metadata: authors: 0: author: Annez,Patricia Clarke
1: author: Bertaud,Alain
2: author: Bertaud,Marie Agnes
3: author: Bhatt, Bijal
4: author: Bhatt,Chirayu Janardan
5: author: Patel,Bimal
6: author: Phatak,Vidyadhar K.
count: India
docna: 0: docna: Ahmedabad : more but different government
            for "slum free" and livable cities
docty: Policy Research Working Paper
subtopic: Urban Housing and Land Settlements,City to City Alliances,Sanitation and Sewerage,Engineering,National Urban Development Policies & Strategies,Regional Urban Development,City Development Strategies,Urban Economics,Urban Governance and Management,Urban Housing,Water and Human Health,Hydrology,Water Supply and Sanitation Economics,Sanitary Environmental Engineering,Small Private Water Supply Providers,Environmental Engineering,Municipal Management and Reform,Urban Economic Development,Town Water Supply and Sanitation,Urban Communities
teratopic: Public Sector Development,Urban Development,Communities and Human Settlements
abstracts: cdata!: This paper analyzes real estate market
            dynamics over the past decade in the city of Ahmedabad,
            India, with a view to improving the living conditions of the
            large population living in slums. The paper combines census
            data, the National Sample Survey, and slum household surveys
            to review the demand side of the market. Satellite
            photography was used to estimate the production of both
            formal and informal housing over the past ten years.
            Analysis of the execution of the development plan for the
            Ahmedabad region and town planning schemes shows how the
            system of housing supply has evolved. These analyses are
            used to assess the feasibility of various approaches to
            achieving "slum free" cities, the goal of the
            Government of India's planned assistance program Rajiv
            Awas Yojana. The paper concludes that notwithstanding a
            substantial increase in public housing production in recent
            years, providing subsidized formal homes from government or
            through reservations for lower income groups in private
            developments would take more than a generation just to
            handle the current slum population -- representing one-third
            of households. Providing basic environmental infrastructure
            services in existing underserved neighborhoods -- a proven
            approach under the Slum Networking Program -- and bolstering
            infrastructure networks for the city to accommodate
            increased demand are affordable and feasible. Addressing
            issues such as rural-urban land conversion and ambiguous
            land tenure, and allowing flexibility for realistic building
            standards and increasing maximum floor space standards in
            certain neighborhoods can help to ensure a growing supply of
            housing that is affordable for moderate and low-income households.
geo_reg_key: 517198,517212,517191
repnme: repnme: Ahmedabad : more but different government
            for "slum free" and livable cities
display_title: Ahmedabad : more but different
            government for "slum free" and livable cities
listing_relative_url: /research/2012/11/16956866/ahmedabad-more-different-government-slum-free-livable-cities
topicv3: Strategic Urban Planning m1326026 816,Water m1326522 137,Urban Development m1327371 699,Wastewater Collection m1327591 148,Land and Housing m1327648 817
publishtoextweb_dt: 2012-11-01T00:00:00Z
historic_topic: Public Sector Development,Urban Development,Communities and Human Settlements
no_of_pages: 99
author_keys: 0: author_key: 91855
1: author_key: 90691
2: author_key: 85917
3: author_key: 1290826
4: author_key: 566004
5: author_key: 456316
model_extractions: WPS6267 Policy Research Working Paper 6267

# Ahmedabad

More but Different Government for “Slum Free” and Livable Cities _Patricia Clarke Annez Alain Bertaud Marie-Agnes Bertaud Bijal Bhatt Chirayu Bhatt Bimal Patel Vidyadhar Phatak_ The World Bank Sustainable Development Network Finance Economics and Urban Department November 2012
Policy Research Working Paper 6267

# **Abstract**

This paper analyzes real estate market dynamics over the past decade in the city of Ahmedabad, India, with a view to improving the living conditions of the large population living in slums. The paper combines census data, the National Sample Survey, and slum household surveys to review the demand side of the market. Satellite photography was used to estimate the production of both formal and informal housing over the past ten years. Analysis of the execution of the development plan for the Ahmedabad region and town planning schemes shows how the system of housing supply has evolved. These analyses are used to assess the feasibility of various approaches to achieving “slum free” cities, the goal of the Government of India’s planned assistance program Rajiv Awas Yojana. The paper concludes that notwithstanding a substantial increase in public housing production in recent years, providing subsidized formal homes from government or through reservations for lower income groups in private developments would take more than a generation just to handle the current slum population—representing one-third of households. Providing basic environmental infrastructure services in existing underserved neighborhoods—a proven approach under the Slum Networking Program—and bolstering infrastructure networks for the city to accommodate increased demand are affordable and feasible. Addressing issues such as rural-urban land conversion and ambiguous land tenure, and allowing flexibility for realistic building standards and increasing maximum floor space standards in certain neighborhoods can help to ensure a growing supply of housing that is affordable for moderate and low-income households.

This paper is a product of the Finance Economics and Urban Department, Sustainable Development Network. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. The author may be contacted at pannez@worldbank.org or pcannez.clarke.work@gmail.com.

_The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent._ Produced by the Research Support Team
# **Ahmedabad: More but Different Government for “Slum Free” and Livable Cities**

Patricia Clarke Annez, Alain Bertaud, Marie-Agnes Bertaud, Bijal Bhatt, Chirayu Bhatt, Bimal Patel, Vidyadhar Phatak<sup>1</sup> Keywords: Basic services, Slums, Urban Infrastructure, Housing and Land Policy in India JEL Classification: R21 Housing Demand, R31 Housing Supply and Markets, R52 Land Use Regulations, R52 Land Use Regulations, R53 Public Investment and Capital Stock Sector Board: Urban

> 1 Annez, Bertaud , Bertaud and Phatak (consultants to the World Bank), Bijal Bhatt (Self-Employed Women’s Association Mahila Housing Trust), Chirayu Bhatt and Bimal Patel (Environmental Planning Collaborative Ahmedabad) . Ms. Purti Sharma of the India Development Foundation  provided generous assistance  and invaluable insights in preparing computations using the NSS data. Ms. Mridusmita Bordoloi downloaded and analyzed the NSS Household Expenditure Data. Ms. Vasudha Thawakar of the World Bank organized and facilitated the consultations in Ahmedabad and provided invaluable advice as the reports were written and reviewed. The authors are grateful to the many persons who gave us comments and very helpful insights for this work, including Ms. Ela Bhatt, Mr. Sundar Burra, Mr. I.P. Gautam,  Mr. Shubhagato DasGupta, Ms. Renana Jhabvala, Mr. Rajendra Joshi, Ms. Darshini Mahadevia, Mr. Arun Maira, Mr. Augustin Maria, Mr. Dinesh Mehta, Ms. Meera Mehta, Mr. G. Mohapatra, Ms. Reema Nanavaty, Mr. Prem Pangotra, Ms. Sheela Patel, Ms. Giovanna Prennushi, Mr. Harris Selod, Mr. Mike Slingsby, Mr Howard Spodek,  Mr. S. Sundar, Ms. Tara Vishwanath., and Ms. Berenice Van Bronkhorst. In addition, officials of the Planning Commission and the Ministry of Housing and Urban Poverty Alleviation have been most generous of their time in providing feedback as this work progressed. All errors and omissions remain those of the authors. Views expressed are personal.
Page 3

# **Ahmedabad:**

# **More but Different Government for “Slum Free” and Livable Cities**

Authors: Patricia Clarke Annez, Alain Bertaud, Marie-Agnes Bertaud, Bijal Bhatt, Chirayu Bhatt, Bimal Patel, Vidyadhar Phatak

## <u>Table of Contents</u>

|**I.**|**Methodology and Context**............................................................................................................. 6|
|---|---|
|**II.**|**Introduction and Background on Factors Driving Demand for Housing in Ahmedabad**...... 6|
|**III.**|**Evolution of the Population, Built-up Areas and Supply of Housing in Ahmedabad 2001-**<br>**2011**............................................................................................................................................... 14|
|**IV.**|**Land Management and Real Estate Policy**................................................................................ 20|
|**IV A.**|**Salient developments in planning and real estate policy and programs in Ahmedabad**.... 20|
|**IV B.**|**Constraints on the Supply of Housing in the AMC today**..................................................... 29|
|**V.**|**Immediate Improvements**: .......................................................................................................... 47|
|**VI.**|**SUMMARY AND CONCLUSIONS**.......................................................................................... 60|

## <u>ANNEXES</u>

1. Computation of Distribution of Household Income in AMC

2. Ahmedabad: Residential Prices 3. Ahmedabad: Cost of Slum and Chawl Upgrading 4. Evolution of City Spatial Structure between 2001 and 2011 5. Summary of Lessons from the City-Wide Assessment in Ahmedabad

## <u>List of Figures:</u>

Figure II.1: Distribution of Household Income 2001 and 2011 by Income Category Figure II.2: Household Income Distribution for 2011 and Housing Typologies Figure II.3: Households’ income distribution and affordable housing prices Figure III.1: Evolution of population and built-up areas in the AMC between 2001 and 2011 Figure III.2: Estimate dwelling units produced between 2001 and 2011 Figure III.3: Built-up area and areas occupied by slums in 2001 Figure III.4: Built-up area and areas occupied by slums in 2011 Figure III.5: Location of newly developed areas between 2001 and 2011 Figure III.6: Evolution of Real Estate Prices in AMC Zones
Page 4 Figure IV.1: Development Plan of Ahmedabad, 1965 Figure IV. 2: Neighborhood Improvements under SNP Figure IV.3: Process for Conversion of Rural Land already Zoned for Urban Development Figure IV.4: Progress of Town Planning Schemes Started under the new DP Since 2003 Figure IV.5: Process for Brownfield Urban Redevelopment Figure IV.6: Built Up Density Profile in AMC 1991-2001 Figure IV.7: Ahmedabad Built Up Densities in 2001 Figure IV.8a: Existing Formal Housing that would be Illegal for New Construction under the GCDR Figure IV.8b: Existing Formal Housing that would be Illegal for New Construction under the GCDR Figure IV.8c: Existing Formal Housing that would be Illegal for New Construction under the GCDR Figure IV. 9a: Possible Plot Layout according to GCDR Figure IV.9b: Plot Layout with modifications to GCDR Figure V.1: Before and After Slum Networking in Ahmedabad Figure V.2: Typical Lower Middle Class Housing in Ahmedabad Figure V.3: Distribution by Dwelling Size in Sample Slum Pockets

# <u>List of Tables:</u>

Table II.1: Population and Urbanization Growth in Ahmedabad 1971-2011 Table II.2: Growth Rates of Employment and Population 1991-2001 Table IV.1: Town Planning Schemes in Ahmedabad Table IV.2: Key Infrastructure built by AUDA between 1999 and 2010 Table IV.3: Land Appropriated in all TP Schemes in Ahmedabad, 2010 Table IV.4: Key Indicators for Vernacular and GDCR housing Table IV.5: Comparison of Key Specifications for GDCR and Modified GCDR Specification for More Affordable Housing Table IV.6: Cost Comparison with marginal flexibility in the GCDR Table V.1: Summary of Total Costs of Upgradation in Ahmedabad Table V.2: Per Household Upgrading Costs Table V.3: AMC Budget 2008-09 through 2011-2012 Table V.4: Estimates of Populations Unsuitable for In-Situ Upgradation
Page 5

# **List of Acronyms and Definitions**

AMC-Ahmedabad Municipal Corporation AUDA_Ahmedabad Urban Development Authority BRTS-Bus Rapid Transit System CBD-Central Business District CBO_Community Based Organization CEPT-Centre for Environmental and Planning Technology in Ahmedabad CSO-Civil Society Organization

- Chawls or Challis—this refers to very low substandard housing historically provided by mill owners for mill workers. These are located on private lands. Although typically located on private lands, given the substandard infrastructure services provided in these neighborhoods, they strongly resemble slums and often need improvements in network and neighborhood infrastructure.

Crores-Unit of counting used commonly in South Asia, refers to ten million DP-Development Plan EPC-Environmental Planning Collaborative FSI-Floor Space Index –refers to the ratio of built area on a given parcel in relation to the overall area of the parcel. Maximum FSI limits how much floor area may be built on a given plot.

- Gamtals—Village areas that have been surrounded by the city over time. Oftentimes due to late incorporation in the city, they are not serviced with urban infrastructure. Housing also does not necessarily adhere to municipal by-law standards

- GDCR-General Development Control Regulations. These are building by laws that stipulate a number of physical features that are to be allowed in formally approved construction projects. These regulations run to many pages and cover many features such as the amount of a plot that may be covered by construction, distance from neighboring plots, widths of hallways, etc.

HUPA-Ministry of Housing and Urban Poverty Alleviation in Government of India JnNURM Jawaharlal Nehru Urban Reform Mission an urban Program sponsored by the Government of India Lakhs or lacs –unit of counting used commonly is South Asia, refers to one hundred thousand NOC- No Objection Certificate RAY- Rajiv Awas Yojana - an urban shelter Program sponsored by the Government of India SEWA Self Employed Women’s Association SPV-Special Purpose Vehicle

- TPS- Town Planning Schemes are a form of land pooling for infrastructure provision supported under the Town Planning Act in the state of Gujarat. Land Pooling requires participating land holders to give up a portion of their land to provide land for urban services.

UA-Urban Agglomeration
Page 6

# **Ahmedabad**

# **More but Different Government for “Slum**<sup>**2**</sup> **Free” and Livable Cities**

# **I. Methodology and Context**

The purpose of this work is (i) to gather basic information necessary to prepare a broad assessment of feasibility for immediate actions to improve key public services and environmental conditions for all households in low-cost informal housing; and (ii) to prepare an assessment of impediments to supply of housing across the income spectrum and recommendations for actions that will make that supply more responsive to increased demands as population and incomes grow. Such measures would reduce pressure on prices and make decent and dignified housing more widely affordable.

The objective is to mobilize support at the city, state and federal levels of government and within the local community for a program of short and medium term actions and investments based on a commonly shared and credible set of data. As such, the study focuses on working with reliable, available data to the extent possible rather than seeking to prepare a definitive research analysis that would take years to develop. .The focus of the study is its city-wide perspective—taking a comprehensive look at the entire market and infrastructure network and examining what it would take to provide minimum shelter standards for all. It does not pretend at this stage to present the most precise and detailed information on each topic—which must be left to the responsible agencies. We sought a level of accuracy that permits us to make a quick assessment of what a comprehensive program would entail. Should there be agreement on moving forward with the approach, full feasibility and design studies would be required.

We have chosen to illustrate the city level approach in Ahmedabad, because many parts of the envisaged program of investment and reform have already been successfully piloted here. For the purpose of data gathering and analysis, we have taken the Ahmedabad Municipal Corporation (AMC) as extended in 2006 to represent the city of Ahmedabad. This area captures virtually all of the built up area in the agglomeration.

Consultations as the work progresses have been an integral part of the study. Likewise, the study includes documentation of the methodology used in preparing the assessment to illustrate how other cities wishing to take a similar approach might proceed.(Annex 5).

# **II. Introduction and Background on Factors Driving Demand for Housing in Ahmedabad**

Ahmedabad is a fast growing city in one of India’s most dynamic and rapidly urbanizing states. Table II.1 shows that Gujarat, at 42.6 percent is well over the all-India urbanization average of 31.2 percent as measured in the 2011 Census. Likewise the speed at which urbanization in Gujarat is taking place is considerably more rapid than in all of India, which changed less than 2 percentage points over ten years. The average annual growth rate of urban population in Gujarat

> 2 Throughout this study, when we refer to slums, we are referring to any underserviced substandard informal housing area. This may include chawls/challis that have conditions similar to slums, even through ownership arrangements and administrative treatment of slums and challis may differ. Our emphasis is on providing basic neighborhood improvements to areas that do not have them. As such, an underserviced chawl is not that different from a slum. There is of course considerably variability among different slums and challi areas, which must be taken into account when detailed investment plans are drawn up.
Page 7 for the next 15 years has been forecast at 2.9 percent<sup>3</sup> , indicating continued high urban population growth in the state for an extended period. As is commonly the case, Ahmedabad, the largest city in the state, has been growing more slowly than the total urban population of the state. It is also important to note that while population growth rates in both the AMC and the urban areas of Gujarat rose in the recent census, they are considerably lower than in the 1970s. These healthy growth rates and the relatively youthful age profile of the population clearly imply that household formation in the AMC—not currently measured at the corporation or urban agglomeration area—are likely to be buoyant and will require a substantial supply response to avoid major real estate price increases. However, rising prices and continuing large shares of the population in slums are not the result of out of control urbanization. Rates of growth are actually declining.

