglomerations, by their very nature, need a minimum of basic services for their healthy existence. However, the state of most of our urban areas in this respect is far from satisfactory; in fact in general the picture is extremely bad. Apart from the fact that many of the municipal bodies are moribund or have been supreseded, they are being administered badly, have unde- veloped and/or eroded tax systems and suffer from lack of capital funds for development. The services they provide have deteriorated over the years and there seems no sign of reversal. Over-crowded and under-serviced, * The final figure is 160 million.

286

an increasing proportion and area of urban conglomerations are being turned into slums.

                                                TABLE 12.4
        
                  Distribution of Urban Population among Different size Classes of Towns
        
                                                    
        Sl.       Town classification                     Number of        Population       Percentage     Annual rate
        No.                                               towns            in million       of population   of growth
                                                                                            1971-81
                                                              
        1                   2                               3                  4                 5               6
                                                              
        
        
        1.        Class I (1 lakh and above)               216              94.34            60.4             4.60
                                                                                             (56.2)           (4.32)
        
        2.        Class 11 (50000 to 99999)               270               18.12            11.6             4.22
                                                                                             (11.2)           (.3.49)
        
        3.        Class III (20000 to 49999)              739               22.50             14.4             2.53
                                                                                              (16.3)           (2.60)
        4.        Class IV (10000 to 19999)              1048               14.84              9.5             2.10
                                                                                              (11.2)           (1.74)
        5.        Class V (5000 to 9999)                  742                5.62              3.6             1.45
                                                                                              (4.6)            (-1.09)
        6.        Class VI (less than 5000)               230                0.78               0.5            1.86
                                                                                              (0.5)            (-2.18)
        
                  Total                                  3245              156.20            100.00            3.86
                                                                                                               (3.27)

Notes:-1. The latest data available from the Registrar General's Office place urban population at 160 million. The break-up of this by size classes of towns is, however, not available.

2. Figures in brackets are for 1971.

12.28 In view of the extremely serious situation in which the urban bodies find themselves, a vigorous multi-pronged attack is needed to reverse the trend and to restore conditions of healthy growth. The following may be identified as the major constituents of a comprehensive plan for urban development:

(a) the planned and integrated development of small and medium towns and cities along with slowing down of the growth of big metropolises;

(b) revitalisation of civic bodies;

(d) concentration on the improvement of slums and the provision of basic municipal services; and

(e) for this purpose to work out schemes of regular devolution of funds from State Governments and to establish the necessary institutional framework for channeling capital funds for the improvement of urban infrastructure.

12.29 A thorough re-examination of the procedures currently used in the planning of metropolitan areas and the evolution of approaches and methods more suited to the new imperatives arising from the intensification of urban growth all over the country are called for.

12.30 Urbanisation is a phenomenon which is part and parcel of economic development in general. Certain activities are best performed in, indeed require, agglomeration of people. Planning of urban development should essentially be supportive of the economic development in the country, state or sub-region, be it in agriculture, extractive industry, manufacturing industry or in the tertiary sector. The provision of urban services such as transport, communication, water, sanitation and shelter alone is usually unlikely to stimulate large-scale urban development. It is important to time investments in urban services and shelter to coincide with investments in agriculture and industry, mining and commerce which provide sources of permanent employment. Therefore, a proper urban development approach must consist of two constituents. The first is the interaction between physical and investment planning and the second is the preparation of regional and sub-regional urban development plans to make the first possible. Industrial location policy must be made to subserve regional and urban planning. During the Seventh Plan a concerted effort should be made to channelise private industrial investment in the vicinity of small and medium towns so that migration of population is diverted to these from going to the metropolises. The same principal should be applied to public sector investment.

12.31 Regional urban systems can be identified according to their economic, climatic, geographical and transportation characteristics. Planning for urban develop-

287

ment can be done on the basis of such regions and according to the relative need and function of each town in its regional context. Thus, within each planning zone allocation to towns should be made more on the basis of their functions with particular emphasis on their respective industrial and employment potential than on their sizes.

12.32 Within towns and cities there is a much greater need for community participation and for more private initiative and investment in urban development than existing at present. The delivery of basic public services to everyone is simply not feasible without such an approach. Slum improvement, sanitation, garbage removal, etc. can be organised and even paid for at the community level. Resources for urban development are very limited and will continue to be so in the foreseeable future given the existence of wide-spread rural poverty and lack of basic services in rural areas. This would call for better allocation of existing funds and mobilisation of additional funds by the municipal bodies themselves. A realistic assessment of needs for basic infrastructure and services is, therefore, a pre-requisite for efficient and effective planning.

12.33 The planning for metropolitan development should provide for:

(i) coordination of city level investment plans with higher (State and Central) level planning and resources allocation exercises;

(ii) coordination of city level investment plans with resource availability and with physical planning; and

(iii) the fostering of a close relationship between the norms and standards used in physical planning with the socioeconomic realities prevailing within our cities. More explicitly the needs of the poor must be taken account of more specifically in all physical planning exercises.

12.34 In the small towns and the new centres, the strategy should be to purchase lands in concentric circles, at short notice, before land values begin to rise, quickly providing the infrastructure facilities within a period of 2 to 3 years and then selling the land to the public and private sectors. In this way, the public authority could make two major gains: (i) the profit from site development and (ii) the gains through passage of time. The gains could be used for various purposes. If the public authority makes non-speculative purchases continuously, withdraws land for short periods and continuously puts these back into the land market, there need not be an inflation of real estate prices. In that case, the rise in the costs and rents of houses would be limited.

