Major cities in India face unprecedented rise in rents and land prices

Last fortnight, Dr A.U. Memon, the newly-appointed mayor of Bombay, paid a surprise visit to an unauthorised group of hutments in the Northern Vakola area of the city. The surprise, as it turned out, was on him. Having parked his official limousine some distance away, Memon arrived at the shanty town on foot and incognito.A seedy-looking individual, noticing Memon's interest in the crudely-built hutments, accosted him and inquired whether he would be interested in a two-room hutment. The price: an astounding Rs 45,000. When Memon applied the usual bargaining lever that since the colony was unauthorised it could be demolished any day by municipal authorities, the man merely sneered at the suggestion. '"Don't worry about the authorities," he confided confidently, "nobody dares touch us." Newspapers, reporting the event later, merely played up the fact that Memon had ordered the colony demolished. None of them bothered to comment on the fact that a two-room hut in an unauthorised slum was being sold for an incredible Rs 45,000. And yet, their negligence was hardly surprising. Property prices and rents have soared wildly upward over the past 12 months in almost every major city in the country at an average escalation rate of a mind-boggling 50 per cent, but the mind no longer boggles at the numbing climb, because it has become a fact of urban life.Bombay's urhan chaos reflected in a chasl: Two rooms in the chawl cozt Rs one lakhThe urban property price boom is at its most striking in New Delhi. Not such a long time ago, houses and flats could be bought or rented for reasonable amounts-reasonable for the salaried class, the denizens of government bureaucracy which is an inevitable part of the population in a national capital. Today, however, New Delhi's sprawling greenery does little to soothe the impact of an unprecedented rise in property values and rents.In Defence Colony, one of south Delhi's oldest residential areas, a three-bedroom single storey house on a 270 sq metre plot is today worth Rs 18 lakh as compared to Rs 12 lakh a year ago. In more prestigious residential areas like Sunder Nagar and Vasant Vihar houses built on 750 sq metre plots and of indifferent construction demand prices ranging from Rs 30 to Rs 35 lakh.The price rise epidemic has inexorably spread to the capital's suburb's. In one of Delhi's newer colonies across the river Yamuna, Vivek Vihar, 200 sq metre plots sold last year by the Delhi Development Authority (DDA) at rates of Rs 250 per sq metre: today the rate is Rs 1,250 per sq metre. In freehold residential areas like Greater Kailash, 250 sq metre plots sell for as high as Rs 4,500 per sq metre - an increase of more than 100 per cent over last year.The story for commercial property is the same. In Connaught Place, the business hub of the city, monthly rents for office space range from Rs 10 to Rs 14 per sq ft. In outlying commercial complexes like Rajindra Place and Nehru Place office space rents for Rs 6 to Rs 8 per sq ft. Recently, a retailer is supposed to have paid a pugree of Rs 1.25 crore for a 2,000 sq ft shop space in South Extension, one of south Delhi's prime shopping areas. Shopping space in yet to be built hotels around Connaught Place has already been sold for Rs 3,000 per sq ft.Stagnant Construction:The thirst for property has led to a bizarre situation. At the periodical auctions of land for planned commercial complexes, the bidding touches new heights with every auction - fuelled, in part, by expatriate Indians from Iran and Afghanistan who are determined to put their money in this most solid of investments.They team up to oust the other hopefuls, and in doing so, boost the price of a particular parcel of land to extravagant heights. As they have to recoup their investment, the rates for space in the planned building are too high for even the most daring of investors, and so, construction stagnates as the landlords look for money to buy cement with: ironically, the urban price boom appears to be throttling major construction in the capital.What Delhi is experiencing today, Bombay, the financial capital of India, had gone through some time ago. The city's hunger for space is legendary, but over the years, the situation has gone from worse to desperate. In Colaba, a middle class residential area, a two-bedroom flat with 1,000 sq ft carpet area now costs Rs 6 lakh as compared to Rs 2.50 lakh in 1974. In Versova, a Bombay suburb which a few years ago was considered the back of beyond, the booking price for a pokey two-bedroom flat of 800 sq ft carpet area is Rs 3 lakh and by the time it is completed in two