Table II. 1 Population and Urbanization Growth in Ahmedabad 1971-2011

||**1971**|**1981**|**1991**|**2001**|**2011**|
|---|---|---|---|---|---|
|**Population in '000**||||||
|Gujarat State|26,697|34,086|41,310|50,671|_60,384_|
|Gujarat-Urban|7,497|10,601|14,248|18,930|25,713|
|Ahmedabad MC(AMCext from 2001)|1,731|2,396|2,924|4,520|5,571|
|**Average Annual Pop'n Growth Rates**||||||
|Gujarat State||2.47%|1.94%|2.06%|1.77%|
|Gujarat-Urban||3.53%|3.00%|2.88%|3.11%|
|Ahmedabad MC||3.30%|2.01% NA||2.11%|
|**Ratios**||||||
|Gujarat State Urban/Total|28.1%|31.1%|34.5%|37.4%|42.6%|
|Ahmedabad AMC/Gujarat Urban|23.1%|22.6%|20.5%|23.9%|21.7%|

Source: Census of India, various years Note: Growth of AMC population between 1991 and 2001 is not shown due to expansion of AMC area in 2001. Since population is measured on two different areas in the different years, the growth number reflects the jurisdictional shift not population growth.

Incomes are, however, growing rapidly. Per capita net state domestic product has grown at over 8.4 percent per annum in real terms between 2001 and 2010<sup>4</sup> , placing Gujarat amongst the most rapidly growing states in the country. Employment as reported in the Census of 2001 grew by 4 percent a year between 1991 and 2001 in the urban agglomeration of Ahmedabad, as against a population growth of 3 percent<sup>5</sup> . This is typical of the pattern for the state as a whole, with employment in urban areas outpacing both population growth in the cities and the rate of employment growth in the state as a whole. Table II.2 illustrates. Median household expenditure in Ahmedabad as measured by the National Sample Survey, has grown at over 5 percent a year in real terms in the 5 years between 2004/2005 and 2009/2010<sup>6</sup> . Thus, the problems of affordable housing in the AMC are resulting not from a distressed economy and growing poverty. The issue in this city lies elsewhere.

> 3 Report Of The Technical Group On Population Projections Constituted By The national Commission On Population May 2006.Office Of The Registrar General & Census Commissioner, India 2a, Mansingh Road, New Delhi

> 4 RBI website Handbook of Statistics of the Indian Economy. consulted 08/11/11 http://rbidocs.rbi.org.in/rdocs/Publications/PDFs/009T_HBS120911.pdf

> 5 Data from Census 2001 and 1991 Marginal Workers and Main Workers Categories. Such employment data is not available for the AMC itself and only for the Urban Agglomeration (UA).

> 6 Nominal data is converted using the GDP deflator for Gujarat published by the Reserve Bank of India. As is commonly the case with rapid income growth, the mean expenditure is growing more rapidly than the median. The ratio between mean and median in the 2009/10 survey has risen only slightly to 1.22 from 1.20 in the 2004/05 data.
Page 8 Table II. 2 Growth Rates of Employment and Population 1991-2001 <mark>Average Annual Growth 1991-2001</mark>

||Employment|Population|
|---|---|---|
|Gujarat|2.5%|2.1%|
|Gujarat Urban|3.8%|2.9%|
|Ahmedabad UA|4.0%|3.0%|

In order to understand the demand for housing in Ahmedabad in relation to the supply of formal housing, it is essential to examine the distribution of household income, not just examine averages.

The income distribution of households within the AMC current boundaries is shown for 2001 and 2011 on the two graphs of _<u>Figure II.1</u>_ . The population living in slums/challis is shown as yellow bars while the population living outside slums is shown as blue bars. Predictably, the slum population is mostly clustered at the left part of the graph for the 2 years measured. However, we can see an overlap between the income of the more affluent households living in slums and the income of the less affluent living in formal housing. The total number of households living in slums/challis in both years is derived from the slum mapping described in section III. Based on data for the distribution of household income, we were then able to determine how high up the income distribution are the households obliged to live in slums. We then cross check this information with a sample of housing prices using standard affordability measures of multiples of income.
<!-- Start of picture text --> Ahmedabad - Households income distribution 2001<br>60,000 100%<br>50,000Tae<br>mam Non Slum pop 80%<br>mm slum_pop<br>. 70%<br>33 | | 60%<br>3 | | Median income 7,250<br>= 30,000 50%<br>5<br>3<br>£<br>s | 40%<br>Z 20,000 ) 30%<br>10,000 | 20%<br>J<br>; Hil HT ows<br>eooooooooooooeosesesesesoeeseseseseseseeseeeeeeeeeeeegg<br>BRERSKRZRRKFRKKRKRKRKZKRKRKKRKRRKFEKRKKRRFRRKRRKRRRKRRRARRARRB<br>aaa r wen aa AiG T HEN AFR NG SRRAetR shea es<br>Monthly Households'income (IRP)<br>Ahmedabad - Households income distribution 2011<br>60,000 100%<br>50,000Pt<br>80%<br>70%<br>4 40,000<br>a)<br>3 60%<br>3 Median income 19,500<br>= 30,000 50%<br>°<br>5<br>Ee 40%<br>=<br>Z<br>20,000 ry<br>Hil wn<br>eooooooosooososooeseseseeoesescsoescescsceocosesesesesesescesesesescescescsoesesescs<br>BRRRSKRKSKSRKRRFSRKSKRRRZSKRKZKRKRRRZEZSKZSRKRRZERZRRRBRBR<br>Se Ce oe ae SSS RA NAN REE RAR RRR BG eS<br>Monthly Households'income (Inr)<br><!-- End of picture text -->
Page 10 **Figure II.1 illustrates the very striking upward trend in household incomes over the ten year period under study. The median income has increased to 2.7 times what it was in 2001.** While we have no comparable data for housing prices over the period **,** it is nonetheless striking that formal housing is still not affordable for a large part of the population. The population living in challis and slums alone represents more than two million people, and they cannot be placed in new housing overnight. As such, there is a dramatic and immediate need for better services for this very substantial share of the population. A strategy for meeting this need will be discussed in detail in Sections IV and V below.

If the supply of housing were perfectly elastic any increase in income for the higher income slum dwellers would allow them to move into formal housing. If the supply of housing were completely inelastic then higher incomes would result in higher prices and a general increase in income would results in households living in the same type of housing in spite of their increased income.

**Figure II.1** shows that a similar proportion of households who were living in slums/challis in 2001 are also living in slums/challis in 2011 in spite of a large increase in nominal income<sup>8</sup> . However, if we take into account the demographic conditions in slums (higher natural growth rate, higher rate of in-migration) it is clear that quite a number of slum/challi dwellers must have “escaped” from their slum into higher standard housing. If it was not the case the proportion of slum dweller in the total population would have increased (as it appears to be the case in Mumbai). For the slum households whose increased income allowed them to move out of a slum, it is likely that they have moved to the older part of the housing stock, many in the old city, which is cheaper and often more centrally located than the newer apartments in the more distant suburban areas.

> 8 It should be noted, as discussed later in the text, that the share of the population living in slums/challis was calculated independently using our mapping of slum areas combined with data on density per hectares from detailed surveys of representative slums and on average household size. Those computations provide us with the number of households living in slums/challis. The results are shown in Figure III. 2
# Ahmedabad- Income distribution and housing typology

<!-- Start of picture text --> 21 new low end private flats<br>60,000 0 Older low end private flats 100%<br>13 Site B private development Narol Naroda Road id.<br>90%<br>50,000 = 17 Site H private development low middle income<br>80%<br>« 6 developer built informal development<br>2 40,000 3 Row house relocation Manipur 70%<br>5u“ 4 Housing cluster ae sree<br>S 5 High density slum Naroda<br>5 @ 1 Low density slum Ellis bridge) Median income 19,500 Inr/month<br>2 -—o<br>= 40%<br>s<br>Z 20,000 i<br>|<br>10,000 Hl<br>yy | 10%<br>ecooeceeoeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee<br>Sources: AhmedabadRRAZARRRRRRARRRRRZAZRRARRARRRARAZRRRARRARRRRRAZRRBFANG incomeTHONSHSAICTexpenditure ... LR SHAT RARHTKRRRARARA" RAE R A<br>Typology study HCP-DPM - Team Site visits Monthly Households'income (Inr)<br><!-- End of picture text -->
Page 12 Taking the current income distribution of slum/challi dwellers, it is possible to define roughly what housing price each income group could afford. Based on price data collected for different housing typologies in Ahmedabad, we analyze affordability based on a range of price / income ratio (PI ratios). At the very low end of the income distribution, less than INR 7,000 per month, households can hardly afford any expenditure on housing except for a very low rent for a small hut in an existing slum. The 2011 households’ income distribution shows that about 8% of Ahmedabad population (or about 24% of the total slum/challi population) has a monthly income below INR 7,000 for whom it is difficult to afford a decent low standard home. For the other 76% of households in slums/challis, it should be possible to find housing solutions much like low-cost ‘vernacular’ housing solutions that already exist in large quantities in Ahmedabad. As we discuss in Section IV below, this involves investing more in basic infrastructure services in poor neighborhoods and introducing more flexibility in standards for formal housing as currently defined in the General Development Control Regulations (GDCR).

The analysis uses a price-to-income (PI) ratio between 2 and 3.5 for monthly income above INR 7,000 to calculate the range of price that slum dwellers could afford on the current housing market (Figure II.3). Individual households vary in their capacity to save and borrow from banks or relatives, hence the range of PI ratio for the same income groups.

For instance, for a land cost of INR 16,000/m2 and a construction cost of INR 8,000/m2, a dwelling of 12 m2 would cost INR 1.7 lacks if the same land use standards as much of the vernacular housing stock in Ahmedabad (84% coverage, 3 floors). The same 12 m2 dwelling on 3 floors would cost 2.4 lacks or 38% more if GDCR standards were used. In fact the GDCR standards penalize low buildings as they force using a large amount of land on the ground for large streets, open space and parking.
Ahmedabad - Income distribution 2011 and housing affordability <!-- Start of picture text --> ean BLAST ELE E DETECT CT CERT DLT ETT LOALICTET EELLE ET<br>© veooooo LUTTE<br>= srooooo HUTTETTT<br>Yeoooo FHT TTT eg<br>» asooo00 +H ee<br>= yooooo LLU eT<br>= 300000 LUTTTT ete<br>‘a> yoooo00.1ooooo LTTLLUTTTi ret a<br>> xoooooo FHTee et<br>Z TTT he<br>ss "900,000sooooo FLTBEE EEEEEEEEE EEETT ELE EEE CEErerCECE EEEEEEE Eee eee ee<br>@ 700,000 eeerr<br>©& 600,000500,000 _HtFCCPSatceOT eratiot TTT TTTTTTEHTT T TT TTTTTT<br>aooooo LETTTTT eC rrencerrr TTT TTT<br>3o0o00 {HTT TTT TT TTTanne<br>500,000 tle LITT TIT errr TTT TTTTTT<br>100,000eee LemmeSREES>= G00era[ARERRTTT ORSERES!ETTMOSSERRR R SETS E Sennen ee Ree Reeeen<br>oeoocqcéododcoeeteeeoeoeeeepeeeeeceeeeeee eeeclcetlUcUrwmCUCUPWCCcUOCcUOOC SoC Se se e8o<br>RARARARARRARRRARRARARRARARARRARARARRARARRAARaaa AR<br>ewes<br>FSI NGT REN SS RAN RTH RERRAR ARR SHEE BS<br>30,000<br>o<br>5<br>=3 «20,000<br>‘S<br>5<br>aces ew eM STP NARS SHAS KTS ARR NRK RR RR RAR RRR RRR OR OB<br>Monthly Households'income (Inr)<br><!-- End of picture text -->
# Ahmedabad - Growth of slum and chalis population and areas between 2001 and 2011

||2001|2011|Absolute<br>increase|% increase ||Yearly<br> increase|
|---|---|---|---|---|---|
|Ahmedabad Population (AMCarea) [1]|4,520,255||5,570,585|1,050,330|23%|2.1%|
|Built-up area (Km2)<br>[2]<br>|185<br>|212<br>|27<br>|14%<br>|1.4%<br>|
|Built-updensity (p/ha)|244|262|19|8%|0.7%||
|Slumandchalisarea(Km2)[3]|14.9|G3}|0.4|2%|0.2%||
|<br>Density in slums (p/ha) [4]<br>|1070<br>|1230<br>|160<br>|15%<br>|1.4%<br>|
|population inslumsand chalis|1,596,800|1,880,300|283,500|18%|1.6%||
|% ofslumand chalis population overtotalAMC population|35.3%|33.8%|-1.6%|-A%|-0.5%|
|Population living in formal areas (outside slums and chalis)|2,923,455|3,690,285|766,830|26%|2.4%|
|Areas offormal development<br>|170<br>|197<br>|26<br>|16%<br>|1.5%<br>|
|Densitiesinformalareas|171|187|15.9|9%6|0.9%||

[1] 2001 and 2011 census data corresponding to current AMC boundaries

[2] built up area as measured on Google Earth imagery dated Oct 2000 and jan 2001 for the year 2001 and May and Nov 2010 for 2011

[3] Slum areas measured on Google Erath imagery dated as above. Were included slums that have no apparent planned street structures and settlements with streets narrower than about 3 meters

[4] Average densities in slums extrapolated from a detailed topographical and social survey in 15 slums done by SEWA-MHT in 2001 and 2011
Page 15 The area of land developed between 2001 and 2011 has increased at a slower rate than the population, resulting in higher densities in the built-up areas in 2011 than in 2001. This increase in average built-up density is exceptional for a city of the size of Ahmedabad. Cross country analysis over cities in across the income range shows that when household income rises, built up densities go down (Angel 2011). Given that between 2001 and 2010 the nominal median household’s income has increased by 170%, **this countertrend in density land development shows a serious land supply constraint** . (It is important to note that we speak here of built up density only, not overall density. That figure is lower due to the fragmented nature of development at the periphery, see Figure III.5) This land supply constraint, however, is not caused by a lack of transport infrastructure – as it is often the case in other parts of India – Ahmedabad has developed a large number of arterial roads during the last 10 years – but by severe regulatory constraints that are discussed in a section below.

