Public-Private Partnerships for Housing Delivery in Kolkata
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Public-Private Partnerships
for Housing Delivery in Kolkata
Urmi Sengupta
School of Architecture, Planning and Landscape, University of Newcastle upon Tyne1
Abstract
Last decade saw an emergence of a new wave of Public Private Partnerships (PPP) in the
urban housing sector in India. The concept of PPP in India has been widely recognized as a
natural response to meet the colossal demand for housing, government’s dwindling
budgetary capacity, massive demand coming from a section of the society for better quality
of services and a need for a catalyst to boost macro-economic conditions. The city has been
in the forefront of housing market revival and prime government agencies have, under the
PPP framework, assumed a unique facilitating role without undermining the pervasive
influence of the regulatory ideology. As the influential partner in implementation, the
government is able to revise regulations related to land supply, building materials, target
groups, affordability, building bye laws and regulatory framework as and when necessary.
This paper investigates the dynamics of the public private interplay that has resulted from
the West Bengal Government’s Public Private Partnership policy in supplying affordable
housing in Kolkata. Overall, its considerable success in the city paints a rosy picture as the
joint approach brings together the technical and managerial expertise of the private sector
with the accountability and fair pricing (obligation) of the public sector to improve the
delivery of good quality housing. It is interesting to observe how two opposite forces have
blended and are growing in the midst of prospect and constraints, conflict and cooperation,
that are, oddly enough, set within the socialist institutional context. However, housing
production under the PPP model is impressive in terms of costs and quality but is
miniscule in terms of numbers. This leads to a proposition that although the agenda of
public private partnership is important, one must not lose sight of the needs of the low
income group comprising half of the total city population and the primacy of current state-
articulated regulation in this transition. Since the outcome of the new policy remains
uncertain in the long term, any prognosis about this union is difficult to make. The city will
need to hedge its best and continue to exploit new opportunities and multiple possibilities.
1
Corresponding E-mail address: Urmi.Sengupta@ncl.ac.ukKey words: Public Private Partnership, Legal and regulatory framework, Urban poor,
Affordable housing, Kolkata
1. Introduction
The last decade saw the emergence of a new wave of partnership in urban housing sector
across India. Kolkata has been in the forefront of housing market revival with its own
Public Private Partnership (PPP) “model,” regarded highly successful nationally (Jain,
2003; Rao, 2000). The phenomenal change in housing sector in Kolkata in recent years can
be gauged by a newspaper headline which heralds “Changing Skylines” and describes how
the three hundred year old city is getting a new look as new skyscrapers find their way
among the age old crumbling buildings’ (Chatterjee, 2000). Once a colonial capital (1772-
1912), the city is now referred as the cultural capital of India and is one of the world’s ten
largest metropolitan areas with a population of 14.96 million in 2001. The World
Development Indicator Report projects that Kolkata will remain in the league of most
populated cities even in the year 2015 with an increased population of 17.3 million (World
Bank, 2001). Understandably, to sustain this demographic trend, the magnitude of
infrastructure investment needed will be huge. A massive programme to provide the shelter
facilities in the future, therefore, has to be taken up to match such a high scale of need.
Ironically, housing outcomes of direct public construction in terms of numbers have been
miniscule, and hardly has any bearing on ameliorating the severe housing shortage in the
city. Whereas the projected average annual additional housing need in the Kolkata
Metropolitan Area is going to shoot up between now and 2025 by 90,000 units (KMDA,
2000, p. 73). This reflects the magnitude of additional growth assuming current housing
deficiency will not worsen further. In this situation, utilization of private sector resources
becomes a sine qua non. Consequently, in line with the international trends and severe
domestic resource limitations, in 1993, the Bengal Ambuja Housing Development Limited,
a joint venture housing company between West Bengal Housing Board and Gujarat
Ambuja Cements, was formed and the new saga of public-private partnership in the
housing sector started in Kolkata. Public private partnership has been endorsed and
solicited in the influential policy documents such as the National Housing Policy (1994),
the National Housing and Habitat Policy (1998) nationally and in different international
documents like Enabling Markets to Work (1993) and Global Strategy of the Shelter for
the Year (2000), as a way to tackle the housing scarcity.