or three years the flat will be worth Rs 6 lakh. For the less financially fortunate, seedy two-room apartments in dingy chawls in Dadar or Girgaum can be had for Rs 1 lakh." As long as urban land is held by private individuals, there's no solution to tardy construction and, hence, high prices."G.H. Lalwani, Bombay Civic TrustFor the well-heeled elite of Bombay, however, there is still hope. "Exclusive luxury duplex apartments - carpet area 4,000 sq ft - are being planned for the ridge on Malabar Hill: each costs, at present, Rs 40 to Rs 50 lakh. By the time they are complete the flats would have a market value of Rs 1.50 crore. In other prestigious residential areas of the city like Warden Road and Napean Sea Road, a well-constructed flat is available at a rate of Rs 1,200 to Rs 1,600 per sq ft. On Marine Drive, the long and winding road that skirts the breakers of the Arabian Sea, a pugree of Rs 10 lakh is expected for a 2,000 sq ft flat.Other cities have not been spared by the price rise epidemic. Bangalore, capital of Karnataka, with low rents and housing availablity made one of the cheapest state capitals to live in a few years ago, is now one of the most expensive. A four-bedroom flat in Palace Orchards, available for a monthly rent of Rs 2,000 barely three years ago, now rents for Rs 5,000 and more. Prime residential land can be bought at a rate of Rs 2,000 a sq metre. The going rates per sq metre for purchase of residential land in the prime areas of other cities are - Srinagar: Rs 1,800; Calcutta: Rs 1,700; Lucknow: Rs 1,500; Ahmedabad: Rs 1,400; Secunderabad: Rs 1,100; Pune: Rs 900; Indore: Rs 800; Patna: Rs 625; Madras: Rs 600; Trivandrum: Rs 575; Bhopal: Rs 550; Dehra Dun: Rs 450; and Cochin: Rs 400. Only four years ago, land was available for one fourth the present price in all these cities.While prices of property have shown a steady rise over the years, it was after the Emergency that the graph really turned exponential. In Bombay especially, the piles of carefully guarded black money sought an outlet, and found it in land. The result is that investment in property is the first item on the check list of anyone with lots of money.Decaying mansions in Calcutta reflect the city's obsession with the past, but prices at Rs 450 a sq ft point to a grim futureSays K.N. Chari, an investment consultant in Calcutta: "To all my clients, I give an A plus rating to investment in property, A to antiques and gold and B to silver." Says Tejwant Singh, managing director of Skipper Construction Co, an aggressive Delhi-based real estate firm: "Five years ago, it was a buyer's market. Now, it's totally the opposite. You just have to advertise and buyers turn out in hordes." In reply to a recent advertisement for a Delhi Development Authority (DDA) flat in a Delhi suburb, the DDA was deluged with over two lakh applicants willing to pay the advance of between Rs 5,000 and Rs 15,000 just to get their names registered. The tragic fact of the property boom is that according to Works and Housing Ministry statistics, eight out of every 10 families who are capable of owning homes have no home of their own in urban India.Myriad Factors: Property developers with savvy foresaw the boom coming long before it actually did and made timely investments. Some of those who are reaping the fruits of the investment are: Ansal Property Dealers, Skipper Construction Co, Delhi Land and Finance Corporation, Kailash Nath & Co in Delhi; the Rahejas, the Mittals, and Makers in Bombay; Southern Investments and Parsons in the south. But even to the uninitiated, a boom in land prices and rents was inevitable considering the meshing of myriad factors that have triggered off the explosion: burgeoning industrial and commercial activity; an insatiable demand for residential accommodation as compared to the negligible increase in supply; increase in black money; ill-conceived government regulations; a crippling shortage of construction material with corresponding rise in construction costs, and the Government's low priority for housing. "We are seeing something very unusual in Bombay - prices going up by 1,000 per cent In three years."K.M. Goenka, director, Conwood Construction CoNaturally, with property ranking above gold as an investment, major construction companies ganged up and grabbed the choice land to be sold to desperate customers at two and three times its original value Even holiday resorts like Simla, Srinagar and Shillong, where there is little or no commercial activity, have experienced a major upheaval in property prices and rents. But according to the Works and Housing Ministry, none of the 20-odd cities with a population of over five lakh