The areas occupied by slums have barely increased by 2% over 10 years, while the slum population has increased by 18%. This implies that a densification of existing slums occurred during this period. The morphology of slums allows this densification through the occupation of existing open space or the subdivision of existing dwellings. Thus contrary to some popular perceptions, slums and challis do not waste large tracts of valuable urban land. They are using this resource more and more parsimoniously as slum/challi populations expand—much more so than other urban development.
<!-- Start of picture text --> Evaluation of the number of dwelling units produced per year between 2001 and 2011 per type of land use<br>year 2001 year 2011<br>Average Total<br>Additional |number of |addition<br>Households |built-up Households |number of |units to the<br>built-up area |density orhousing |jarea density orhousing — |units created per |built up<br>Type of use |(km2) (p/ha) population units (km2) (p/ha) population units created year area (ha)<br>Mix Built-up} 121.14 138 1,669,096 370,904 142.51 148 2,104,960 473,038 102,134 10,213 2,137<br>Old City] 5.60 665 372,633 82,806 5.60 750 420,020 94,389 11,583 1,158 -<br>Slums and chalis| 14.92 1,070 1,596,839 354,847 15.29 1,230 1,820,300 422,551 67,704 6,770 36<br>Gamtal| 10.73 700 751,161 166,922 11.69 850 993,485 223,261 56,340 5,634 96<br>Industry 177 50 78,853 17,523 16.69 60 100,161 22,509 4,986 499 92<br>Villas in large estates 17.25 30 51,753 11,500 20.47 35 71,660 16,104 4,603 460 322<br>Total 185.41 244 4,520,335 1,004,501 212.25 262 5,570,585 1,251,852 247,351 24,735 2,684<br>Sources: aggregate population :census data; area per land use type: Google earth image measurements; population per land use type: density measurement<br>File: AB_pop and land use 2000_2011.xIsx<br><!-- End of picture text -->
<!-- Start of picture text --> wee 4p INFORMAL<br>;martyr dese tty fone (wi AHMEDABAD 2001<br>fs jf 3 i ie) gece 0<br>% Xe ; Se Me<br>es pa sf BSEpte nae on wi<br>2 /e. af” ARPS ae td<br>rok Va) SRR |:<br>i ee aL<br>st \ . ie . AW A ii f “ft === District Limits<br>ai re. J osi IN> ibaie ines is “hy —se0s Major Roads<br>: i KsaeSc aerase S ahih. aIO Lsh dyf ”Heo]. INFORMAL SETTLEMENTSi Decne:Ring R = City Center<br>VNWe eas: se HOLD CITY = 5.60Km2<br>“er ate my GS GanTAL= 10.73Km2<br>we)or a, (he De Pe, MB INFORMAL DEVEL. = 14.92Km2<br>‘ s Ss hh = aC TOTAL BUILT-UP 2001 = 185.41 Km2<br>> Y/ tee, mae: ce Ah. ae Ry, GS water BODY<br>a i> f' -- a are @, ar Author.<br>A cd , f/ A a \) aes 2 sa Marie-Agnes Bertaud<br>s “Ye alee — * om | Urban Planner<br>, 4 " , s porate Inege Interpretation<br>0 1 2 4 6 a a] 2 “4 6 a —o<br><!-- End of picture text -->
<!-- Start of picture text --> a ae F 4 Ahmedabad 2011<br>I Informal settlements<br>Ir : eae ms ei Sor of a i<br>wo \\ gol SE ae AF id == District Limits<br>cae C6. Saks ae<br>Pas Gi VA ’ ane LS haa v iS J ss+" Ring Road<br>‘A: [i ae aS nits sfHA Seo te — Distance from City Center<br>0 eR o> a, Bf HOLD CITY = 5.60Km2<br>4 a6 ye an [GQ GAMTAL = 11.69Km2<br>we) [ GF x xfi. nOGeif ae 4 : MMBuiltup INFORMALarea DEVEL.= 212 = 15.29Km2km2<br>foe 5 en Ais Pa Jey < 4, FS e [TER BODY<br>J oesi 3 A/f| WE- re? gagefom ¢2 ic : Author.Marie-Agnes Bertaud<br>$ “SBR. ee xs, i Urban Planner<br>4 , ; ma = So Google Image Interpretation<br>0TL4 2 4 6 8 0 12 4 16 8 aa _Keitometers<br><!-- End of picture text -->
<!-- Start of picture text --> Mgt\ Eek 2<br>tee es, IAF eee. \; Anmedabad 2001-2011<br>° PP gta Lo —— he N\A Ne bedi 1 Differences in built-up<br>Ble,cy<br>oot Pome” te coed alm (pt Len r hy ae kL<br>rtp 1 J * - Fa : ) “aN . ay x hd Cd =<br>oe My me 5 in Vitae \ “camel dee <= District Limits<br>-L \ oo Se, as fy < OH oe Wes — Major Roads<br>-— ~ 7 ees ee — fs Ey m4 #=** Ring Road<br>ae ae? ay SP eer —Distance from City Center<br>ae ES a oe Pr : a tt MN BUILT-UP 2001 = 185.41 Km2<br>oN 3 Fees hes ~ Ars MB EXPANSION 2011 = 27.08 Km2<br>ie ene ae ey, ue I WATER BODY<br>‘at st" g : my ta, * Marie-Agnes Bertaud<br>s “ater Sx‘ , 2oe TM. i UrbanGoogle PlannerImage Interpretation<br>TT hetero anes<br>0 4 2 4 6 8 0 12 4 16 ad Pi)<br><!-- End of picture text -->
<!-- Start of picture text --> 220<br>— AN<br>140 (x er<br>r/ > A mw. eaemeest Zone<br>120 J ><er e=@= orth Zone<br>1o9 WAD esse South Zone<br>ay, ====City Index<br>80<br>2007 Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar Apr-June<br>Index 2010 2010 2010 2010 2011 2011<br>Index Index Index Index Index Index<br><!-- End of picture text -->
<!-- Start of picture text --> Bs Wnasecte eteek cnaNeNOErppeeoo “evevopuewrOF AHMEDABADPusx,<br>Pe eeea /e aon eee<br>Cee o e baseENCE os prc Saecoes<br>i> ee<br>Se on Sey, 5 | = =<br>ie aa oot al 0(os ee ; SiS" Ss Se<br>BeAe) fe<br>oe ye eo PREFARe ae<br>BnSa eae 5<te 2. We 27 <a ss&<br>Hes ( =e<br>Ce basteoa relae (LL! |ig,=<br>efyeTepe \c ‘. i &<br>e S:<br>fe 7 ee: ws<br>i oe ny “MBs i<br>oe ; Cg tee aS Be<br>ee DA .<br>Eoi2eeee:aeeSRR oe BeePeatcee Pee" Be keoS2 omanay aaeesseie ee iD) Lcd<br>mom, \ bd BS Soy Basen outs RIEESD ©<br><a DE ep) een Ware:<br><!-- End of picture text -->
Page 22 Source: Sanctioned Development Plan 1965, Drawing Branch, Ahmedabad Municipal Corporation Interventionist planning policies continued in the subsequent plan for Ahmedabad sanctioned in 1976. But by the mid-1990s, it was clear that this approach had proved a failure. There was substantial illegal growth at the periphery, FSI and zoning regulations were widely ignored, and artificial scarcities created by these restrictions led to rapid price increases. At the periphery, infrastructure development moved slowly. The main tool for urban expansion, the Town Planning Schemes, a form of land readjustment, took years to negotiate and execute, and landowners gave up their lands without benefitting from infrastructure investments, oftentimes for ten to twenty years. Funds mobilized under the schemes, by the time they were negotiated and approved, were inadequate to build the necessary infrastructure.

In 2001, subsequent to the Bhuj earthquake, the Town Planning Schemes were revamped to move more quickly through modest shifts that had a large impact.

- The Revenue Department allowed AUDA to build the infrastructure as soon as the draft plan was approved, but before all the tenure issues in each plot were addressed.

- The share of land appropriated was increased modestly so that excess lands could be auctioned to cover infrastructure costs.

- Private Contractors could be hired to prepare the schemes, thus avoiding potential bottlenecks due to shortages of skilled government town planners.

Together these changes made dramatic improvements in the speed of execution. Between 2000 and 2009, Town Planning Schemes, vigorously pursued by AUDA and the AMC, developed over 200 sq km on the urban periphery vs. 100 sq km in the preceding 25 years.

Table IV.1: Town Planning Schemes in Ahmedabad

|**T P Schemes**|**AUDA**|**AMC**|
|---|---|---|
|Up to 1999|29|58|
|1999-2010|74|43|
|Total|103|101|
|Total Area Covered (sq km)|153|148|

Source: Urban Planning Cell, Ahmedabad Urban Development Authority, Ahmedabad Urban Planning Cell, Ahmedabad Municipal Corporation The Development Plan for 2001 also changed course. Over 100 sq. kms of land in the periphery were zoned for new residential growth. Rigid reservations, such as the green belt designation, were lifted. Appropriation of private land for public purposes was abandoned, replaced by more proactive use of the Town Planning Schemes.<sup>12</sup> 50 percent of reservations not yet acquired were de-reserved. The FSI limit in the city was also raised—albeit quite modestly.

> 12 Balleney, Shirley and Bimal Patel. 2009.  “Using the ‘Development Plan—Town Planning Scheme’ Mechanism to Appropriate Land and Build Urban Infrastructure” Chapter 24 in India Infrastructure Report 2009: Land: A Critical Input for Infrastructure. New Delhi: Oxford University Press
Page 23

# **Investing in Ahmedabad’s Low-Income Neighborhoods: The Slum Networking Project**

Ahmedabad has a long history of programs to provide basic services to the poor. Even before independence, the Ahmedabad local government focused, albeit sporadically, on large programs for improving environmental conditions in low-income neighborhoods in the old city and the chawls.<sup>13</sup> From the 1970s, the AMC has sponsored low-cost programs that help households obtain in house water connections and toilets at a modest cost. However in the mid-1990s, Ahmedabad—without prodding or sponsorship either from the center or the state-- embarked on a home grown ambitious and comprehensive program to improve whole neighborhoods as a community effort bolstered by strong government support.

The Slum Networking Program (SNP), started in the mid-1990s, was successful in establishing a model that worked at scale, benefitting over 14,000 households. The model comprised the following features:

- Provision of seven basic services based on consultations with beneficiaries: water (inhouse connection), underground sewerage connection to each house, in house private toilet, roads, solid waste collection,  storm water drainage, and street lighting. The total cost of these services in the late 1990s and early 2000s averaged INR 22,000 (<$US 500) per household.

- Beneficiaries contributed roughly 10 percent of costs (The Municipal Corporation lowered the share from the originally proposed 33 percent.) Organizers report that beneficiaries would have contributed more. Indeed many were incredulous that such a package would be provided for such a small contribution. It was not uncommon to pay INR.5000 just to get an illegal water line.

- The program offered scope for local politicians to assist their constituents. They could pay up to one half of the beneficiary contribution provided they did so for all households in a given community.

- NGOs were mobilized to organize CBOs in each slum.  These were responsible for collection of contributions, work out a revised site plan acceptable to the community to accommodate infrastructure, and coordinate demolitions by the households themselves (Some households lost part of their housing units. However, negotiations across the NGOs, the community and the corporation resulted in design standards that minimized such demolitions.) A fee per household was paid to the NGO by the Corporation to defray their organization costs<sup>14</sup> .

- The community supervised the quality of the works, and had the final sign off for disbursing their share of costs. Beneficiary contributions were collected in an escrow account that only the CBO had authorization to release once they were satisfied with the completed works.

- Women’s involvement and engagement in making the program work was recognized, with women’s name coming first on title and on utility bills when SEWA Bank financed.

- Households covered by the program received a ten year non-eviction guarantee from the Municipal Corporation, but did not receive clean tenure for their land parcels—a clear impossibility in many cases.

> 13 Spodek, Howard. 2011. **Ahmedabad: Shock City of  Twentieth Century India** Bloomington: University of Indiana Press

> 14 Unfortunately, these payments to NGOs were often delayed and sometimes not paid at all. This approach, along with the requirement that NGOs finance 30 percent of the community organization costs undermines the scalability of the program.
Page 24 The partnerships in the program had many advantages:

- The participation of the NGOs was critical for building the trust of the slum households to contribute to a scheme. Unfortunately,   slum dwellers are commonly approached by people promising service connections against payment. But the promises either do not materialize or the services disappoint. The presence of a well-established NGO that potential participants could visit or whom they already knew, made a big difference.

- The on-site supervision of the beneficiaries led to better quality works, less pilferage, and rejection of substandard building materials.

- The communities reported illegal service connections to the authorities, and they paid their property taxes after the upgradation. The service providers, including the electricity company (not part of the upgradation) reported increased revenues as a result.

- The households benefitted most significantly in terms of reduced health care expenditures and lost work time. On average, women gained 1-2 hours per day from time no longer spent queuing for water.  Hygiene standards (frequency of bathing and washing of bedding, etc.) improved significantly and open defecation (particularly burdensome for women who need to seek privacy) was eliminated.

- House values and rents increased substantially. Considerable investments have been made in adding stories<sup>15</sup> , improving housing quality, and building low-cost informal rental units in the improved slums. Some beneficiaries have sold their homes and traded up within the slums. Others have sold out their slum home and purchased a low-cost formal home. Slums improved over six years ago remain well maintained and building continues to boom in these informal areas.

- In Eastern Ahmedabad there were no sewer lines prior to the project. To accommodate the SNP, the corporation extended sewer services to this part of the city.

# **Lessons for the Future**

It was not possible to upgrade slums on public lands other than those of the municipal corporation because central or state agencies did not wish to cooperate, particularly in providing a ten year no-eviction guarantee. Even today, because of refusals to provide the necessary no objection certificate, it is impossible to upgrade slums on centrally owned land, even without any promise of tenure. Means to address these limitations are discussed in Section V below.

The communal violence in 2002 reduced the momentum of the program. A more lasting constraint has been the introduction of alternative, highly subsidized housing programs under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) established in 2005. This program has diverted government attention from the scalable and cost –effective SNP approach. It is clear from the levels of prevailing market prices, and from past experience of affordable formal housing provision--be it the center, the state, the AMC or private developers—that government sponsored new formal housing cannot be produced at the scale in required for today’s large population living in slums and chawls. Today, even after AUDA has substantially accelerated its building program to about 5000 houses per year, only about 11 percent of the housing stock is public<sup>16</sup> . No slum redevelopment schemes have been fully negotiated, much less

> 15 Contrary to what some might expect, none of the houses in areas improved under the SNP collapsed in the 2001 earthquake. Modern formal housing suffered more damage. Advice from NGOs  like MHT SEWA on safe building techniques may have contributed to this positive outcome. 16 Annez et alia: 2010
Before After <!-- Start of picture text --> MA —it ° ‘ ’ yee fa; POG SD omen<br>in| RES anol WF i oS<br>peera Sa | Par eo)i Eet 4 ad | | |<br>Be IE op , eed ee. | wos F<br>= oe Aree - tiie. 9 x De fi eee =<br>ae yh eR ja ><br>ce gigee fi SS ethFas hesha) Sy, Beawae Al wy . _fhy '<br>of te?~ he 8 1 ae Ks Yoh<br><!-- End of picture text -->
Page 26

# **From Public Lands to Public Goods** — **Ahmedabad’s Creative Disposition of Public Lands AUDA Land Auctions in Town Planning Schemes**

As mentioned earlier, when AUDA revamped the Town Planning Scheme mechanism in 2001, it introduced a mechanism for self-financing the infrastructure in the scheme. As with all public infrastructure programs, some private land was taken for rights of way, public facilities like schooling, etc. The town planning scheme’s equitable approach to the taking of private land— requiring all land owners to sacrifice some land for public infrastructure, was just one of the innovative features of the schemes. Under the old schemes, an impact fee was levied to fund the infrastructure. As with most taxes and levies, this was unpopular, difficult to collect, and ultimately yielded meager financial resources. The revamped TP schemes also took a small percentage of the private land for creating saleable well serviced plots with clean title. These plots were auctioned off for very substantial prices because of these very attractive attributes. As a result, the recent TP schemes dramatically accelerated infrastructure investments, notably the new ring road sanctioned in 2002 and now partially completed.