Public Private Partnership in Kolkata has emerged as the most prominent manifestation of
government’s recent housing reforms, after a strong tradition of state housing projects for
more than three decades. The PPP appears to be orchestrating well in consonance with the
socialist political regime where ideologically full privatization is incomprehensible at
present. Good builders, new building concepts and technology and government’s active
participation are resulting in numerous housing projects and townships like New Kolkata,
East Kolkata and Baishnabghata - Patuli township to resolve the scarcity of land and
housing.
2The paper presents a brief overview of housing situation in Kolkata followed by a
discussion on the forces instrumental in the emergence of the PPP as a mode of housing
market revival in Kolkata. The second section discusses the operational arrangement of
this partnership pertaining to the administrative and financial arrangement, land and
legislative issues. This paper seeks to highlight the dichotomy of government intervention
in housing market in Kolkata where slow reforms and regulated partnership is hindering a
speedy implementation of PPP schemes but state’s role cannot be undermined in this
transition in light of Kolkata’s socio economic condition where half of the population are
poor.
2. Housing situation in Kolkata : An overview
Kolkata is a linear city, sprawling over 1785 sq. km and extending north-south along the
east and west banks of the Hoogly River. It has been always an administrative and
commercial centre in both pre and post independence era due to its strategic location and
seaport. As much as the city has been the apple of the east, a series of economic and
political turmoil - famine in 1943; influx of refugees at and during partition time in 1947
(India-Pakistan) and in 1971 (Bangladesh-Pakistan) have consistently stifled the city’s
growth equilibrium. The city is known for its huge urban agglomeration and the legendary
housing poverty characterized by the existence of “slums, semi-slums and super-slums” as
portrayed by Mitra (1987). Almost a century ago, in 1917 Kolkata had as many as 5,940
Bustees, which reduced to 3,272 in 1960 (Mitra, 1987), largely by virtue of different slum
improvement projects carried out with the assistance from international donor agencies.
The situation, however, remains challenging with the official number of slums hitting the
figure of 5511 in the city today. About 44% of the population live in very poor quality
houses with a very low level of or no urban services. The average room density (occupancy
rate) for a substantial proportion (26%) of the KMA households is as high as seven persons
per room and about 59% families live in one room units (Hasan and Khan,1999, p.104-5).
According to the Census (2001), Kolkata has 1.5 million slum population which is 32.5%
of the total population under Kolkata Municipal Corporation (KMC), revealing one of the
worst forms of congestion and overcrowding.
Housing, in Kolkata is supplied by multiple agents and organizations such as West Bengal
Housing Board (WBHB), Kolkata Metropolitan Development Authority (KMDA) and
other state housing and urban development departments, Housing Cooperatives and private
institutions. While a large bulk of supply comes from the formal and informal private
sector, their operation is by and large unregulated in the absence of any single consolidated
authority for monitoring and record. Among the key public sector agencies, WBHB has
delivered around a thousand dwelling units per year since its inception in 1972. Housing
Directorate currently maintains additional 33,400 rental flats in West Bengal (Economic
Review, 2003). KMDA, a relatively new player in housing sector, has just over 7,000
housing units to its credit, not undermining KMDA’s contribution in other spheres of
urban development. It is an irony that the joint supply by all these public agencies together
could not meet even a fraction of the total demand.
3According to the 1991 census, the inadequacy of supply led a housing shortage of 1.4
million in West Bengal, the majority of which was concentrated in Kolkata. Das (2002)
estimated, even whilst assuring a modest shelter of 250 sq. ft and an average cost of pucca
construction @ 350 per sq. ft, the total investment required for providing shelter for all in
the state would come to INR125 billion (US$28 million). This was a conservative estimate
of the housing investment required in 1991, which has increased many times in the last
decade. Inevitably, raising such a large investment makes it necessary to pool resources
from all avenues and integrate the capital market with housing finance. However, other
than capital fund, there are multiple resource constraints in terms of land, building
materials and so forth on the one hand and the increasing population with a very low
affordability on the other that makes the problem more pronounced (Chakravarti, 1998, p.