has been able to provide houses on ownership basis to even 10 per cent of their respective populations.In Delhi alone, over three lakh housing units are currently required to clear the backlog. The shortages in other major cities, according to one urban planner's estimates, are - Bangalore: 21, 000. Madras: 50,000, Patna: 15, 000, Lucknow: 70,000. Bombay: 4,50,000, Kanpur: 25,000, and Hyderabad: 50, 000. With the growing migration of the rural population to urban areas and a population that is increasing by 10 million every year, the housing problem is certain to grow more acute in the next few years, pushing property prices and rents even higher. Official estimates put the rate of growth of unfulfilled housing demands at around 18 per cent annually. According to Planning Commission sources, the total backlog of houses in the country has shot up from 15.7 million in 1978 to over 23 million in 1980. Similarly, against the annual demand of 10 million houses, government and private agencies have been constructing an average of 400, 000 units annually. The horrendous gap between demand and supply is, of course, the major cause for the rocketing prices. As over 50 per cent of the vacant land in urban areas is owned by the Government. it is obvious that a major portion of the blame for the current unprecedented boom rests at the Government's already cluttered doorstep.Hansalaya building on Delhi's Barakha~nba Road constructed in 1980: monthly rents ranging from Rs 12 to Rs 14 per sq ftLand Squeeze:There are, however. extraneous factors which vary from city to city. In cities like Patna, Bangalore, Hyderabad, Ahmedabad, Pune and Cochin, the soaring rents are a direct result of massive industrialisation. In Bombay, the housing shortage is mainly because the city is virtually an island and, with all available space having been built on, the only way the city can expand is upwards. "With non-availability of land for new construction, it is hardly surprising that rents and property prices have risen sharply," says Parmeshwar Mittal, president of the Association of Building Industry in Maharashtra.Moreover, in a city like Bombay, the ethos of which is dominated by taking risks and playing for high stakes, builders and real estate agents betray an enormous capacity to hold on to their land till prices reach up to their expectations. And prices shoot up only when development reaches the surrounding areas.For instance, land in Juhu, a Bombay suburb popular with film stars and industrialists, was Rs 33 to Rs 55 a sq metre till 1970 as no development had taken place. Then came the bulldozers and the road-rollers, and the price shot up to Rs 660 a sq metre. But, even then, speculators are chary about bringing a lot of plots on the market for fear that this might depress the prices; they also hope that the longer they wait, the higher will be the return on the investment.Say G.H. Lalwani, head of the Bombay Civic Trust: "There are still 15,000 acres of vacant land in Bombay without any buildings on it but the owners refuse to sell. As long as urban land is held by private individuals there's no solution to tardy construction and, hence, high prices." But even the land that is available for free sale is not being built up fast enough because of Bombay's labyrinthine Rent Act, and its offshoot, the Lease and Licence Act. "Five years ago, it was a buyer's market. Now, it's totally the opposite. You just have to advertise and buyers turn out in hordes."Tejwant Singh, managing director, Skipper Construction CoUnder these Acts, any tenant can approach the courts and have a standard rent determined and fixed for the flat he occupies. Under the Lease and Licence Act, even short-term licencees, including 11-month licencees, can get permanent tenures by court orders. Thus all rental properties have been pulled off the market and are kept vacant by owners who cannot either live in them or dispose of them. Estimates M. Shirodkar, a property tax lawyer in Bombay: "'There will be a ten-fold spurt in building activity here if the rent law is relaxed."Blocked Stocks: KM. Goenka, director of Conwood Construction Co Pvt Ltd, which has undertaken the construction of low-cost housing on a large scale in Bombay's suburbs, has very definite ideas about the reasons for the boom. He asserts: "If you study the index of tenement prices in the last 20 years, you will find that the annual rise in prices has been 5 to 7 per cent. But after 1978 prices shot up by 600 to 1,000 per cent for the three years. My assessment is that it is entirely due to the feeling of scarcity caused by the Urban Land Ceiling Act. This has resulted in all stocks of tenements, both