Table IV.2 below summarizes the impressive new infrastructure investments made by AUDA in the last 10 years, while Table IV.3 outlines land appropriated for auction under TP schemes.
Page 27

# **Table IV.2: Key Infrastructure built by AUDA between 1999 and 2010**

|**Infrastructure**|**Proposed Length/**<br>**Coverage**|**Expenditure**<br>**Rs (Cr)**|
|---|---|---|
|Roads|1472 km|825|
|Water Supply Network|144 sq km|80|
|Water Treatment Plant<br>(Not Included in D.P)|275 MLD capacity at<br>Jaspur|106|
|Sewerage Network|144 sq km|83|
|Sewerage Treatment Plant<br>(not included In D.P)|At Vasna|106.9|
|Sewerage Treatment Plant<br>and terminal station|At Vinzol|36.8|
|Storm Water Disposal|144 sq km|101|

Source: Urban Planning Cell, Ahmedabad Urban Development Authority, Ahmedabad

# T **able IV: 3 Land Appropriated in all TP Schemes in Ahmedabad, 2010** .

|No.|Land Allotted to<br>Appropriate<br>|AMC<br>||AUDA<br>||
|---|---|---|---|---|---|
||Authority<br>|Total 101 Nos. of T<br>sqkm|.P.S for 148.7|Total 103 No<br>sqkm|s. of T.P.S for 153.8|
|||Total Area in sq<br>km.|%Age<br>(AMC)|Total Area<br>in sq.km.|% Age (AUDA)|
|1|Roads|17.78|11.69|21.79|14.2|
|2|Schools|0.85|0.57|1.01|0.7|
|3|E.W.S.H|2.89|1.94|4.53|2.9|
|4|Salable Plots|3.64|2.45|12.06|7.8|
|5|N.C./ P.U. / Others|5.54|3.72|4.69|3.1|
|6|Gardens, O.S., PG|2.57|1.73|4.45|2.9|
|7|Total Land to A.A.|33.27|22.38|48.53|31.6|
|8|Private F.P. Area|115.4|77.6|105.3|68.4|

Source: Drawing Branch, Ahmedabad Municipal Corporation, Ahmedabad Drawing Branch, Ahmedabad Urban Development Authority, Ahmedabad EWSH-Economically Weaker Section Housing, NC-Neighborhood Center, PUPublic Utilities, OS-Open Space, PG Playground, AA-Appropriate Authority, ie, Municipal Corporation, Development Authority or other agency designated by the Town Planning Act.
Page 28

# **The Sabarmati River Project: Using Public Land to Create Quality Public Spaces**

Civic leaders in Ahmedabad had nurtured the idea of creating high quality public space on the riverfront in Ahmedabad for long years, starting with plans drawn up in the 1960s with the help of distinguished international architects. When the dam constructed at Baroi in 1976 transformed the Sabarmati’s flow from seasonal water availability during the monsoon to a continuous flow, it became possible to move on from ideas to designs and plans **.** Once the river became perennial, it was possible to undertake land reclamation by building embankments. In 1997, the Sabermati Riverfront Development Company was formed as a special purpose vehicle to execute an ambitious long term project to transform the riverfront. Reclaimed along the riverfront would offer all the amenities of prime waterfront land, and could constitute a public realm along both sides of the river comprising public promenades, parks, and informal markets. At the same time the works could improve the river’s flood carrying capacity and even out and protect the very irregular unstable banks that characterized the Sabarmati’s meander through Ahmedabad. Interceptor sewers embedded in the reclaimed land would capture untreated sewage coming through the storm water drainage lines and divert it to a sewage treatment station downriver, thus making the environment much cleaner and more agreeable. This creative investment concept compensates for the uneven coverage of sewerage networks common in many Indian cities. Another very important, but also controversial project component, involved relocation of the population of an estimated 14,000 households living in the slums on the riverbanks, subjected to regular seasonal flooding. They were to be moved to basic public housing as nearby as possible—and many, but not all, have been successfully relocated as of this writing. As of this writing, the heavy engineering, interceptor sewers, and embankment work have been completed, and 200 hectares of riverfront land have been reclaimed. Redevelopment of the city around this riverfront will, of course, be a long-term process.

Clearly the public at large and nearby areas of the city would benefit greatly from this project. However, if the project focused on creating public goods such as parks open to the public at no cost, no private sector investor would step in to build and finance such a project. The city was in no position to borrow for this investment, and even if financing were found, the project would not generate revenues to pay back a loan or a municipal bond. The project cost was substantial. Today, it is estimated at roughly Rs. 800 crores (about $200 million<sup>18</sup> ). However the value to the general public and to neighboring areas was also substantial. A compromise was found. The Ahmedabad Municipal Corporation (AMC) obtained an agreement from the Government of Gujarat to cede the property rights over the reclaimed river bed to them. A small fraction, currently estimated at 15% of total reclaimed land was put aside for future sale upon project completion. The estimated market value of this land is sufficient to cover all project costs, including the relocation of the residents there. During construction, the AMC mortgaged other lands to obtain loans, and later, as the works progressed, the mortgages were shifted to the reclaimed lands earmarked for future sale. With judicious use of public land, resources were mobilized to provide infrastructure that made the river itself cleaner and transformed the riverfront area into a public space for all to enjoy. Standing on the principle that no public lands should ever be sold to private parties would have meant accepting the status quo for a long time to come. That status quo meant that all high value riverfront lands would stay in the hands of well to do private parties and inaccessible to the public other than the shifting population who lived in squalid and dangerous conditions in the slums. The compromise of carving out some valuable commercial space in the reclaimed area generated the finance essential to making this investment in free access public amenities and environmental cleanup possible.

18 At Rs. 50 per US dollar
Page 29

# **IV B. Constraints on the Supply of Housing in the AMC today**

As is to be expected in an economy as dynamic as Ahmedabad’s, experiencing rapid growth of incomes and purchasing power for many, along with continued migration and population growth, real estate and land management policies need to be recalibrated to meet today’s demands. Our assessment of the real estate market developments show that a substantial share of the population must continue to live in substandard housing because formal housing is unaffordable. Across the market, housing is more costly than it need be. Government regulations and processes make it very costly and slow to provide any new formal housing. Uncertainties in the regulatory and property rights system restrain the level of investment in housing—be it in the city center or on the urban periphery. The natural result of such restraints is high prices—for villas, low quality apartments or a room in a slum. Just as the license raj made imported goods scarce and expensive, and items like telephones nearly impossible to get, so do many well intended interventions in real estate and land markets unduly restrict what the private market can offer. Twenty years ago, telephones, controlled by government, were unaffordable and unobtainable for most households. Today, the private sector—not the government—has provided cell phone service so inexpensive that most urban households have access. Even though well to do households consumer more and better services— basic telephone connectivity is very widespread. A similar process of unleashing lower cost private supply could be achieved for housing. The most important constraints observed in the Ahmedabad housing market, based on our assessment, are discussed below:

# **Constraints on Developing Land at the Urban Periphery (Greenfield Development)**

While TP schemes and rezoning under 2002 DP have opened up zoning of new urban lands and provided the infrastructure to support urbanization, these benefits are underutilized. The DP of 2002 created 127 sq km of new zoned urban space. However, in ten years, only 27 sq km of this space -- **one fifth of the newly zoned urban land --has been developed in ten years** . TP schemes have covered a large percentage of these newly zoned urban areas thereby providing basic infrastructure for urban development. As such, lack of infrastructure is not the reason that 80 percent of that serviced land is unused. If housing prices were stable or declining, one might assume that this is because supply of urban zoned land has outpaced demand. If densities in the peripheral areas were low, then this might suggest a surplus of developable land. But, this is not the case. Land and housing prices are rising quickly all over the AMC area, and the densities in the peri-urban areas, already exceptionally high by international standards, are on the increase. (See Figure III. 1) As can be seen in Figure III.5, much of the new development on the periphery is highly fragmented even in areas with good road infrastructure built under TP schemes. **All of these factors indicate that serviced land zoned for urban development is not the binding constraint on supply.** Figure IV.3 illustrates a clear constraint on the supply of housing at the periphery—the multiple approvals and costs required to turn serviced urban zoned land into approved plots with legal housing—even after the infrastructure has been provided in the early phase of the TP scheme. The streamlining of the TP scheme process following the earthquake in 2001 was a very significant reform. It made it possible to build and finance the infrastructure in a TP scheme **_before_** regularization and rural urban conversion of every parcel is complete. However, it takes years to complete the plot by plot approval that regularizes fully the new urban use and building of housing on each parcel. Figure IV.4 shows that no TP scheme commenced since 2003 is fully complete in this sense—and it suggests that the approval of urban rural conversion and final plot boundaries are currently the bottlenecks—at steps 7 and 8.
Page 30 Clearly many parcels have been built nonetheless. Many of these may be the parcels that got approvals and rural urban conversion early on or those whose new boundaries have shrunk but do not overlap with the old boundaries of other landowners. In the latter circumstance, the risk of a boundary dispute is low and owners may choose to invest even before full formalization. However, for other plots whose boundaries are significantly displaced and overlap with the old boundaries of other properties, the newly created parcels remain in limbo as it takes years to complete the approval of the new boundaries under the scheme. Until those new boundaries are approved, the risks of any substantial investment in housing are very high, probably too high for any but the largest and most powerful investors.

# **_Figure IV.3:  Process for Conversion of Rural Land already Zoned for Urban Development_**

<!-- Start of picture text --> Agricultural Developed<br>Land Property<br>7 8 10 11 13<br>Plot by plot Plot by plot Plot by plot Plot by plot Property by<br>upgrading of grant of NA registering of land updating of property<br>tenure permission transaction and land cadastre registration and<br>levy of stamp duty levy of stamp duty<br>2 5<br>Sanction of DP Sanction of TPS<br>12<br>Plot by Plot development of<br>1 3 4 6 real estate<br>Building permission<br>Zoning of land for Building city level Detailed area planning – Building TPS level Construction monitoring<br>development infrastructure TPS infrastructure Building use permission<br>in DP<br>9 14<br>Purchase of land Use of<br>for development Property<br>Revenue Dept.<br>Urban DevelopmentDept.<br>Dev. Authority/Local Govt.<br>Private Sector<br><!-- End of picture text -->
<!-- Start of picture text --> 180 I<br>ay- OS $—t—t oi fmt — tt jbo = rt =<br>eS — ——— —— ——s — —— ia <= =<br>110<br>60%—<br>D 100 | a oat | a ae|<br>uw a<br>< z C1]<br>4om%- 70 |<br>Cf a: —— : — a a —— ——+ ——<br>we 2 —— 7 oS —_ ——<br>«of EE __ aim eo<br>me ae Z====za==<br>i= SI|| SS=: Se—— ——:<br>on =<br>SS Fe erento =========<br>cam | 2005 2004 2005 2006 2007 2008 2008 2010 2017 anz<br>TIME ——*<br><!-- End of picture text -->
Page 32 Formal redevelopment of brownfield land is far more complicated and costly than the informal densification we have documented for slums. Figure IV.5 illustrates these complexities. The uniform and low maximum FSI of 1.8 in Ahmedabad greatly constrains how much incremental saleable floor space can be obtained through re-development, as much existing formal development is fairly close this level. The transaction costs and attendant uncertainties in passing through the formal process of redevelopment are too high to be covered by marginal increments to floor space. As a result, little redevelopment takes place, and this potential source of incremental housing is thereby greatly limited.

# **_Figure IV.5: Process for Brownfield Urban Redevelopment_**

<!-- Start of picture text --> Brownfield<br>BROWNFIELD DEVELOPMENT<br>8 10 11<br>Registration Consolidation Update<br>and Stamp charges cadastre<br>Duty<br>15<br>2 5<br>Municipal<br>Sanction of DP Sanction of TPS and Taxes and<br>Neighbourhood Level Plans Charges<br>1<br>3 4 6 13<br>Area-wide zoning<br>& land uses in DP. ALLOW HIGHER BROWNFIELD FSI FOR Upgrade existing infrastructurecity level level planning for Neighbourhoodexisting areas through Town neighbourhoodinfrastructureUpgrade level ConstructionBuilding Use PermissionsMonitoring Building<br>DEVELOPMENT Planning Schemes Permissions<br>in DCR Mechanism (TPS)<br>7 9 12 14<br>Plot by Plot Sale Consolidation Design and Sale of Property<br>of Plots Construction<br><!-- End of picture text --> <!-- Start of picture text --> Built Space<br><!-- End of picture text -->
<!-- Start of picture text --> Ahmedabad -Change in built-up density between 1991 and 2001<br><!-- End of picture text --> <!-- Start of picture text --> 400<br>350<br>© Density in built-up areas in 1991<br>ga ® Densities in built up area in 2001<br> _<br>|, 250<br>&<br>a<br>i=]<br>E 200 5<br>E<br>&<br>: | . | | | | | | l l l [|<br>||||||<br>12 a 4 5 6 7 a 9 10 al 12 13 14 15<br>Distance from the city center (km)<br>Sources: census of 1991 and 2001 per ward. Vectorization ofbuilt-uparea of 1991 (landsatjand2001 (Google Earth)<br><!-- End of picture text -->
Page 34 The costs of clarifying ownership and cleaning up any outstanding regulatory reservations and obtaining rural urban conversion in resources, time and uncertainty in the process are often prohibitive, even if there is no corruption encountered along the way. As in the case of Greenfield development in Figure IV.3, various State and local departments must provide information and approvals once the ownership disputes are resolved. For low-income households, the burden is particularly heavy. For example, if, as is likely, their existing home is not up to the exacting standards of the GDCR (see below **), it must be demolished and a substantial fine (Rs. 13 lakh or Rs. 1.3 million) before applying for conversion to urban status.** These costs place further impediments in the way of building a modern high quality and affordable housing stock in Ahmedabad. The system is so complex and opaque that it would be extremely costly and time consuming just to assess the extent of land where ownership is compromised in this way. But casual observation, anecdotal evidence, and the premia paid for lands with clean title sold by AUDA strongly suggest that it is a significant part of the stock.

The high cost of regularizing ownership has blunted the effect of earlier land use reforms, and other developments such as increased availability of housing finance. While reservations such as ULCRA, the green belt and development restrictions are no longer placing new areas in limbo, the legacy of earlier measures remains because of the welter of competing claims created while these reservations were in place. Those lands will not be freed up to provide much needed housing until there is an expeditious and predictable mechanism to clean up competing claims to land tenure and allow grandfathering of structures that do not satisfy today’s high building standards, but which do meet very basic standards for safety and health. Patel et alia (2010) have proposed a consensual mechanism as an alternative to formal litigation, much as TP schemes offer a consensual alternative to government land expropriation. The goal of such a mechanism would be similar to bankruptcy law—establishing rules for freeing up assets that would otherwise remain frozen due to prolonged disputes over competing claims. Even though all claimants don’t get everything they might be able to claim, an expedited process allows legitimate claimants to get some fraction of their claim in relatively short order.

It has been argued that TP schemes work because they are underpinned by the basic principle of fairness and they offer flexibility to address competing claims in a transparent rules driven framework. They allow all landowners to give up something (unserviced land) for something more valuable (less land with good infrastructure). Likewise a consensual expedited tenure dispute resolution mechanism could allow all claimants to gain some share of the value of a plot with clean tenure today by giving up a claim to all the value that might only eventually be awarded to them years in the future after a prolonged legal process. **A reform offering a mechanism for unlocking land frozen in disputes and ambiguous ownership claims could dramatically accelerate the modernization of the real estate market and offer thousands of low-income households a chance to become legal homeowners and the autonomy to invest in their well being.** Since administration of property rights to land is primarily the responsibility of the state, the form that such a reform would take depends on the legal and regulatory framework in each state. Moreoever such a reform would have to be driven by the appetite in any given state for expedited solutions to disputes through consensual mechanisms and local preferences for dispute management. For these reasons, putting forward a single legal blueprint for reform is both premature and unrealistic, although Patel et alia (2010) sketch out the broad lines of what such a system **_could_** look like. What is essential today is to recognize the high social and economic cost of protracted urban land disputes and the scope for reducing them by providing expedited processes. Without a system such as this, many plots in urban areas cannot benefit from the
Page 35 substantial investments for improvement and redevelopment that the market may dictate, but which the current ownership framework make highly risky and ineligible for formal financing.

# **Government Regulations Requiring Consumption of Land**

The discussion above describes government policies and procedures that make it difficult and costly to obtain land for development; this section discusses a set of regulations that force a high consumption of land per unit of floor space provided. What households want is living space—a roof over their head—not necessarily raw land. Having made land expensive, government also limits the ability to economize on land when producing housing space. These regulations all have acceptable goals. Typically, their rationale is based on quality of life considerations, privacy, local environment, preservation of views etc. However, especially in a fast growing economy which has difficulty expanding access to land or wishing to contain urban sprawl and a large low-income population, the effects are the opposite of what is intended. The key to the unintended effects lies in affordability. If, as is the case in Ahmedabad, only 50 percent of the population can afford a new formal home, much of the expansion of the housing stock takes place informally—where these regulations don’t matter.