268 ). It was being increasingly realised that to tackle such an unprecedented scale of
housing poverty a fast-track approach is required that can produce mass affordable housing
quickly and efficiently.
The PPP schemes are expected to share the responsibility of the government expanding the
housing market, drawing from experiences and expertise of public sector and efficient
production and marketing of the private sector together. Whilst it is still early to comment
on the outcomes as the reforms on the institutional and legislative framework are still
underway, an attempt is made to reflect on the PPP model of Kolkata in the following
paragraphs.
3. Public Private Participation in Kolkata
Public private partnership has been widely recognized as a natural response to meet the
colossal demand for housing in the context of government’s dwindling budgetary capacity.
The need for it is also accelerated by the massive market demand for better quality of
services coming from an elite section of society and a need to spin off the macro-economic
conditions. Kolkata’s PPP model is now regarded as panacea for the city’s 14 million
population and is expected to boost macro economic conditions of the city with its
multiplier effects.
According to Deb (2002), every rupee invested in housing adds 78 paisa to the GDP in
India, which alone has forward and backward linkages with as many as 280 industries. The
real estate/construction industry provides 16% of employment and is the second largest
employer in India next to agricultural sector. The real estate sector has (therefore) tended
to focus more on maximizing housing output as a way of maximizing revenue and a way to
save the State from industrial recession owing to the increasing recognition of the link
between the real estate sector and wider economy in the city.
On a positive side, the macroeconomic conditions in West Bengal appear to be favourable
for housing market. West Bengal’s State Domestic Product (SDP) has been registering a
growth of 7.45 per cent, higher than the growth of Gross Domestic Product of the country
during 2001-2002. West Bengal’s per capita income during 2001-2002 had been
4INR10375.82 (US$228.5)2 at 1993-1994 prices and INR17,769.18 (US$391.3) at current
prices (Economic Review, 2003). On the finance side banks have come into this sector at a
time when credit off take in the industrial sector has been low. With plenty of flush funds
waiting to be deployed, the housing sector presents an attractive option to the banks to
channel their funds. This was particularly so, as in the housing sector advances are given
against mortgage of assets, which continue to carry value, and therefore make the loans
relatively safe. To sum up, the outcomes of liberalisation initiatives and competitive
markets have now led to the transformation of demand capital into housing market thereby
making the supply of housing for sale attractive to developers. To maximise housing
investment, the Government has recently declared the housing sector as an infrastructure
sector, thereby annexing tax benefits on investments. These developments can be
understood mainly as the normal market reactions to the changes in the relationship of
demand and supply where housing markets would have to respond to the effective
demands of consumers arising from rising real incomes and changing life styles.
The following section explains the dynamics of the public-private collaboration in Kolkata
and the proactive role being played by the state to increase the supply of housing. The
administrative and financial resolution between partners such as structure of negotiation,
criteria to qualify developers, the first cornerstone project and target groups are discussed
along with the land and legislative issues and obstacles such as land development, high
stamp duty, weak enforcement of law and sanctioning of plans which lie in the core of this
partnership. The narrative however, revolves around the strategy than institutional
framework or role of involved stakeholders.
3.1 Administrative Issues
The partnership comprises partners from public sectors agencies like WBHB and KMDA
and big, reputed business groups of India as private partners with established financial
credentials. Public Private Partnership companies that are currently operational include
Bengal Ambuja, Bengal Peerless, Bengal Shrachi, Bengal Development Consulted Limited
(Bengal DCL) and Bengal IFB (with Indian Fine Blanks Industries) to name a few. A few
more joint venture companies are in the pipeline. The private partners are being introduced
after a mature selection process. To qualify in these PPP schemes, the partners should have
a minimum net worth of INR 50 million (US$1.1 million) and should have completed
constructing 500,000 square feet of building space in the last five years (Mookherjee,
2003). The financial arrangement between these JV companies under PPP schemes has
been fairly standard. Generally, the equity share between public-private bodies ranges from
a minimum government share of 11% up to 49.5% depending upon the nature of the
project (Mookherjee, 2003). In the case of Bengal Peerless Joint Venture in particular,
WBHB and Bengal Peerless share 49.5% each and remaining 1% comes from the public
(Bagchi, 2003).