ready and under construction, being taken over by the investors. There is general inflation all over the world and as a result there is a rise in estate prices all over but we are seeing something very unusual in Bombay - prices going up by 1,000 per cent in three years."Land prices statistics make astonishing reading. A building in a prime residential area on Napean Sea Road sold space at Rs 90 per sq ft in 1970. In May 1981, the rate was Rs 1,500 per sq ft. In a commercial office block in Nariman Point, the rate was Rs 100 per sq ft in 1971; in May 1981, the rate was Rs 1,000 per sq ft."Our organisation is meant for the lower income group and the economically weaker sections, otherwise they would get short shrift from private developers."V.S. Ailawadi, vice-chairman, DDAWhile in Bombay the enforced scarcity had led to the boom, down south in Trivandrum, Kerala, money repatriated from the Gulf has led to values shooting up by 2,000 per cent in 15 years. According to unofficial sources, virtually every Kerala family has one of its members in the Gulf, and those who return, flush with money, hanker after high-class residences. One example of the staggering escalation is Jawahar Nagar colony. In 1962, a plot of land there was sold at Rs 15 per sq metre. In 1978 it changed hands at Rs 200 per sq metre. Two months ago, it was sold yet again at Rs 575 per sq metre.In Calcutta, however, the price spiral of property in the prime areas is caused almost entirely by sociological factors. Till the late '40s and early '50s, the city was owned almost entirely by a few rich Bengali families (the Tagores being one) which were largely decaying joint families with no roots in business and industry. In particular, these families dominated the fashionable "European quarter" - a 10 sq km parcel of land bounded by Lenin Sarani in the north and Elgin Road in the south Most of the land eventually became the focus of protracted partition suits. And, when the wrecker crews finally arrived on the scene, they were stopped by court injunctions often secured by fourth or fifth cousins of the actual seller. The problem burgeoned when hordes of upcountry businessmen, having socially outgrown their congested ghettos of Burrabazaar and Howrah, started moving enmasse into the so-called European quarter.Ripple Effect: Little wonder then, that a large portion of Calcutta's company executives and businessmen have turned into flat-hopping nomads trying to adjust their lives and budgets to the erratic spiral in prices. Moti Saberwal, who booked a flat in Chowringhee Buildings, Calcutta's busiest artery, at Rs 90 a sq ft in 1974 faces the classic Calcutta dilemma. The flat is ready for occupation but he is getting offers of Rs 450 per sq ft. The exclusive Kanchenjanga building in Bombay completed last year is still unoccupied: a duplex, 4000 sq ft flat with an estimated market value of Rs 45 to Rs 50 lakhAt Embassy Buildings on Shakespeare Sarani, plum residential land, flats were sold in 1972 at Rs 58 per sq ft-a giveaway by today's standards. Most of the original inhabitants have moved out, trading their flats at almost seven times what they paid for them. The ripple effect of the price spurt has now touched the peripheral areas as well.At Lake Town, along the express highway to Calcutta's Dum Dum Airport. an area which a few years ago was shunned as a housing prospect, land prices have soared as much as 20 times in as many years. In partially developed areas like Jadavpur, miles from the city centre, prices have skyrocketed three-fold in five years.The lowest common denominator in the urban land boom is the Urban Land Ceiling and Regulation Act of 1976 which renders property transfers cumbersome if not impossible in certain cases, and the rent laws in a number of states which are weighted heavily in the tenant's favour. Under urban ceiling laws, any privately-held vacant land in excess of 5, 040 square feet would be automatically forfeited to the state in exchange for a nominal compensation. In Bombay and Delhi, for instance, the state pays a paltry Rs 10 per sq metre of excess land compared to the market price of anything between Rs 100 and Rs 300 per sq metre. Argues an official in the Works and Housing Ministry: The urban land ceiling laws are in step with our socialistic aspirations. If they do not adequately compensate monopolists of urban hind, it cannot be helped."Though his logic is unshaken, the actual acquisition figures question the Government's ability to "socialise" urban land by acquiring it and releasing it for housing purposes. In the last five years, not even 10 per cent of excess urban land has been acquired, and. when it has, interminable