# **Maximum FSI**

Low uniform maximum FSI even in the city center forces more Greenfield development at the urban periphery—pushing the pressure for developable land into the periphery where the delays in rural urban land conversion make themselves felt. See Figure IV.6 showing that the density profile already flattened between 1991 and 2001<sup>21</sup> .

The practice, common in India, to impose a uniform maximum FSI to an entire city has many negative impacts. This practice forces the consumption of land in less desirable suburban areas and it decreases the area of floor space that can be built in areas where there is a high demand for high quality high density urban development. But not allowing higher maximum FSI in nonresidential areas, it intensifies the competition between households and businesses for welllocated land. While businesses may happily sacrifice a spacious, bucolic environment for an efficient well designed business centre, uniformly low maximum FSI forces them to consume open space they don’t want or need. This drives up the price of open space everywhere, and raises the costs of these amenities to households. In aggregate low maximum FSI increases the land required for housing and commercial development, and drives up its price—thereby driving up the cost of any housing—since they all need land.

Beyond its substantial impacts on housing affordability, the current maximum FSI policy affects the structure of the city in undesirable and possibly unforeseen ways. Figure IV.7 shows for example that some of the lowest densities in the city are in the heart of the central business district (CBD) on the west side of the river. The modern service sector CBD that emerged in the 1980s along Ashram road around Nehru bridge is now anemic because the low FSI doesn’t allow the construction of a modern CBD. Instead, small office and commercial centers are being built in suburban areas along ring roads and radial roads. By failing to distinguish between commercial and residential land, the current 1.8 FSI imposed on Ahmedabad contributes to dispersing commercial activities into distant suburbs. This dispersion of business and commercial activities will have consequences for the modernization of Ahmedabad’s transport system.

21 This analysis can be updated to 2011 once ward level population data are available from the 2011 census.
Page 36 The current density of Ahmedabad (262 p/ha) is quite high by international standards. This density is not compatible with individual transport as the dominant transport mode. The minimum necessary road space required for parking and moving a car at 30 km/h would simply not be available when, say, 30% of trips will use an automobile. Mass transit will be a necessity for continued mobility in the city, and the AMC has already started the process through investments in the Bus Rapid Transit System (BRTS). But making the shift to mass transit will not be straightforward given the land use patterns now being established. Efficient transit systems require not only high densities but also concentration of trip destination. That requires CBDs that are dense in jobs and commercial activities. The uniform FSI prevents the formation of CBDs that could be the focal points of a modern mass transit network. The dispersion of jobs along suburban roads, which is the natural response to the current FSI regulations, will destroy the viability of a mass transit system. Annex 4 discusses some of the longer term unintended and undesirable consequences that may be created under the current regulatory framework for land use.
<!-- Start of picture text --> a,<br>Ahmedabad - Built-up densities:in 2001 ‘<br>Peg ons* Wyaty oei -<br>ty - a- we<br>"th Rye<br>‘ 3 Wis a ce ee<br>Legend ; a ” * reatPes aah oo7¥ ae<br>LandLand use 2000 heeutshet -. ge “ a ae. é° A sar,4<br> use ad ¥v J?‘ _ wit ae Y Fo é<br>Airport ay my . :. ‘ \ >‘ oya ct ssps *- %<br>ON OpenParks or agriculture _ a it aeae acaira2 Fe 7: A ¥ —"ae<br>I) Utilities eos) o q Get i te sg Bs ; ee<br>River and water bodies 5" Y sa ; “h der ~ A e " . rt<br>Densities p/ha in 2001 . : 0, = p<br>N_DENS oe Pah a CBD | - , -<br>WO 26 - 132 : i 2 x. 3°“ ? : i o -, i<br>GN 133 - 234 a oF ’ a ‘ —.<br>HE 235- 350 + 2p a a me<br>HEE 360 - 567 a’; : > om”cS 2 apes4° d : y \ té= ww<br>i<br>= : : aa . or 2 “~ or -<br>a” rear f aN te’ . Tv:<br>” f Be oe 4 ae ee e .<br>. : ‘ {P<br>Sad ( i. TM ii:Me 4. ane° is<br>ji =f “pi : i ‘ r ** i<br>/ y & a -— / ae = £<br>Kilometers<br>0 25 5 10 15 20 25<br><!-- End of picture text -->
Page 38 and above, depending upon location. This is to be compared to the Rs 8 lakhs and above found in new formal subdivisions adhering to the GDCR in more distant areas.

This vernacular housing, as can be seen in Figure IV.8c constitutes a pleasant, if modest living environment, and is in no sense, a squalid slum. Land use surveys have shown that the great majority of the population of Ahmedabad (about 80%) is currently living in settlements that use land in way that differs significantly from the minimum standards established by law. Figures IV.8a and b show drawings of actual developments following patterns very common in Ahmedabad based on Google Earth images. Figure IV.9a is a layout proposal for a new development following the current GDCR to build affordable housing. Table IV.4 shows some of the key indicators for the three types of development.

**Table IV. 4 Key Indicators for Vernacular and** **<u>GDCR housing</u>**

||Vernacular Narol Naroda Rd.|GDCR Model|Modified<br>GDCR|
|---|---|---|---|
|Persons per Hectare|1958|1991|4200|
|Average Living Space per<br>Person|7.7 m2|5.2 m2|5.2 m2|
|Ratio of Vernacular to Others<br>Living space perperson||1.49|1.49|
|Ground Coverage|75%|45%|55%|

Table IV. 4 shows that one of the important cost drivers in the GCDR is the low maximum ground coverage in relation to vernacular neighborhoods. Units adhering to the GCDR are not necessarily larger, however. Units may actually be smaller in lower end formal developments than in vernacular homes. Also it is worth noting that low ground coverage limits in the land use regulations do NOT necessarily reduce the density of persons per hectare. Density is roughly the same between the GDCR model and the vernacular developments we compare. **Broadly speaking, this means that for the same density, residents of vernacular neighborhoods can get roughly 50 percent more housing space using the same piece of land. The essential difference between these two is in ground coverage not density** .

The modified model in the last column of Table IV.4 shows the limitations of marginal changes to the regulations while staying within the same basic development type—four story walk ups with low ground coverage. As shown in Table IV.5, this approach seeks to economize on land by reducing parking and space between buildings while respecting setback rules for front and side margins, and marginally increasing plot coverage. This alternative model may still be acceptable to lower income households that don’t own cars, and can reduce unit costs substantially by building more units per hectare, as Table IV.6 shows—especially in well located neighborhoods where land costs are high<sup>25</sup> . However, keeping plot coverage low comes at the cost of higher density, which may be a concern.

The most important lesson from these examples is, however, that the multiple requirements for parking, setbacks, and limits on ground coverage have made low-cost, low rise vernacular housing illegal—thus eliminating the option to substitute costly open areas for a larger living

> 24 1 lakh is Rs. 100,000 or roughly US$2000 at prevailing exchange rates at the time of writing.

> 25 The example used here was based on a land cost for a relatively low-cost land parcel distant from the city center. However as shown in the table, when land prices are higher, the impact of the regulations on cost are greater—as are the overall costs of the home. With the current rapid rise in land prices, homes designed and built to sell for 4 lakhs would now have a price closer to 8-10 lakhs, so the goal of a 4 lakh home is rapidly becoming infeasible.
Page 39 space and the amenities of low rise living. ‘Affordable’ formal housing is now required to be in cramped apartment living—most likely an unintended, but still very real consequence of the multiple design standards in the GDCR.

The AMC’s large stock of well laid out vernacular housing fortunately offers good affordable housing options in the city. **But this stock cannot now expand legally. This cuts off a path to meeting the needs of the large population of low and middle income households with growing purchase power** . The GCDR sets standards that are really only suited to the highest income households. For example, the GCDR requires all formal apartments to build a parking space---whereas automobile ownership in Ahmedabad is 12 vehicles per 1000 population<sup>26</sup> , below the average for India of 15 automobiles per thousand persons in 2006, where India is ranked 127 out of 138 countries for car ownership.<sup>27</sup> The large gap that has been introduced between this more modest standard of legacy urban development and new formal housing not only raises the costs of new Greenfield development. As discussed above, the high GCDR standards raise the costs of regularizing and redeveloping existing urban development for a very large share of the housing stock. Full regularization of tenure requires demolition of illegal structures and redevelopment according to the costly GCDR standards—and most likely a reduction in living space.

> 26 <u>http://www.ourcitiesourselves.org/exhibition/city/ahmedabad referenced on November 18, 2011</u> 27 World Bank Development Indicators referenced 11 August 2011. Data is for 2006. Includes commercial  vehicles, automobiles, vans and SUVs but excludes motorcycles and other two wheelers.
<!-- Start of picture text --> Low income development Middle income development<br>along Sardar Patel Ring Road along Narol Naroda Road<br>lat: 23.017506 lat: 23.032800<br>long: 72.671711 long: 72.640567<br>Housing price: around 2 lakhs Housing prices: used 4 to 12 lakhs<br>distance from CBD: 11.1 km Pence tem Gb 0:23 kam<br>tI<br>* asaeE 3 |i"| ie Ea<br>.. peeaecns SSS SSS ea<br>Baece es a jf}<br>ea \ee\er\er ee [4 aD Fay 7<br>ane 1 nome a ay<br>eae Ss om =a fon Ls<br>Zee 2 8 RSS<br>a a | con SSE<br>Zi me AAR a<br>VY || FH PREee a<br>| AYES<br>ry bey AS<br>| PHY Er a<br>| FAFA ERS<br>PS BERR ERS )<br>L [7 ASfas! mefarts! A[Gap Apeokeey ||<br>PILPGCA<br>10 0 10 2 30 40 50 60 7 80 90 100 110 120 Meters 10 9 10 20 30) 40 50 O78 100110120 Meters<br>a a ee ed OTT<br>Number of dwelling 1 level 229 Number of dwelling 2 levels 385<br>person per household 45 persons per household 45<br>Total population 1031_ Total population 3465<br>Number of households 229 Number of households _770_ _<br>Average population density 905 person/Ha Average population density 1958 person/Ha<br>Average dwelling size 37_m2 Average dwelling size 34.60 m2<br>Average floor area per person 8.2 m2 Average floor area per person 7.69 m2<br>Total dwellings area 1 level (m2) 8,438 74% Total dwellings area 2 levels (m2) 13,320 75.28%<br>Total street area (m2) 2,954 26% Total street area (m2) 4374 24.72%<br>Total settlement area (m2) 11,392 100% Total settelment area (m2) 17,694 100.00%<br><!-- End of picture text -->
Page 41

**_Figure IV.8b. Existing Formal Housing that would be Illegal for New Construction under the GCDR_**
Page 42

**_Figure IV.8c. Existing Formal Housing that would be Illegal for New Construction under the GCDR_**
<!-- Start of picture text -->
||] fl... F’4_.L.1.l-|1 L-L [.|<br>| ey kesis yop]5 tp el5 Ls Tssite | | 4Seppesis 5 5 im!aes5 te ae5 Us<br>| ‘]e-01] Ano2 | A-o3Uifeos] A |==| a-o5‘an | awe | A-07‘an|e-os pS B] ey“eorfobAce | mosaa[aoe =| aos |ana-06 | a7chy|e-os] |<br>AAS ry | a-10 |s-ool, St ate | ats [=] W0e7g Ato | A-09<br>:PPR ES AL Ta Bag oe bo ES) (eaa ee Se<br>| Ss ETNE keel<br>24, ee, ry = =y. 7)| i ——i — 24-8" WIDE ROAD rs5 > (qi eSa, i pps<br>[tieri 3 rae= 7]tri SF 4.6HA4 | ty | °°i at PyL e2 4 jaar=aLp |<br>4 a (B-4) nd<br>Ifed)B05 J oo Pgran Pe rd)| el |}!<br>‘i reZ- tFSOm . —mn —1__ yoPFR ae|_CTF |<br>IN = a I IS) ALG PEN a |HR —<br>i =| & bap tek Soe 4 e | :<br>i:qr] h02 § peeae lar RS rl‘ Oh “ k at<br>| OS” SA ay ee<br>19-29" oe ee Ss = . 2 aan =e:<br>——< = an D, 1 J} bb pes<br>er at ee<br>_ ;<br>ENTRY ~~ | A/| |<br>—_———COO STP,PLANT400"‘O" WIDE2PROP.ROAD STATIONELECSUB- - =): +—ENTRY SO| a<br>F.S.I ES Oy -<br>DISTANCEPARKING+CCOPBWN2BLD =15'=35% oeooa<br>CORRIDOOR =5' _<br>SAIRCASE =5'<br>GROUND COVERAGE =45%<br><!-- End of picture text -->
<!-- Start of picture text --> cr<br>(.) Grr} ES aw,FH Ce] co ci co 4 cr PIE] cr i co i t)<br>as Es = Cer) Ca Chr Ch) Cer) ® Cer) Cer Che) Chr<br>@ ete za FE mH Wy mH Ee Ea rH Ea Es<br>> = ae @ -| -_-A = eas ow A- = as- - as- =A - =A oe as =(:)<br>a oe Go ace ae Lid Lil Lif Li Li Li} Lid Li<br>Ci a Cy a a Cy) CI) a<br>[J 4 éH Ca Ler Cer Ca om Cer) Ca) om (-)<br>be h V&<br>C3 Cer]52 GR= awa GA ® cr M4 cr x=< (Eeage) 8 cr 4 cM co C:)<br>las | _ asoeMO asEE eS— ChrT] 5 Ch)fq Chrrq FASEri) Ch7] CE)FA Ch]== ChSS<br>EA | - oe oa = Whe oe -s ofS &<br>me CaN Es ov .—_<_ & Vi -— 2 ere<br>fy co i PET) AQ RA RY cy a oe i)<br>a) co + eb ° washaps<br>— a fas EE ee Chr] AA<br>ema) BSS ata ‘5<br>C8 fot op te ae a re<br>g aCar |Car CI)Ca ia<br>eM re eee eis<br>2 Lone oy<br>40’ WIDE ROAD A<br>F.S.I =2.36 -<br>PARKING+CCOP =36%<br>DISTANCE BWN 2 BLD =7'6"<br>CORRIDOOR =3'<br>SAIRCASE =3'<br>GROUND COVERAGE =54%<br><!-- End of picture text -->
Page 45

# **_Table IV.5 Comparison of Key Specifications for GDCR and Modified GCDR Specification for More Affordable Housing_**

|**BYLAWS**||**DESIGN**<br>**AS**<br>**GDCR**|**PER**|**DESIGN WITHOUT GDCR**|
|---|---|---|---|---|
|<br>PARKING||<br>25%||<br>N.P|
|<br>COP||<br>10%||<br>N.P|
|<br>DISTANCE<br>BETWEEN<br>BUILDINGS|TWO|<br>MIN.15'0"||<br>MIN. 7'6"|
|<br>STAIRCASE WIDTH||<br>MIN.4'0"||<br>2'9"|
|<br>CORRIDOR WIDTH||<br>5'0"||<br>N/A|
|<br>GROUND COVERAGE||<br>45%||<br>55%|
|<br>FRONT MARGIN||<br>15 FT.||<br>15 FT.|
|<br>SIDE MARGIN||<br>MIN. 10'0"||<br>MIN. 10'0"|
|<br>FSI||<br>1.2||<br>2.36|
|<br>ROAD WIDTH||<br>MIN. 25'0"||<br>12'0"|
|<br>HEIGHT OF BUILDING||<br>(G+2) 30'0"||<br>(G + 4) 45'0"|
|<br>LENGTH OF BUILDING||<br>MAX 450 FT.||<br>MAX 450 FT.|