2
1 US$ = 45.4083 INR (as of 27 May 2004)
5The integral component of this partnership is the cross subsidy approach. The cross
subsidy is introduced first, as an incentive for private sector companies to investment in
housing and, secondly, as a social concern for the impact of PPP on the low income group
due to unregulated price. For that matter prices of the unit, size, the kinds of amenities,
location, quality are prescribed by the government. Under the PPP schemes, each project
should comprise at least 10 to 15 percent of the total construction as low-income group
(LIG) or medium-income group (MIG) sectors. The low-income group and medium-
income group housing are made available at lower prices and are being disposed with “no
profit” or on the basis of a “little profit,” whereas the price of high-income group (HIG)
apartments are set at the discretion of the private partners to capture the economic rents of
the housing and services they are providing. As much as the housing deficit arising from
the needs of the projected population, there is a new demand for luxury units, fuelled by
new wealth and attitudes of modest number of Kolkattans with high purchasing power.
Tapping this potential is equally vital to sustain any form of cross subsidy strategy. This is
perceived as a win-win situation for all stakeholders such that the JV developers have
pledged to increase the Low Income Group and Middle Income Group stock by at least 50
per cent in the state, as a majority of the development will be done in this segment. On the
other hand the government has been careful in not imposing any compulsory subsidy
scheme on the private partners which would otherwise have a serious implication on the
financial viability of the partnership in the long term.
Udayan, 1600 dwelling units, located in the Eastern Metropolitan Bypass, is the
cornerstone project in the series initiated first by Bengal Ambuja, with 1.9 million square
feet of built-up area. Bengal Peerless Joint Venture's “Anupama” was built with 1400
dwelling units out of which 73% of units have been provided to low and middle income
households; of people having gross monthly income up to INR5,000 (US$110) and
INR7,500 (US$165) respectively. KMDA has taken up a housing-cum commercial Project,
“Hiland Park’ in partnership with private developers to construct housing. Many others
projects are in pipeline that have capitalized modern popular themes like environment
friendly construction, city-living etc.
The Public Private Partnership model in Kolkata has the government’s role as both policy
devising and implementing agency. The state’s accountability to the wider community has
necessitated the government to adopt a restrained approach by taking measured steps and
applying a great deal of caution. Despite the flood of interested developers who could meet
the minimum pre-requirements laid down by the state, so far, even after a decade of
introduction of PPP, the state has less than a dozen private partners. The government
emphasis appears to be on building up a high quality long term partnership.
3.2 Finance and Affordability Issues
An obvious implication of the PPP process has been the expansion of the metropolitan
housing market which came through an overall real estate awareness and finance
availability resulting in wider housing delivery by multiple agents in the market. A
significant price drop and rise in quality in general has been observed across the board
6lately. The incidence of PPP appears to be working considering housing price in the private
sector has not seen any reverse trend in the past several years. Traditionally, households in
Kolkata have used their savings to purchase homes, land, or building materials or
constructing homes by themselves.
Total disbursement by Housing finance companies and Public sector banks
Source: The Telegraph (2003)
7In a recent comparative survey of over more than a dozen cities in India, Kolkata emerged
as the No.1 city in India in terms of “relative growth” with one of the highest savings ratios
in the country (The Telegraph, 2003). With more information dissemination about
financing and property rights arising from competitive market, borrowers in Kolkata are
less vulnerable to vagaries of real estate market, are increasingly becoming decisive,
protective of his/her rights and have become more open and positive about taking loans.
With the sliding interest rates, now savings are being translated into spending.