legal disputes have invariably sprung up around the property. "Population growth sometimes upsets all development plans. Planners have found it difficult to get resources to boost construction because it has become capital intensive."Bhishma Narain Singh, Union minister for works and housing In Bombay, for instance, out of an estimated 7,500 acres of surplus land available, only a mere 40 acres were brought into the market through acquisition. In Calcutta, not a single acre of the 5,000 acres of surplus land has been acquired. Delhi and Bangalore share the same fate. In Delhi, only a bare 50 acres of the 5,000 acres of surplus land have been acquired. In Bangalore, authorities have not even taken the trouble to locate the exact amount of surplus land available for acquisition under the Act.Disincentive: Consequently, while the basic purpose behind the Act - that of pooling surplus land for redistribution - has been defeated, its various sections and sub-sections have further queered the pitch for a free market governed by the basic laws of supply and demand. Under Section 27 of the Act, it is mandatory for owners holding land below the ceiling to secure the permission of the urban land ceiling authorities before sale or transfer of their land. Says Hem Hingorani, a well-known Calcutta-based property consultant: "The urban land ceiling laws are the single biggest disincentive for construction in the cities."The Act has other, more questionable spin-offs. Under advice from top property experts and with the active connivance of government officials, promoters and land sharks have grabbed up all the prime land in most of the major cities. In Delhi, two leading construction companies have bought sprawling old houses for the development of several commercial complexes in and around Connaught Place. Villagers migrating to thc citics grab any sleeping space they can find, evcn dry fountains: Future shockIn some cases, co-operatives have been formed to circumvent civic laws. Admits a private building contractor: "It is dishonesty and illegality which pays in India and real estate is the dirtiest but most rewarding business in India." In Bangalore, Bombay-based construction companies and estate dealers have descended on the city, buying up land in the prestigious Frazer Town area at Rs 300 and Rs 400 a sq ft.Ironically, however, the land-grabbing by property sharks has done little to alleviate the chronic housing shortage, simply because the real estate companies, in most cases, are stalling on construction, hoping for prices to climb even further before making their killing. In Delhi, the two construction companies who bought up land for the setting up of a dozen commercial complexes six years ago have yet to start construction. Meanwhile, they have already collected 25 per cent advance money from prospective clients. The clients themselves are quite happy to let matters rest till the boom rides a crest since they can be assured of a much higher return on their investment. Already, the price of those particular plots has jumped from Rs 180 per sq ft to Rs 800 per sq ft.Lucrative Plots: But the market manipulations would be impossible without the covert help of government and municipal authorities. In most cases, the modus operandi is virtually the same. By virtue of their "contacts" in the Government, they get advance warning of plots coming up for auction. Armed with this knowledge, they take out mouth-watering advertisements announcing their plans to develop new commercial complexes. Once the buyers have been short-listed, they collect the advance payment and bid for the property at the auction. Once the property has been acquired and construction starts, they collect the remaining money from the buyers in installments, thus avoiding having to spend their own money. Other real estate sharks employ even more dubious methods. A leading Parsi real estate dealer in Bangalore has been promising local Anglo-Indians visas to immigrate abroad in return for their property at rock bottom prices. He then sells the plots at a hefty profit to Bombay-based real estate companies, who make their own profit on the deal, thus ensuring that the vicious circle continues.Predictably, the boom has filtered down to the bottom of the property barrel. A shack in a Bombay slum goes for anything between Rs 20,000 and Rs 45,000. In New Delhi and Bombay, even pavement spaces and footpaths are exchanged for money, sometimes as much as Rs 2,000 in the case of Bombay for a prime street corner where an unauthorised paanwalla can set up shop. Last month, a decrepit one-room flat in Delhi's Malkaganj, a refugee colony hastily constructed over 30 