**Source: Environmental Policy Collaborative and SEWA Mahila Housing Trust**

Note that these specifications respect all perimeters with respect to neighboring plots, such as side and front margins.
Page 46

# **Table IV.6 Cost Comparison with marginal flexibility in the GCDR**

|**DESCRIPTION **|**AS PERGDCR **|**AS PER REVISEDGDCR (G+4)**|
|---|---|---|
|PLOT AREAsqft|81681|81681|
|NO OFUNITS|330|710|
|CARPET AREAsqft|250|250|
|BUILT UP AREA sq ft|336|305|
|LAND COST in Rs.M. (plot 11km from<br>CBD in undeveloped area)|40,000,000|40,000,000|
|NO OF FLOORS|G+2|G+4|
|TOTAL BUILTUP AREA(SQ.FT.)|110250|223440|
|LANDCOST PERSQFTCARPET AREA|485|225|
|CONSTCOSTpersqft.|800|800|
|LAND COST PER UNIT|121212|56338|
|CONSTRUCTIONCOST PERUNIT|268800|244000|
|**TOTAL COST PER UNIT Rs.**|**390012**|**300338**|
|**SAVINGS W/ REVISED MODEL PER**<br>**UNIT**||**23%**|
|**LAND PRICE 5 X HIGHER**||**40%**|
|**LAND PRICE 10 X HIGHER**||**45%**|

To address the affordability problem of the majority of lower income households in Ahmedabad, it would make sense to study the land use standards that have been used by various developers in the past and select and adapt the types of layout that are more attractive from environmental and economic criteria. These models could become allowable under an expanded GDCR that offers different models of building by- laws in different parts of the city. Obviously, the type of layout to be recommended for legalization in a central location would differ from layouts adapted to suburban locations. The current legal land use standards are very rigid, and are ill adapted to high land prices. By contrast, many vernacular subdivisions built under more flexible regulations have been refined over time as developers respond to consumer tastes and preferences. By surveying the land use of these older subdivisions and the environmental satisfaction of its inhabitants, it would be possible to develop standards that are more anchored in the urban culture of Ahmedabad and less prisoner of abstract international norms of good housing standards. **A policy of land use regulations that make legal formal housing unaffordable to about 40% of the population of Ahmedabad must be reconsidered. Our review of the housing stock in Ahmedabad suggests that good home grown alternatives exist and deserve a place amongst models allowed in the GDCR.**
Page 47

# **V. Immediate Improvements**

Clearly there is much to do to reduce the pressures in Ahmedabad’s real estate market. Serviced land that has permissions and title sufficient to make the substantial investments required to build good quality housing is in short supply. Converting existing built space to higher intensity land use with more surface area and good quality housing is either prevented due to maximum FSI regulations or it is too costly and risky to do because of the many procedures at the state and local level involved. At the same time, the building by laws require more expensive land than most of the legacy middle class housing stock so new formal housing is beyond the reach of most households—in spite of growing prosperity. Informal housing solutions have been meeting much of the new housing demand, largely by densification of existing slums, gamtals, and the old city. New formal housing is further and further away from the city center, which imposes important transport costs.

Reversing this dynamic of tightly constrained and high cost new housing supply will require many important changes—not just stroke of the pen reforms—but also changes in the role that government plays in land markets, changes in procedures, institutional mandates, coordination across agencies, and eventually new procedures for expediting some of the bottlenecks in the land system. Thinking through how to effect these changes should start right now. Otherwise it will not be possible to keep pace with the dynamic economy and informal housing solutions will continue to proliferate in the face of growing prosperity. However even with rapid progress in these areas, the need for very low-cost housing will remain.

Today, because basic environmental infrastructure services in most informal areas (slums and challis) are substandard. Opting for modest low-cost housing affordable for low-income groups, consigns them to living in squalid neighborhoods. The SNP has shown that this situation can be turned around. **The linchpin of an affordable housing policy should be to raise the minimum standards of even the lowest cost housing by providing neighborhood upgrading to all slums and unserviced challis and gamtals. Such a program would ensure that the basic entry level housing available in Ahmedabad would offer even the most modest income groups decent homes** . Once neighborhood infrastructure is upgraded, poor households have shown that they can improve and expand their own homes on their own initiative and to a very great extent with their own resources, and eventually even leave slums to live in low-cost formal housing. Without these basic environmental improvements, however, there is no base upon which an enterprising household can build.

Government can do a great deal for the populations of these low quality informal areas by investing in them— **by providing the network services and neighborhood improvements that individual households cannot** . Making these investments a high investment priority can do much more for improving living conditions in the city, and can do so far more effectively, than relying upon building public housing in increasingly far flung areas that are not suited to most residents of slums and challis.
Page 48 In this study, we have prepared a preliminary mapping all slum, chawl, and gamtal areas, as shown in Figure III.4. Our rough estimate of the population of the slums and chawl areas is 1.88 million persons, or 422,000 households<sup>28</sup> . We have estimated the costs of the basic package of providing the neighborhood upgradation services to these slum and challi households, based on experience with the Slum Networking Program (SNP) and updated to reflect today’s market costs. These costs include project management, community organization and a full complement of seven key services in all neighborhoods: in house toilets, in house water connections, sewer connections, road paving, drainage, garbage collection, and street lighting. These costs amount to Rs. 56,000 per household in today’s prices. Table V. 1 summarizes the full costs of the program if executed over a five year period<sup>29</sup> . This table shows a program phased over five years. If the implementation period could be reduced to three years, costs could be reduced by about 11 percent, because of lower cost escalation in the current environment of moderate inflation estimated here for simplicity at 9 percent per annum, a relatively conservative figure. **We note that the current costs for civil works have been estimated on the basis of market prices for labor and building materials, not the standard rates often used for estimation purposes in government, which often cannot be achieved and may lead to underestimates of costs and insufficient budget provisions.** These costs are estimated conservatively, assuming that all slum and challi household would need the full upgradation complement. To the extent that households may have already gotten these services, they may be lower. For example, if as some believe, up to 60 percent of all households already have in house water and toilet facilities, the total cost of the program would decline by about 40 percent to Rs. 1800 crore or $360 million.

# **Table V. 1. Summary of Total Costs of  Upgradation in Ahmedabad**

|**Ahmedabad: Slum and Chawl Upgr**<br>**Summary of Program Cost**<br>**Data**|**ading - Implemen**|**tation Plan**||||
|---|---|---|---|---|---|
|Households to be upgraded|400000|||||
|**Key Assumptions**||||||
|Option=<br>1||Year 1|Year 2<br>Year 3 Year 4|Year 5||
|1 - 5 Year||10|15<br>25<br>25|25||
|2- 3 Year||25|40<br>35|||
|Inflation % p.a.||9|9<br>9<br>9|9||
|**Summary of Cost of SUP Program**||||R|s. in Crores|
|Item|Initiation|Year 1<br>Ye|ar 2<br>Year 3<br>Year 4|Year 5<br>T|otal|
|Households upgraded||40,000|60,000<br>100,000<br>100,000|100,000|400,000|
|Management Structure|0.05|0.78|0.86<br>0.93<br>1.02|1.11|4.75|
|Project Preparation % of Civil Cost|1<br>2.05|3.35|6.09<br>6.63<br>7.23||25.35|
|Project management % of Civil Cost|2.5|5.12|8.38<br>15.22<br>16.59|18.08|63.38|
|Survey, Household Data, Community||31.39|51.33<br>93.24<br>101.63|110.78|388.37|
|Consultation & Design|||||0.00|
|Civil Works||204.92|335.04<br>608.66<br>663.44|723.15|2535.22|
|**Total**|**2.10**|**245.57**|**401.69**<br>**724.69**<br>**789.91**|**853.12**|**3017.08**|

Source: Authors’ calculations NB. Rs. 1 crore is equal to roughly $ 200,000. Rs. 3000 crore is roughly equal to $600 million 28 The average household size is assumed to be 4.7 persons based on recent sample surveys of slums. Many gamtals have good services, or are in the process of upgradation. We have left them out of this initial estimate. If the city takes on a strategy of providing services for all as advocated in this paper, a more detailed survey and assessment would be needed. We understand that CEPT has started work on such a survey for slums.

29 Please see Annex 3 for details of the costing exercise and assumptions.
Page 49

# **Table V.2 Per Household Upgrading Costs**

|**Per Household Cost**|**2**|**011/12 Prices**|
|---|---|---|
|Management Structure||90|
|Project Preparation % of Civil Cost|1|470|
|Project management % of Civil Cost|2.5|1,175|
|Survey, Household Data||7,200|
|Community Consultation & Design|||
|Civil Works||47,000|
|TOTAL||55,935|
||Approx.|**56,000**|

Source: Authors’ calculations

# **Impact on the Budget of the AMC**

# **Table V. 3 AMC Budget 2008-09 through 2011-2012**

||||all figure|s in Rupees Thousands|
|---|---|---|---|---|
||**2008-09**|**2009-10**|**2010-11**|**2011-12**|
||FINAL|FINAL|REVISED|APPROVED BY AMC|
|**Total Capital Income**|**8,762,959**<br>|**10,365,515**|**17,762,152**|**28,607,000**|
|**Total Capital Expenditure**|**10,311,889**|**12,950,453**|**17,762,152**|**28,607,000**|
|**Total Revenue Income**|**15,541,668.00**|**16,169,373.00**|**22,353,514.00**|**31,975,350**|
|**Total Revenue Expenditure**|**9,104,426.00**|**11,559,960.00**<br>|**13,494,597**|**17,903,008**|
|**Total INCOME(CAPITAL+REVENUE)**<br>|**24,304,627**|**26,534,888**|**40,115,666**|**60,582,350**|
|**Total EXPENDITURE(CAPITAL+REVENUE)**|**19,416,315**|**24,510,413**|**31,256,749**|**46,510,008**|

Source: Published budgets of the AMC and authors’ calculations The Average Municipal Budget of Ahmedabad for Capital Expenditures has been around Rs. 1300 crores in the last 3 years (2008-2011). This provides an indication of their current capacity to undertake large infrastructure improvement projects.<sup>30</sup> The capital budget in 2011-12 is more than twice the average, reflecting very rapid capital budget growth over the last three years. The annualized project cost of the five year program is Rs. 603 crores which represents 21 percent of the 2011-12 capital budget, which seems a clearly manageable figure. The corresponding figures for the three year program are Rs. 895 crores and 31 percent respectively. There are clear advantages to setting an ambitious goal of completing the program in three years, but this could be a stretch for the AMC. It is up to them to assess whether this represents too much of a stretch for a rapidly growing budget. The five year implementation option appears quite manageable. As for the operations and management budget, experience from the SNP suggests that, since newly connected households pay into the network whereas they did not before, the program should not be a drain on the operating budget. This should be assessed in more detail.

> 30 *This does not include capital expenditure towards the Sabarmati Riverfront Development Project, since it is set up as an SPV and is funded through a loan from HUDCO. However, the AMC budget does include expenses for BRTS project related infrastructure improvements and bus procurements. The BRTS is operated by Ahmedabad Janmarg Limited which is also an SPV
Page 50

# **Upgrading Network Infrastructure**

The costs discussed so far are essentially on-site local costs. Traditionally, in India, slum upgradation projects have been limited to this kind of investment. This approach neglects two implications for infrastructure networks.

First, once every household will have an individual water connection and an individual WC might substantially increase the demand for such services as compared to the present levels of service delivery. The trunk or primary infrastructure network may not have the capacity to cope with the demand for services at the assumed standards.

Second, Ahmedabad, much like most other Indian cities, would benefit greatly from an overall upgradation and capacity augmentation of its network infrastructure, especially water, drainage, and sewerage. It has been the tradition in India’s cities to get by with the bare minimum of basic services of this kind and cope with the concomitant service failures as a routine of doing business. While most households have come to expect water only a few hours per day— experience with pilots in Karnataka have shown that moving to 24X7 water is achievable, popular and people are willing to pay for it. AMC and Gujarat have shown the way to throwing over tradition and modernizing many areas of city management. A city-wide project to provide neighborhood improvements to all its informal areas is an excellent opportunity also to take a truly inclusive approach, and upgrade networks so that all residents of the AMC experience service improvements—not just those in slums and chawls---as part of the program.

It would therefore be useful to assess the network capacities and plan for their augmentation concomitant with the slum-upgrading program. However quantification of cost of network augmentation has not been attempted here. Based on the above, it can be seen that AMC is already undertaking initiatives to improve trunk infrastructure and access to the services. About 73 crores have been allocated in the most recent budget for upgrading existing networks. Details are available in Annex 3. It is fortunate that the Corporation has already started such improvements, and is thus gaining experience and capacity with such network infrastructure upgrades. This experience could provide the basis for scaling up these efforts to the city level.

# **Providing Relocation for Households Whose Shelter Cannot Be Upgraded in Situ**

It is common for traditional slum upgradation plans to ignore some of the most vulnerable households in the city—those for which in situ upgradation is not a good option. In the AMC, we have identified two types of households of this kind—those in flood prone areas around lakes and sidewalk dwellers. For the sidewalk dwellers, options range from homeless shelters to public housing, depending on their permanence in the city and capacity to live independently. In Ahmedabad, our estimates suggest that the pavement dweller population is fortunately relatively limited. More study is needed to determine how best to meet the needs of this population, and find effective solutions to improve their living conditions. Standard approaches such as night shelters have not met the needs of all the population.
Page 51

# **Table V. 4 Estimates of Populations Unsuitable for In-Situ Upgradation**

|**Households Potentially Unviable for Upgradation**<br>**Unsuitable for**<br>**Upgradation**<br>**Area (Ha)**|**# of**<br>**Households**|
|---|---|
|1 Pavement Dwellers<br>-|3,406|
|2 Flood Prone Areas<br>2.31|577|
|3**_Infrastructure Upgrades_**<br>**_6_**|**_1,500_**|

|**Flood Prone Househ**<br>**Lake name**|**olds in Slums Near Lake**|**s**<br>**# of**<br>**Households**|
|---|---|---|
|Chandola lake|Total Population|3,930|
||Relocation HH|442|
|Thaltejlake|Slum Pocket|1,369|
||Relocation HH|101|
|Isanpur lake|Slum Pocket|1,255|
||Relocation HH|34|
|TOTAL||6,554|
|TOTAL After Lake Pro|tection|577|

Slum and chawl households in the path of important infrastructure development (e.g. new roads or widening of existing roads identified in the development plan) may be better served by relocation than upgradation, because their future in situ is uncertain. However, not all road projects come to fruition as planned, and the land cleared by relocation for infrastructure improvement is prone to further encroachment until the proposed infrastructure improvement is completed. This implementation timeline for such infrastructure projects is not always assured as it depends on various factors like availability of appropriate funding etc. It makes no sense to relocate households until such funding is available. Furthermore, the relocation of any households displaced by the infrastructure should be paid for as part of the project costs.

Accordingly, while noting the presence of this set of households, their relocation is not included as part of the project costs. Assuming full cost of relocation within the cost of major infrastructure projects with high economic value has become increasingly accepted through, among others, experience with IFIs that developed working models for rehabilitation of all affected households. The MMRDA in Mumbai, for example, subsequent to a World Bank urban transport project, has adopted R&R guidelines using community involvement to avoid abusive inclusion in rehabilitation schemes, NGOs that are trusted intermediaries, and abolishing punitive cut off dates for providing compensation to affected households. AMC and AUDA certainly have the capacity take up such a forward looking approach to rehabilitation in their own infrastructure projects.
Page 52 The households around the lakes offer a different set of considerations. Since the lake is prone to periodic flooding, it is often assumed that these households should merely be relocated, and the lake infrastructure upgraded as a separate matter. However, experience suggests that it usually makes much more financial sense to reinforce the lakeside infrastructure to reduce flooding and improve these slum neighborhoods in situ to avoid dislocation. According to our rough estimates, less than 10 percent of households would need to be relocated if infrastructure investments are made. One hopes that working with the community, as was the case under the SNP, this number could be reduced even further. This offers a substantial savings—if all lakeside households are relocated, this would add 150 percent to the current estimate of relocation costs city-wide. This incremental sum of Rs. 300-600 crores that could be saved by making the necessary infrastructure investments is quite substantial—representing from 10-20 percent of total project costs.