Concomitant to the wider finance deregulation, the housing finance sector is undergoing a
sea change. This has chimed well with the government’s decision to promote partnership
schemes. The fall in the rates has been phenomenal over the last 4 to 5 years. From rates
that were around 16% and over, they have plummeted to around 8% and even lower. This
has been accompanied by increased volume of housing loan disbursements that have
soared by over 400 per cent (The Telegraph, 2003). In fact, in some cases, depending upon
the pay back period, Equated Monthly Instalment (EMIs) which one has to pay against the
housing loan turns out almost the same as the rent one pays for a similar apartment. Across
the country, the total housing loan disbursements by housing finance companies and public
sector banks have risen from INR 11.3 billion to 450 billion (US$ 250 million to US$10
billion) between 1999 and 2003 while total mortgage market stood at INR 650 billion
(US$14.3 billion) in the year 2002/03 nation-wide (National Housing Bank, 2003).
Under PPP schemes, dwellings ranging from 250 square feet to 1500 square feet or above
are made available with various price tags depending on the floor, surface treatment and
the location of the estate. The government has been prescribing certain components of
housing such as minimum areas and cost limits for the Economically Weaker Section
(EWS)3 and Low Income Group to be made over by the Joint Venture companies. Costs
have been kept to minimum. A typical Low Income Group unit of 350 square feet costs in
the range of Rs.113,000 to Rs.200,000 (US$ 2,489 to 4,405), which is regarded as quite
reasonable as compared to the prices of similar units produced by the private developers in
the city. There is, however, a potential pitfall in the process. There is no mortgage finance
facility for the potential buyers attached to the scheme. In the KMA area, 53.3% of the
households belong to Low Income Group (KMDA, 2000). Despite the benefit of the wider
finance sector reforms, housing loans have not yet trickled down to the low income group
in a meaningful way. Often eligibility criteria are stringent and are heavily biased to
persons having regular salaried income from employment or
income from business etc. with income tax return proof. The Life Insurance Corporation
Housing Finance Limited (LICHFL) for example, determines the quantum
3
KMDA (2000) has categorised the population in Kolkata in four different economic groups based on their
level of income. Households with monthly income of up to INR1,999 (US$44) fall within Economically
Weaker Section. Households with monthly income between INR2,000-4,999 (US$44 – US$110) and
INR5,000-9,999 (US$110-US$220) fall within Low Income and Middle Income Group respectively. Those
with household income of more than INR 10,000 (US$220) are categorised as High Income Group.
8of the loan in a way that estimates monthly instalment to be within 50% of the net
take home pay. In practice, because of these cut off points, low income buyers don’t get
the full amount and often require to utilise their savings (if they have any). Thus there is an
observable finance gap. It is important the housing finance institutions look into these
issues more pragmatically to enhance the affordability and design to suit the low income
group, so that housing finance becomes a way to a housing solution. The housing market
would look vastly different if there was a massive liquidity and support from both public-
private sector housing finance agencies.
3.3 Land Issues
The supply of land as the key for an adequate and affordable housing for all is widely
recognised (Angel, 1983; Payne, 1998; Kundu, 1997). Kolkata has seen soaring land prices
in the last few decades as many third world cities as demand for developable land has
increased where as supply of land is limited. The alternative land supply through
reclamation is both expensive and environmentally unsustainable (Munsi, 1990, p. 49).
Bhattacharya and Bhattacharya, (1998, p.24) have observed that the cost of land in India
constitutes 50% or more of the total costs of the building. And Kolkata is no different from
its other metro counterparts. In this context, it is increasingly realized that, without some
strong policy intervention from the government, building homes for the mass will be a
utopian dream.
Urban land has been a principal tool for West Bengal government’s policy to maximize
real estate activities and an incentive to encourage the private enterprises. In recent years,
the state government has started playing a far more aggressive role in the urban land
market by developing and allocating land through townships, so that housing development
initiatives are not constrained owing to scarcity of land. In 1999, New Kolkata also known
as Rajarhat township, which is estimated to accommodate 750,000 people in 3,075
Hectares, amidst modern office complexes and open spaces was started. The New Town
was grounded on the nationwide programme that conceptualises the creation of 100 new
towns by 2021. Now it has become a hub for real estate investments. Land acquisition and
disposal are being carried out in full swing where almost 50% of the land is for residential
use. The state administrated land release has basically two parallel approaches. First, 40%
has been reserved for bulk residential to be used by Joint Venture companies and other
organizations and, secondly, remaining 60% of the total land has been released to the
individuals, cooperatives for subsidized housing. The state seeks to confer equal priority to
individual buyers and housing cooperatives so that building and constructing do not
become purely a private sector monopoly.