12.35 While making provision for urban development schemes due attention should be paid to the needs of the minority concentration areas and their development in the context of their socio-cultural milieu.

12.36 As pointed out earlier, municipal bodies are not able to play their due part in providing the needed services to urban dwellers and in developing urban infrastructure commensurate with the growth of urban population. They are politically, administratively, and financially in a week condition. The restoration of health to local bodies is the pre-requisite for the efficient management of our towns and cities. At the first stage the aim should be to provide to all citizens the minimum of essential services. All obligatory functions should be reverted to municipal authorities. The strategy for urban development would include a package of measures to strengthen the capability of local bodies comprising the restroration of popular Government (except in states where abnormal conditions exist), structural reforms, improvement in general and financial administration and reform of the tax system. While the State Governments have to shoulder the major responsibility for putting through these measures, the Central Government as well as autonomous institutions at the Central level should actively participate in developing programmes of revitalisation and reform. In particular, the Central Government should extend aid to a selected number of institutions for promoting research in the area of urban administration, urban finances, and the planning of the development of urban infrastructure, and to strengthen their capability to provide technical assistance in these areas to State level institutions as well as to the local bodies.

12.37 As the problems created by rapid urbanisation are stupendous and have wide-ranging social and political ramifications, there is national concern for checking the deterioration of conditions in our cities and towns. In this context, central participation and assistance in this vital area is justified. For this purpose it is proposed to set up a National Urban Infrastructure Development Finance Corporation with an initial Plan provision of Rs. 55 crores-Rs. 35 crores in the Urban Development Sector and Rs. 20 crores in the Water Supply and Sanitation Sector.

12.38 In the Seventh Plan 1985-90 emphasis is placed on the following major programmes:

(a) The Environmental Improvement of Slums (EIS) programme has to be continued with greater vigour and steps should be taken to provide security of tenure to the slum dwellers so that they may develop a stake in maintaining and improving their habitat. Of the total urban population, nearly a fifth is estimated to constitute the slum population. The Sixth Plan had estimated that in 1985 the magnitude of such population needing attention would be about 33.1 million. Of this, upto March 1985, about 15.6 million slum dwellers would have been benefited, leaving a balance of 17.5 million people yet to be provided relief. Per capita assistance which was only Rs.

288

120 in 1972 has been stepped up from time to time and the present rate of Rs. 250 was fixed in 1984. Since many State Government considered this quantum inadequate it has been decided to step up the per capita expenditure to Rs. 300. The total outlay for EIS in State Plans works out to Rs. 269.55 crores for the Seventh Plan. On the basis of a per capita expenditure of Rs. 300, this order of total outlay would-benefit about 9 million slum dwellers during the Seventh Plan.

(b) In order to ensure a balanced distribution of urban population and to slow down the growth of metropolises, a centrally sponsored scheme of Integrated Development of Small and Medium Towns (IDSMT) was introduced during the Sixth Plan to provide infrastucture and other facilities in these towns. The Sixth Plan made a provision of Rs. 96 crores in the Central sector with a matching provision in the States' sector for the development of about 200 towns. During the Plan period, Central releases amounted to about Rs. 61 crores in respect of 235 towns. It is proposed to continue this scheme during the Seventh Plan with a Central provision of Rs. 88 crores. During the Sixth Plan the scheme was applicable to small and medium towns having a population of less than one lakh. It is now proposed to extend the coverage to towns having a population of less than three lakhs. In selecting the towns for assistance under the scheme an additional criterion based on the towns' antiquity, aesthetic character, historic association, etc. requires to be adopted.

(c) The Plan includes a provision of Rs. 930 crores in the States' sector for provision of infrastructure facilities like roads, pavements, minor civic works as well as such amenities as bus sheds, market and shopping complexes and theatres. This provision also includes the States' contribution against the centrally sponsored scheme of IDSMT. A provision of Rs. 317.58 crores is included for the development projects being undertaken in the Calcutta Metropolitan Development Area (CMDA) as part of the externally aided programmes and for the development of State Capital Projects of Gandhi Nagar, Bhopal and Chandigarh.

(d) An outlay of Rs. 35 crores has been included in the Plan of the Ministry of Works and Housing for the development of the National Capital Region (NCR) around Delhi. This will be in addition to the provisions included in the plans of other Central Ministries like Railways, Shipping and Transport, etc. The NCR Plan envisages deconcentration of economic activity from the core of Delhi into regional towns located in Haryana, Rajasthan and Uttar Pradesh. A statutory Planning Board for NCR has been constituted under the Chairmanship of the Minister for Works and Housing and a detailed Plan for Development for NCR is under preparation.

(e) In India, the use of development banks to finance development oriented sectors in the national economy has proved to be quite successful. It is proposed to set up an Urban Infrastructure Development Finance Corporation to deal with the emerging urban problems that the country is and will be facing. The Plan provides Rs. 35 crores in the Urban Development Sector and Rs. 20 crores in the Water Supply and sanitation Sector, as initial capital for the Corporation which would augment its resources by raising funds from institutional sources. The proposed Institution would finance the development of urban infrastructure including water supply and sewer- age schemes. The National Housing Bank also proposed to be set up in the Seventh Plan and the Urban Infrastructure Finance Corporation would together play an important role in promoting housing and urban development on an adequate scale and on a sound basis.

12.39 In the light of the objectives and strategies envisaged for the sector, the outlays proposed for the Seventh Plan are given in Table 12.5.