# **Program Implementation Building from Experience with SNP: Scaling Up by Design**

# **Positive Lessons from SNP**

The Slum Networking Program was started in the mid-1990, and continued for about 10 years. During that time, services were provided to about 14,000 households very cost effectively and made major changes in the neighborhoods of many of the city’s slum pockets—as can be seen in Figure V.1. The homes in these slum pockets, once provided with decent neighborhood infrastructure, greatly increase in value due to the amenities in the environment, and bring households within sight of moving up to middle class housing such as that shown in Figure V. 2 below. A number of lessons were learned in the process and these offer invaluable insights for the design of city scale program.
<!-- Start of picture text --> tm, a Bhar bree F<br>a<br>a >| a<br>< ~ a =<br><!-- End of picture text -->

<!-- Start of picture text --> } 3<br>an; Ho tae<br>a m ” )<br>= act ” . Ts<br><!-- End of picture text --> <!-- Start of picture text --> ~ fi rx ve YAGI N, a ton “a =<br>eee m8 =<br>) — se<br>a EE See<br>y os<br>><br>Ans<br><!-- End of picture text -->
Page 54 There are several important, highly positive lessons learned in the SNP:

- The AMC piloted a collaborative model for working with communities and NGOs that has held up over many years and different municipal commissioners, **showing that it is possible to institutionalize different ways of doing business rather than relying on a single charismatic leader to achieve lasting results** .

- **This project flourished without external funding** , whether from the central ministries or IFIs. It was a homegrown initiative of the AMC adapted to local capabilities and interests.

- **Households in slums are willing to pay** for neighborhood upgradation and in house service delivery. Communities contributed 10 percent of project costs for the SNP— and this contribution rate could have been double that. Prior to the program, individual households were paying much more for illegal individual water and sewer connections than the household contribution for the entire upgrading package.

- Once upgrading is completed, **households invest multiples of what the government provides** to improve the quality of their homes and build additional floors. Many add extra rental units to their homes, one of the best sources of low-cost rental housing.

- **Community involvement contributed greatly to smooth and efficient execution of the upgrading program.**

- In most neighborhoods, the CBOs reworked plans to minimize or avoid altogether relocations of entire households.

- The households themselves performed required demolitions to avoid conflicts with city authorities and contractors.

- The community supervised the quality of the works and it was only upon community agreement as to the quality of work that final payments were made to contractors.

- Storage of building materials on-site reduced pilferage and wastage.

- CBOs formed during the construction period have taken on operations and maintenance of the facilities effectively.

# **Avoiding Avoidable Constraints**

The SNP did face limitations. The tripartite partnership including the private sector proved quite difficult to sustain. The reasons for this are complex. Clearly, attempting to marry the cultures of two distinct organizations in the implementation of a single project proved cumbersome, slow and frustrating to all partners, and was abandoned. Fortunately, the program survived the withdrawal of the private partner. Future programs should be streamlined and simplified to avoid excessive interdependencies, and instead find a responsible division of labor among the different parties involved. This is what worked successfully in SNP.
Page 55 In recent years, attention has shifted away from the SNP to much more costly formal ‘affordable housing’ projects supported under JNNURM, and strongly subsidized by the center. As discussed in section 2, there will be substantial demands for such housing from households who do not now live in slums. Moreover, the number of households living in slums is a very large multiple of even accelerated public housing production. If the center is providing such rich subsidies for this housing, then the State and the Corporation may not wish to refuse them. But the availability of these subsidies should not distract the State and the AMC from their own homegrown initiative, the SNP—which offers a cost effective and scalable path to well located, decent and dignified housing—for the over 400,000 households in slums and chawls.

The center will not be in a position to provide subsidies for more than a fraction of the needs. Annez et alia (2010) estimate that it could cost 20-30 percent of GDP to build new housing for all households living in India’s slums today—not to mention accommodating the growth of this population (18 percent over the last ten years in Ahmedabad) . With the rural employment program NREGA funded at roughly 1-2 percent of GDP per annum, it is unrealistic to expect that multiples of that sum will be spent on subsidies for cities. Even if the massive funding required were available, it will also become increasingly difficult to find land for new housing projects as government land expropriation is coming up against political and social limits and market forces make it very difficult to enforce reservations for low-cost housing in private developments (Deusker 2011 and CEPT 2009). The further out low-cost housing moves, the greater the risk that this housing will either lie empty or will only be taken up by the well-off who can afford the time and cost of a long commute. _In situ_ upgradation, on the other hand, improves living conditions where the poor live and work already. Finally, a city like Ahmedabad that is modernizing quickly and rapidly expanding its infrastructure may find that relocation housing for households displaced by new infrastructure projects may well absorb all its capacity to provide public housing.

Recent experience in Mumbai with the in situ slum rehabilitation program has created the hope that instead of upgrading slums, these neighborhoods can all be redeveloped into private apartments by private developers at no cost to the budget. Annez et alia (2010) illustrate the limits of such a program for Mumbai. Given the large population living in slums in relation to demands for new built space, it would take a generation to provide housing for its entire slum population. A few will benefit, but most lose out because such programs detract attention from simple and cost effective investments in slum upgrading. In Ahmedabad, our analysis of a sample of slum pockets turns up further constraints limiting the scope for Slum Rehabilitation Schemes. Figure V.3 illustrates one potential but powerful physical constraint. Plot sizes vary considerably in slums as the graph below shows. Many of those dwellings are quite small. This leads to high densities, which our data suggest are growing. When the slum pockets themselves are small, the ability to house all families already on site, while profitably redeveloping the remaining land for other purposes is quite limited. The requirement to offer a 250 sq ft (carpet area) apartment to all households also poses some challenges. Would the households with larger size dwellings, which are not the majority, but still a substantial number, accept a standard apartment in exchange for a larger dwelling? Would all parties accept that large numbers of
<!-- Start of picture text --> Ahmedabad- Distribution of dwelling sizes in surveyed slums<br>1800 — 100.0%<br>_ mam Chali Indiranagar _—<br>Sankar Bhuvan Shapur<br>mas Indiranagar Odhav South 80.0%<br>“ae<br>mmm Bhikadev<br>re mam Talawadii Rushinagar; 70.0%<br>58 % of dwellings mas Indiranagars Odhav North’ 60.0%<br>1000 have le han m ——cumulative<br>800<br>40.0%<br>600<br>30.0%<br>400<br>20.0%<br>-fe) ail | ll if I i 0.0%7<br>0--S5m2 6--15m2 16--25m2 26--35m2 36--45m2 46--55m2 56-65m2 66--75m2 76--85m2 86--95m2 96--105m2<br>sources: SEWA-MHT survey<br><!-- End of picture text -->
Page 57

# **Lessons for Moving to Scale: Creating Momentum with Robust and Reliable Procedures**

Those implementing the SNP found that the pace of community organization and community financial contributions followed a simple, compelling logic. **Seeing is believing** . Once one slum had been upgraded, CBOs formed more quickly in neighboring areas. Communities made their cost contributions readily once they saw work crews in the neighborhood. Tangible results offer more credibility than the most finely crafted incentive schemes or communications strategies.

This suggests the following measures for accelerating the pace of a reinvigorated upgradation program in Ahmedabad. The proposed measures could reduce the time needed to improve one neighborhood from 24 to 15 months.

- Start working in priority neighborhoods quickly to demonstrate commitment to the program rather than mapping a process for the entire city up front. Working neighborhood by neighborhood offers natural project risk management. Any mistakes made in early upgradation projects can be corrected in later projects. Gains from learning on the job can easily be applied in later neighborhood upgradations.

- **Unlike large projects with major interdependencies across different components, such as a metro or airport, neighborhood upgrading does not need intricate advance planning, or socio economic surveys of the entire population living in substandard neighborhoods.** The overall cost and financing envelope should be understood with some accuracy to ensure that project can be sustained to completion. The basic principles of beneficiary contributions and responsibilities as well as commitments from the government should be understood up front.  But beyond that, it is unlikely that detailed project planning is worth the cost of the delays inherent in obtaining more precise knowledge. Informal housing in slums, chawls and pavements is the solution when all else fails. These solutions are inherently dynamic and subject to rapid change. Precise advance engineering of city-wide solutions for populations such as these is an illusion—and a very costly one for the households in these areas who remain chronically underserved while the global problem is studied in unnecessary detail. Neighborhood by neighborhood, these questions should be studied as upgradation subprojects are prepared and implemented. Initial conditions need to be documented and frameworks for assessing the impact of the project after completion should be put in place. Full station surveys and detailed engineering designs are required. But the frame of reference for such study is a neighborhood to be improved in the near future—not the city level. Thus all this important information for policy makers and program designers eventually can emerge during execution, rather than in a prolonged planning stage.

- **On tenure and security—the perfect should not be in the way of the good** .  The scope of neighborhood upgrading should be expanded by setting aside the contentious question of tenure, No Objection Certificates (NOCs) or no eviction guarantees— **prior to upgrading the neighborhood** . The SNP included a 10 year no eviction guarantee. This guarantee could only be offered easily on lands owned by the AMC, and thus excluded slums on any other public lands. Unfortunately, even for those limited cases, the AMC was not always able to live up to the guarantee because new infrastructure projects necessitated some relocations in upgraded neighborhoods. Due to subsequent lawsuits and complaints, this guarantee has become controversial. The AMC may be understandably concerned about using it further. Using a no eviction guarantee precluded any upgradation in neighborhoods on public lands owned by other entities such as the State, the center and government enterprises like the railways. Private land
Page 58 ownership ambiguities also make upgrading the chawl areas quite sensitive and problematic if a no eviction guarantee is provided. Together these limitations exclude a very significant share of underserved informal neighborhoods, thus compromising the objective of providing decent living conditions for all. On the other hand, given the experience with the SNP and the no eviction guarantee, households have understood that they are both unlikely to be evicted for no reason, and, _de facto,_ a no-eviction guarantee may not provide full protection. We believe, based on experience in the later phases of the SNP, that many households will accept to pay their contribution even if they are required to recognize formally that they could be evicted—provided neighborhood upgrading is forthcoming.

- The AMC has had little success in its efforts at obtaining NOCs from central agencies like the railways to make any kind of improvement in slums on central lands.  The Ministry of Housing and Poverty Alleviation (HUPA) in Government of India (GOI) should support the AMC and other local governments in obtaining such NOCs as part of its national slum upgrading program RAY<sup>31</sup> .

- Build on the AMC approach to providing upgradation on the Municipal Act clause which allows the Commissioner to provide services to ensure the health and safety of the population. Experience has shown this approach to be expeditious, rapidly implementable, and allows many more households to be serviced.

- Recognize that poor households need to manage cash flow at least as carefully as governments. Requiring beneficiaries to take loans based on government’s promise to deliver services is unnecessary. SNP experience shows that households pay as works progress—and defaults on beneficiaries contributions did not threaten the financial viability of SNP.  Thus, setting the threshold for starting contracting lower than the 80 percent used in the SNP makes sense.  Allowing procurement to start after households have contributed 20 percent of their contribution manages government’s risks reasonably. If problems are encountered in the course of implementation, this figure can be revised.

- The NGOs organizing the CBOs should be remunerated to cover costs. A full cost recovery model is the only path to working at large scale in organizing beneficiary communities. We are recommending their work be budgeted at Rs. 10,000 per household, and that funds be earmarked up front for this purpose to avoid any arrears in payments to NGOs which slowed down and narrowed the scope of the SNP program. Community organization is as crucial an input to the program as good engineering, and needs to be paid accordingly.

- Reduce reliance on micro-finance. Qualification for a loan for the household contribution was a requirement for the SNP program. This is cumbersome and time consuming for the MFIs, the CBOs, the NGOs, and the households. Yet many households can afford their cost contribution without finance if spread over the 15 to 24 month implementation period for upgradation. This amount should be not larger than 20 -30 percent of annual household income for many slum households.  Besides being cumbersome and time consuming, the requirement to take out a loan imposes an interest burden on households that brings no benefit to project finances, since the household contribution is held in escrow until satisfactory completion of the works.

31 Rajiv Awas Yojana
Page 59

- Build an operating model suited to the modular repetitive nature of neighborhood upgradation. The 422,000 households living in Ahmedabad’s slums and chawls are spread over hundreds of neighborhood slum pockets. To achieve fast and tangible results at scale, many pockets must be dealt with at a time, requiring a large number of engineers and community organizers over a limited period of time. However, because each sub-project is relatively small, they do not easily attract the attention of departments working on large and higher visibility city infrastructure projects. To address these problems, an implementation framework should encourage both specialization and scale.

- Specialization can be achieved by a dedicated unit working only on these projects.

- Because there would be a large demand for a relatively limited period, this capability could come by creating a temporary workforce, on a contract basis to meet the needs of the program for a few years.

- Especially for scarce skills like engineering, this could address what is frequently a shortage of necessary skills in government ranks without bloating the civil service with posts that will later be redundant.

- Keeping sufficient engineers on hand to approve works can speed considerably the flow of benefits to neighborhoods once all the investments have been made. Deputation of engineers from their regular departments to a specialized unit can provide a critical mass of engineers, and a deputation premium would make this otherwise unglamorous work more attractive.

- Specialization of procurement of materials for the neighborhood upgrading program would also avoid bottlenecks in the common stores—which often slowed down works even when contractors were ready and willing to move forward.

- Creating a standardized modular contract that allows lumping together a number of neighborhoods to be upgraded in a single contract would make neighborhood upgradation attractive even to the larger contractors, who tend to be technically and financially more reliable, and therefore speed execution while improving quality.

- Making these modular contracts work would require an assured funding source so that short term budget constraints do not derail project execution.

- Given all the above requirements, the special purpose vehicle (SPV) structure may be suited to an accelerated slum upgradation program. The procedural flexibility that SPVs provide would make it simpler to use these customized approaches suited to slum upgradation. The institutional flexibility of SPVs, especially in manpower terms, mean that an SPV could build up and wind down the technical labor force required without burdening the Corporation with staff not needed in the long term.  However, there are also concerns about ownership on the part of government, governance and accountability in SPVs and these deserve consideration as well. What is important is not the form of the institutional arrangements in an SPV, it is gaining the procedural and functional flexibility described above.
Page 60

# **VI. SUMMARY AND CONCLUSIONS**

# **What Does This Study Cover?**

This study has two distinct parts. One outlines an immediate ‘no regret’ investment program. The second discusses how to restructure government’s role in the market to offer more inclusive housing solutions for all.

# **Part One: Immediate Investments for City-Wide Improvements**

1. The first part examines the investments government should make to ensure a basic shelter standard for all households in Ahmedabad.  The analysis starts from the premise that **the first and most fundamental step to achieving this goal is  providing basic neighborhood infrastructure improvements—also known as in-situ slum upgrading to all informal areas in the city.** These improvements include: in house piped water connection, in house toilets and sewer connection, drainage, paved roads, street lighting, and solid waste management.

2. Only government can provide these network infrastructure improvements, and the absence of these services consigns households to squalid living conditions and presents an insuperable obstacle to further private investment in housing improvements. Such investments are simply not worthwhile without basic environmental infrastructure investments.

**3.** Other programs such as providing public housing, encouraging slum rehabilitation by private developers, reservations for low-cost housing in private developments, may also be taken on, but in situ neighborhood upgrading for all must be provided. These other programs may be useful, although more expensive, more complex to implement and enforce, and not necessarily targeted to the needs of all low-income households. **They should be complements to, not substitutes for, basic neighborhood upgrading for all. Plans for providing public housing should not hold back investments needed to bring all neighborhoods to a decent minimum standard.**

4. Is neighborhood upgrading for all feasible?

- a. Our analysis confirms that although there are over 400,000 or about 4.2 lakh households living in informal areas; a program to provide for upgrading for all is feasible and far more affordable than other options.