HIDCO (West Bengal Housing Infrastructure Development corporation), the nodal
development agency for New Town has, through a lottery, already disposed of 5,671
serviced plots to general the public and housing cooperatives under Action Area 1 of Phase
1. Prices for the Low Income Group are fixed as Rs.822/m2 (US$18/ m2), on a cross-
subsidy basis and adjusted against the price of Middle income group and High income
group plots, which are in the range of Rs.1,494/m2 (US$33/m2) to Rs.2,392/ m2 (US$
953/m2). Plots for Low Income Group are sold on leasehold basis for 99 years and
transfer/sub-division/sub-lease or sublet of plots are not permitted for a period of 5 years
whereas plots for Middle Income Group and High Income Group are freehold and are,
thus, free for market transactions. Overall, the prices offered by HIDCO is much lower
than market prices quoted by real estate brokers in the market for similar land parcels in
and around New Town which are Rs.3000/m2 (US$ 66/m2) to Rs.10,000-14,000/m2
(US$220- 309/m2) for Salt Lake area. KMDA has also started two similar but smaller
projects - the East Kolkata township and the Baishnabghata - Patuli township, which are in
progress.
The Urban Land (Ceiling and Regulation) Act (ULCRA) 1976, intended to increase urban
land supply, reduce land speculation, and acquire surplus lands for affordable housing.
However, it has been ineffective because of its inherent limitations as well as different
institutional factors such as lack of clear cut land holdings records plans (absence of
cadastral maps), jurisdictional limitations, shape of the land parcels, and obstacles on bulk
acquisition and development (Rao, 2000, p.58). The liberalisation of the Urban Land
(Ceiling and Regulation) Act 1976 can also ease the land crisis. The Central government
formulated the Urban Land (Ceiling and Regulation) Repeal Act, 1999, but at the moment
it can be inferred from various ministerial statements, it is less likely to be in the political
agenda of the West Bengal government. The Act, however, vests adequate powers and
authority within the state when it comes to granting exemptions as well as imposing
restrictions. Industry watchers, however, believe that these JVs will free the land that has
so far been locked up in Kolkata. In the early stage of PPP implementation, a major
attraction for the potential developers has been the government’s aid in accessing the
developable land. Thus the city will need to hedge its best regarding supply of land and
continue exploiting new possibilities to reinforce the success of PPP in future.
3.4 Legislative Issues
The state government promulgated the West Bengal Building (Regulation of Promotion of
Construction and Transfer by Promoters) Act in 1993 to initiate and regulate privatization.
This Act is meant to control the building activities of the private promoters and protect the
interest of property buyers, giving guidelines on (i) safety of the structures (ii) transparent
financial transactions and (iii) clear legal transactions. In fact, without legislative binding,
it was difficult to gain public confidence involving safety and security of the buildings
constructed and to protect them against any loss owing to swindles or malpractices by the
promoters. Since the promulgation of the Act, only 150 promoters in Kolkata have been
registered (The Statesman, 1999). It is difficult to endorse the given number owing to the
fact that the number engaged in real estate activities is far more than the statistics
registered. The West Bengal Building (Regulation of Promotion of Construction and
Transfer by Promoters) Act 1993 has to be implemented on all promoters in a constructive
and candid way. Malpractice of the few will certainly denounce the whole community of
private developers.
10Attempts are also being made for creating effective market information on developers and
their projects. Independent assessment/grading agencies like ICRA-NAREDCO4 (Grading
of Real Estate Developers and Projects) are providing vital inputs to buyers in their
purchase decisions as well as to finance agencies in their credit decisions. As the grading is
done in terms of contractor, consultant, project Owner, besides the techno financial aspects
of the project, it gives a whole range of information about the project. The grading system
leads to healthy competition and acts as a measure of performance check, equipping buyers
about the pricing and quality of the delivered product. Although these new concepts will
take time for mature implementation, their relevance is pertinent to establish a quality
assurance and risk control mechanism, given the widespread unauthorised and unregulated
development prevailing in the city.