years ago for migrants from Pakistan, was sold for Rs 60,000. And in the capital's resettlement colony Mongolpuri, a claustrophobic 25 sq yard room sells for Rs 18,000.Black money and the shortage of surplus land in the city have also caused a spurt in farmland prices. Only in 1976 an acre of agricultural land on Delhi's outskirts was being sold for Rs 25,000; today the same parcel of land is worth over Rs 1 lakh. Speculation in farmland in fact forced the then Lt Governor of Delhi, Jagmohan to promulgate a notification acquiring over 6,000 acres of agricultural land: according to sources, this move cost him his job.The boom has been inevitably accompained by a rash of unauthorised colonies coming up almost overnight. cutting wide swathes into what used to be open spaces and green helts. Currently, Delhi's much-touted green belt has dwindled to extinction because of the unauthorised colonies that have sprung up in the last 20 years and in which almost half of Delhi's 68 lakh population now resides. If the government and quasi-government agencies are powerless to do anything about unauthorised construction, it is hardly surprising since it suits their objectives. The capital's hard-pressed citizens consider DDA as the main culprit for the rising land prices. In a recent report, even the Public Accounts Committe (PAC) has described DDA's activities as "nothing short of looging". The PAC has cited the example of Kalkaji District Centre where DDA paid owners the rock-bottom price of 27 paise per sq ft for the land. The average cost of developing the 65.4 acre area came to Rs 8.90 per sq ft. DDA eventually sold the land at an average rate of Rs 300 a sq ft.Most people see as significant the fact that property prices and rents in Delhi took off on their unending spiral shortly after DDA's entry into the property market in 1964. Significantly, none of the agencies like DDA or the New Delhi Municipal Committee (NDMC) have fixed any sort of a ceiling for land prices, relying on whatever the market will take, which by current standards is already sky-high, NDMC has recently leased out two plots for the construction of five-star hotels at an annual rent of Rs 2 crore, while DDA earned Rs 12 lakh for a 237 square metre plot in Safdarjung Enclave at around the same time. V.S. Ailawadi, the suave, bespectacled vice-chairman of DDA denies the wide range of charges hurled against the organization he heads. "Our organisation is meant for the lower income group and the economically weaker sections," he insists, "otherwise they would get short shrift from private developers. I am proud of DDA's performance."But DDA, despite its pious intentions, has been accused of not releasing developed land fast enough, and thus adding fuel to the price boost. It came up in 1964 with statutory powers to acquire, develop and dole out in leaseholds 65,000 acres of urban land in accordance with the Master Plan drawn up in 1960. But it has been able to acquire only 30,000 acres of land, of which it has been able to develop only 9, 000 acres so far.Slow-down: Paradoxically, despite the massive pickings in real estate, construction activity has slowed down considerably. According to urban planners and building experts, shortages of inputs and rising construction costs are mainly responsible for the phenomena. During the last three years, the cost of construction has risen by a staggering 40 per cent. A landlord now requires over Rs 2.5 lakh to construct a two-bedroom house with a covered area of 1,600 square feet in the major cities like Delhi, Calcutta, Madras, Bangalore, Lucknow and Srinagar. The only possible exception to the slow-down in construction is Bangalore, where both prices and construction have kept in step. Says John D'Souza, Bangalore's top property tax lawyer: "Businessmen and investors have realised that Bombay, where the trees are made of glass and concrete, has reached the saturation point so they have cast their eyes on Bangalore, the garden city."However, the frenetic building activity in Bangalore braked to a screeching halt when Karnataka's irrepressible Chief Minister Gundu Rao slapped a ban on high rise buildings. About 20 multi-storied buildings stopped, literally, in mid-air. Still, Rao's order, like all government restrictions regarding land and property, can be got around with a mixture of luck and money. Bangalore is agog with rumours that half a crore of rupees has changed hands and the ban is likely to be lifted shortly. In Bombay, as elsewhere, black money is the fuel which keeps the wheels of construction moving. Today, most landlords refuse to sign unless 60 per cent of the money is paid in black. Since the property is