Government’s responsibility is to ensure adequate prudential regulation and supervision.
The involvement of the government as an equal share holder in the joint sector companies
has facilitated the process of obtaining of permits, clearances and registration of property.
Traditionally these activities have been time intensive and are responsible for all sorts of
delays. Umashankar and Misra (1993) recount their experience in Delhi where a developer
seeking consent on Group Housing schemes under the Urban Land Ceiling and Regulation
Act requires approval from Delhi Urban Art Commission, Chief Fire Officer and finally
the local plan sanctioning authority resulting sometimes in a delay of almost one or two
years. To develop a property in Kolkata, builders require nearly 40 clearances from at least
15 departments including sewerage, water, land survey, urban land ceiling, land revenue,
fire and pollution. It is increasingly considered crucial that in order to speed up the PPP
process, the plans and projects are approved through a single window. Prices of dwelling
units could be reduced by Rs.150-200 (US$3.3-4.4) per square feet if the clearances were
expedited (Times of India, 2003). At present the building sanction fee in the metropolitan
area is in the order of INR30 (US$0.67) per square feet of residential development.
Therefore alongside plan approval time, there is an urgent need to rationalize stamp duty
and building sanction fees. Administrative fees could be considered depending upon the
nature and social content of the project. Less profiteering projects could be exempted from
administrative charges. Market performance may be improved by simply minimising the
approval time, introducing the right kind of incentives and lubricating the right parts
without completely overhauling the whole system.
4
ICRA, an independent Information and Credit Rating Agency established in
1991, has been promoted by the joint initiatives of a number of leading public
sector banks and financial institutions such as IFCI, State Bank of India, Unit
Trust of India, General Insurance Company of India, Export-Import Bank of India,
etc.
114. Conclusion
Kolkata has been successful in forging effective Public Private Partnerships in housing. It
is interesting to observe how two opposite forces have blended and are growing in the
midst of prospect and constraints, that are, oddly enough, set within the socialist
institutional context. Its considerable success in the city paints a rosy picture as the joint
approach brings together the technical and managerial expertise of the private sector with
the accountability and fair pricing of the public sector to improve the housing delivery. The
performance is reflected in the improvements made in housing condition, quality and stock
for the significant segment of the population. There are, however important lessons to be
learned. It is evident that the intention of the state has been to bring in slow reforms with a
degree of regulation in this transition and hold the market in check with some mixture of
market forces and regulation. The current state-articulated regulation in this transition
stems from the argument that the gains from hasty privatization are often offset by its
social costs.
At the operational level, major roadblocks to the PPP are identified as antiquated
legislation, like the Urban Land Ceiling Act, the high incidence of municipal taxes, stamp
duties and sanction fees. At a performance level, housing production under the PPP model
is impressive, in terms of costs and quality, but minuscule in terms of numbers. The state
must also monitor that the type and total number of units supplied in the market is
proportionate to the size of each income stratum in the city. Mismatch in the units supplied
and the type of units in demand for a sustained period of time could easily imperil the
present housing renaissance in Kolkata where population is disproportionately
concentrated in Low Income Group.
This leads to a proposition that although Public Private Partnership is important, one must
not lose sight of the needs of the Low Income Group comprising over half of the total
population in Kolkata. The true test of the partnership, therefore, lies on the degree of their
inclusion in overall scheme. As the regulatory agency, the state should assure that PPP is
accompanied and furnished by institutional and legislative reforms, while as a dominant
partner in the implementation it should monitor progress as well as ensuring that issues of
affordability are addressed and distributive justice is done. Since the outcome of the new
partnerships remains uncertain in the long term, prognosis about this union is difficult to
make. In a country as huge as India, in a city with such a huge housing demand as Kolkata,
couple of initiatives are just like the tip of the iceberg. Public Private Partnerships are,
therefore not ends in themselves, they are means to one or more ends.
12References
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