bought in black and raw materials, owing to the countrywide shortage, are also invariably bought in the black market, the vicious circle continues endlessly. Says a senior partner of Southern Investment, the firm that pioneered the movement for high rise buildings in Bangalore: "We're the only people left in the trade who don't deal in black money. The result is that we've hardly any project on hand in Bangalore."Depressing Scenario: But beyond the bare economic and sociological factors lies perhaps the root cause of the property boom - the population explosion. Over the last 15 years, the population in the major cities and metropolitan areas has increased by 40 per cent. Says Housing Minister Bhishma Narain Singh: "Population growth sometimes upsets all developmental plans. Planners have found it difficult to get additional resources to boost up construction because it has become capital intensive." None of the 20 housing boards in the country has sufficient funds to meet even one-tenth of the demand. According to the Planning Commission, over five million housing units are required to merely bridge the current supplydemand gap at an estimated cost of Rs 6,200 crore, which, as Singh says succinctly, is like "asking for the moon"In fact the whole of the Sixth Plan has an allocation of only Rs 1,538 crore for housing including the rural housing programmes - which means that during the next five years three out of four existing houseless families have no hope of owning a flat of their own if they are depending on government support. Meanwhile five million more will be added to the list of the houseless at the end of 35 years of planned development.Weighed against this depressing scenario, the logical answers for hauling down property prices and rents seem woefully inadequate. According to K.P. Singh, managing director of one of the capital's oldest real estate firms, Delhi Land and Finance Pvt Ltd (DLF) one answer would be for the Government to encourage private builders. "The Government should lay down the basic guidelines and leave the rest to us. For our part, we can mobilise the small savings and pool them together to develop new townships," says Singh. Another suggestion is for the Government to include the building industry in the priority sector and give it liberal financial loans. These obviously are pipe-dreams with the Government neither interested in encouraging private building activity nor giving building a priority rating. Says a ministry official, "It is doubtful if even the present tempo can be maintained in the face of steep rises in raw material prices."Meanwhile, the inexorable advance of the urban sprawl is ushering in irreversible changes in demography, city skylines and the environment. Today, every third Calcuttan is a slum-dweller, three out of every eight Bombayites live in slum areas and in Delhi every second person is a slum-dweller. (A slum, as defined by DDA, is any unauthorised area. In actuality, if the official definition is followed, in Delhi one in every five would be a slum dweller.)Urban Chaos: As slums and high-rise apartments grow in tandem, the urban population is getting increasingly polarised between the rich and the poor, crushing the backbone of the population-the middle class. With rents spiralling, the middle class has been progressively pushed out to the suburbs, placing a greater burden on the erratic transport system of most major cities. In Bombay and Calcutta, the two ultimate examples of urban chaos, about three million people are disgorged each morning at the railway stations and bus terminals, choking the streets, bottling up traffic and stretching the city's infrastructure to its limit. The magnitude of the problem is multiplying every year with urban population rising at the rate of 29 percent.In other words, the entire population of Bombay is being added to the urban population of India every year. If Calcutta represents the last, doomsday point in urban growth, Bombay is close behind with Delhi and Bangalore heading for the same catastrophic situation. Japan has recently introduced "capsule" hotel rooms-tiny spaces four feet high and seven feet deep where travellers can spend a thrifty night. In the Japanese context, however, the emphasis is on providing cheap lodging for those who cannot afford higher prices. In India, if the current trend of soaring price continues, capsules may just become the final solution.Published By: AtMigration Published On: Nov 19, 2013 10:30 IST--- ENDS ---

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Major cities in India face unprecedented rise in rents and land prices

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