- b. Already the Slum Networking Program has served 14,000 households in Ahmedabad with these same services.

- c. Rs. 50-60,000 per household can cover all the costs of neighborhood upgrading including community organization. **This is somewhere between one fifth and one tenth of the cost of providing public housing** .

- d. When implemented over 5 years, such a program is affordable. A program covering all slum and challi households would require additional capital expenditures of about 20 percent over the amount the AMC is currently spending on capital account. If, as some estimate, 60 percent of households in challis and slums already have in house toilet and water facilities, these costs would be even lower, possibly as low as 13 percent of the current capital budget.
Page 61 5. An inclusive infrastructure improvement strategy should not leave out those households (hhs) who do not have homes at all, pavement dwellers (about 3,000 hhs) , or those who are living in unsafe areas subject to flooding (about 22,000 hhs) . For the former, more work is needed to understand robust solutions to meet these households’ specific needs. For the latter category, the majority live around three lakes. Investments in flood mitigation works around the lakes together with neighborhood upgrading are both more cost effective and less disruptive to the families concerned than relocation into public housing.

6. Basic minimum living standards should be provided to all informal neighborhoods— including private lands and central and state lands. The Municipal Act allows the Commissioner to upgrade neighborhoods without affecting tenure, as part of his responsibility to provide for the health and safety of the population. Upgrading under this clause will not necessarily provide a ‘no eviction’ guarantee to slum dwellers. However, most households will agree to contribute to such a scheme for basic upgradation even in the absence of a no eviction guarantee. While it is desirable to provide security to poor households, requiring security as part of upgrading _de facto_ excludes many families from programs to provide them with tangible and immediate improvements. **This exclusion is very undesirable and can be avoided** . Moreover, difficulties with honoring some of the tenure guarantees provided in the past have tarnished the reputation of in situ upgradation program, thus reducing commitment to community based upgrading as practiced in the SNP.

7. An inclusive infrastructure improvement strategy should not stop at neighborhood upgrading alone. Adding a large number of household connections will place stress on a system that is struggling to keep up with the needs of a fast growing city. Such stress could downgrade services to households now connected and unnecessarily pit them against the families being connected to networks for the first time. Aggregate water consumption and flows into sewerage and drainage networks would surely rise if the roughly one third of households are added to these networks. **Therefore, a substantial program of bulk supply and network distribution capacity improvements should accompany the slum and challi improvement program.** 8. Ahmedabad has had a very substantial experience with programs to improve services in slums and challis. Much has been learned that can improve the speed and effectiveness of implementation of an in situ slum upgradation program. Using these insights, upgrading more than 4 lakh households over five years becomes a reasonable, if ambitious, goal— not one beyond the reach of the much enhanced capacity of the AMC and the many civil society groups working in Ahmedabad’s informal neighborhoods. However, the design of the program needs to simplify and build upon lessons learned from earlier efforts.

9. To speed implementation, we recommend the following measures:

- a. Establish a dedicated unit, be it an SPV or other institutional structure,  under the AMC, for implementing the program. This could build on the successful experiences in AMC of the BRTS, the hospital, and the Sabermati Riverfront project. A specialized cell or SPV could take a  number of measures to make work progress more quickly, among others:

- i. Deputing officers with a pay premium to compensate for working on smaller and less glamorous projects. These premia will reflect the AMC’s commitment to the inclusive aims of the project.
Page 62

- ii. Avoid using central stores for purchase of materials, and tailor a specialized procurement system to the needs of this project.

- iii. Create bundled contracts with competitively set rates for works that will be repeated with many variations across many different slums. This will permit financially strong and competent large contractors to bid for the works and complete the works quickly to good quality standards.

- iv. Allow contract costing at market rather than PWD rates, which do not always capture price escalations and therefore discourage strong contractors from bidding. Creating a system only attractive to smaller, weaker contractors slows down progress of works due to poor contractor performance and financial problems. Our estimated costs reflect market rates, and they are still quite affordable.

- v. Permit outside contracting of specialized skills required only for the limited period of the project. This can reduce reliance on AMC engineers whose workload will not permit rapid execution and approval of a large number of small projects.

- b. Start work quickly in priority neighborhoods (criteria to be set) to demonstrate ability to achieve results for communities willing to work with the AMC. This work should start before completing comprehensive and detailed surveys of needs in the city. Such exercises can work in parallel. Based on this initial survey and the many other initiatives undertaken to pilot slum upgrading under RAY, AMC should be able to estimate the costs accurately enough to produce project documentation and obtain funding for a city-wide program.

- c. Adapt financial requirements for participating households so that they can meet their financial obligations over time, thus ensuring accountability of contractors and participating NGOs.

- i. Rely less on micro finance for household contributions. Requiring beneficiaries to qualify for a micro loan for their contribution to the project (Here estimated at Rs. 5000 per household based on consultations with community groups) slows down project implementation by 3-6 months. If households are allowed to pay in their contribution based on the progress of works, as would any household hiring their own contractor, the need for micro-finance is much less and micro-loans can be optional.

- ii. Allow works to commence once 20 percent of the required contribution is paid.

- iii. Allow local MLA’s to pay up to 50 percent of the household contribution, provided this is paid for all households in the slum pocket/challi to be upgraded.

- d. **Increase the payment to civil society organizations (CSOs) including NGOs for organizing neighborhood community based organizations (CBOs), supervising the works, and facilitating implementation to cover their costs fully** . In the SNP, the rates were set well below the costs to the participating CSO, and were not always paid on time. When actual costs exceeded set rates, the CSO contribution became substantial. If CSOs are to be expected to organize over 4 lakh households into CBOs for hundreds of slum pockets, they cannot be expected to subsidize such a large operation. Indeed, community organization at this scale will require the hiring of large numbers of additional staff or contractors at market rates. The estimated costs of the community mobilization program are
Page 63 estimated at Rs.7,000-10,000 per household and yet the overall costs of the program remain manageable.

10. **Finally to sustain and build support for the SNP, civil society organizations and government may join in a public relations campaign to raise public awareness of the social and economic benefits of the new neighborhood upgrading project** .

# **Part Two: Addressing Structural Problems that Drive Up the Cost of Housing and Create Chronic Informality**

1. All over India, and in many other countries around the world, government is expected to take an active role in ensuring that affordable housing is built to meet the needs of lowincome groups. Economists would argue that there is no compelling need to subsidize housing, a purely private good. Income transfers, rather than housing, are seen as a better solution. **However this is not practical and most countries provide public housing or incentives for private developers, such as reservations for EWS/LIG**<sup>32</sup> . Ahmedabad is no exception. It has availed of central programs supporting construction of new formal homes, and the Ahmedabad Urban Development Authority (AUDA) has effectively presided over an expansion of public housing.

2. **In nearly all countries, however, government efforts in this domain fall well short of meeting needs.** Budgets are limited. When formal private housing is expensive, it is extremely difficult to target publicly provided housing to low-income groups only. It is particularly difficult to address the problem through public housing when formal housing is beyond the reach of a large share of the population. One must look beyond government programs to supply housing directly if the goal is to ensure all housing meets a decent minimum standard for a growing population.

3. The scope for solving the problem by building new government housing is very limited, first because the amount of additional supply that even efficient governments can provide in relation to the number of households living in substandard conditions is very small. Second, while governments may build new affordable housing on the one hand, on the other hand their policies, investment programs and administration of land often make it difficult for anyone in either the public or private sector to provide legal formal housing with good infrastructure services on large scale. Put otherwise, government’s indirect impact on the operation of the market far outweighs their direct impact on supply by building houses.

**4.** This is the case in Ahmedabad. **About one third of households live in slums and challis, and the number of households living in slums has increased by 18% over the last ten years** . This has happened even though the city economy is thriving and median income in Ahmedabad has increased to 2.7 times what it was in 2001. Median household expenditure based on National Sample Surveys has increased in real terms by over 5 percent annually from 2004/2005 to 2009/2010. But available data indicate that formal housing prices have increased by 70 percent in the last four years, more than double the rate of increase of prices in the state (as calculated using the GDP deflator). So affordability remains a problem even in an economy of relative prosperity. **Today, roughly half of the population could not afford to buy a well located new formal home.**

32 Economically Weaker Sections and Low Income Groups
Page 64 5. T **he flow of new private formal housing of all types is very low in Ahmedabad, probably only about 10 percent of total new production, which is itself only 2.4 percent of the existing stock. Shifting the share of new private housing into ‘affordable housing’ through reservations or PPP schemes such as in-situ slum rehabilitation will have only a very small impact on the large share of the population living in slums** . Government produces about 5000 units per year, showing a recent increase due to central program subsidies. Perhaps another 2,500 units could be provided by reservations for low-income housing—provided these reservations are actually enforced.

**6.** We estimate that 422,000 households live in slums and challis. At a rate of 7500 government sponsored units per year, it would take over 50 years to address the problem for today’s slum population alone **.**

7. Even this ambitious performance would not provide for the additional households who cannot afford formal homes. Over the last ten years, on average 5,600 new households per annum, or 90 percent of our estimate of government capacity to provide new affordable housing directly, are added to the existing population in slums.

**8.** These simple calculations –which abstract from many of the difficulties of using public housing as a path to slum free cities---nonetheless illustrate an important point. The magnitude of the problem is such that public production of housing and reservations will not solve the problem. **No matter how important public housing initiatives and affordable housing reservations may be—they cannot alone ensure that all of Ahmedabad’s families can live in a decent dignified home in a foreseeable future.**

**9. Our assessment of changes in land use patterns and the physical patterns of supply of new homes suggest that government practices and policies are making housing more costly and out of reach of a large share of the population** . **This is happening quite independently of government programs to build public housing and enhance reservation policies.**

10. Government can do much more for housing affordability by re-examining its role in real estate markets, and making it easier and less costly to provide formal homes all over the AMC.

11. Positive Developments: How has government facilitated flexible and responsive housing supply?

- a. The DP approved in 2002 increased the land available for urban development by sizeable 43 percent. A total of 127sq km of new land was zoned for urban development.

- b. Thanks to streamlined procedures subsequent to the earthquake in 2001, TP schemes have provided basic infrastructure and services in these new areas.

- c. These conditions give Ahmedabad an advantage over many other cities where such infrastructure is not yet built, and urban expansion is therefore costly and disorganized.

- d. Reservations and zoning limitations have been reduced, creating more flexibility in land use.
Page 65

- e. The repeal of the Urban Land Ceilings Act has stopped the process of notification which freezes lands for development, leaving them in legal limbo and undeveloped.

**12.** Remaining Agenda:

- **a.** Our assessment shows many symptoms of a very tight land market. Development of the city over the last ten years shows developers moving out further into the periphery and economizing on land as they do. Built up densities even in the newly developed suburban areas are very high—higher than densities in the central business district of Ahmedabad (CBD). Formal developments are fragmented on the periphery—suggesting difficulties in obtaining plots for development **.  Overall density of built- up space in Ahmedabad is rising. Normally, as incomes rise, densities in formally developed areas go down, reflecting a taste for larger homes and more open space as incomes grow. Ahmedabad is going in the opposition direction.** . In aggregate, households are economizing on land, even more than they did ten years ago when their incomes were lower.

- **b.** Government policies forces households and developers to use more land than needed to provide legal formal and well located housing.

**13.** Areas for policy change. A number of policy changes could reduce the restrictions in the current supply system and allow all producers in the market to provide more and better affordable homes.  Since these policies all interact in the decisions on where and how to build homes and the price the market will bear to purchase them, it is not wise to focus on the one or the other stroke of the pen reform to improve outcomes. Housing supply is a system, and the government is involved in nearly all the important points in the system, from infrastructure provision to property rights enforcement to building by-laws. Reducing one constraint may simply shift the pressures in the market elsewhere. We provide the following list of areas for attention and if necessary, incremental change. Even if reforms are incremental, they should affect housing providers across the board to make the system more open and competitive. Selecting a preferred reform among any in the list below, for selective exemptions to specific developers, will not result in a responsive affordable supply system for a dynamic economy. The list of areas for reform below should be read with this important context in mind.

14. Maximum Floor Space Index (FSI) remains uniform and low at 1.8 throughout the AMC. The central business district in West Ahmedabad, one of the most desirable areas of the city, has among the lowest densities in the city—meaning that only the privileged few can afford to be in this desirable area. With such low FSI’s, redevelopment to respond to new demands is either not possible or not economical. As a result, new development is forced into the periphery, as has happened for example along Ashram Road extending to the suburbs.

15. Redevelopment or major improvements of already developed areas in the city—even if allowable under the maximum FSI limits—is very risky and difficult because of ambiguity in land tenure and property rights. It can take years and considerable sums to settle any title problems that arise in a redevelopment project and the risks of legal challenge after a major redevelopment are considerable. So, the costs of expanding housing in well located areas through intensified redevelopment are very substantial. This too forces new development into the periphery on newly developed land.
Page 66 16. But Expansion at the Urban Periphery is Still Difficult, Costly and Uncertain

- a. Of the land newly zoned for urban development in the AMC, since 2002, only about 20 percent actually has been developed, in spite of rapidly rising prices.

- b. While many TP schemes have been started since the new DP was in place, none of them has completed the process of converting all lots from rural to urban designation and approving new ownership boundaries. Unlike zoning for urban use, this process takes place plot by plot and is slow and unpredictable. It takes good knowledge of a complex system and ability to fund the project over the long period of uncertainty while obtaining approvals to undertake a significant formal development. This helps established developers and excludes large many small housing producers and thus makes the developer sector less competitive.

- c. The reforms of the TP scheme process after the earthquake in 2001 have made it possible to build infrastructure before settling tenure and rural urban conversion problems.  However,   the infrastructure benefits are blunted by the regulatory uncertainties surrounding many of the serviced plots. The fragmented, but high density development at the urban periphery observed in our assessment is an indicator that arduous and slow plot by plot clearances are preventing full use of the infrastructure.

17. All the above factors make land difficult and costly to get. As a result, prices of land rise, and land becomes the most important factor in the cost of a home. Well located land is particularly scarce and particularly costly. This penalizes the lower income groups, who can ill afford either the cost of transport or the time for lengthy commutes.

18. Government further aggravates the problem with the General Development Control Regulations. These regulations, running to many pages, fix a number of land use and design parameters that make formal housing voracious consumers of land—the most expensive input to a home.

19. Setbacks, plot coverage limitations, requirements for parking and elevators impose upper middle class tastes on new formal development. These standards are set throughout the city, allowing no variation by neighborhood.

20. These regulations have made it impossible to continue to build ‘vernacular’ traditional developments that now make up a large share of the housing stock in Ahmedabad. These developments are pleasant, affordable, and use land more effectively than the standard apartment building developments that are the lowest cost formal options in Ahmedabad. Vernacular neighborhoods economize on land and privacy to emphasize more living space, but these options are not legal and could not get formal approval. Regularizing tenure in such developments would also be costly and risky, since an early step in the process is demolition of any substandard buildings.

21. Allowing more flexibility in the multiple requirements in the GDCR would offer options for supply of lower cost formal housing, which is still safe, decent, and acceptable to cultural norms and practices. Selective application of different standards in different neighborhoods could open up more options for affordable formal housing. Scope to allow grandfathering of housing that is safe and clean but not up to GDCR standards would facilitate regularizing tenure and increase the supply of legal housing that can be mortgaged and improved using formal finance channels.
Page 67

# 22. Ahmedabad  needs  more

- a. More in situ neighborhood upgradation in poor neighborhoods b. More investments in bulk supply and infrastructure networks to accommodate rising demands for infrastructure with rising incomes and improved slums

- c. More flexibility in standards for formal housing d. More differentiated FSI to meet demands for well-located space

- e. More expeditious pathways to resolution of property rights disputes

- f. More predictability and speed in rural urban land conversion that will lead to a more competitive and open entry for supplying housing.
<u>Annex1</u> Page 1 Annex 1. Computation of Distribution of Household Income in AMC The principle source of household data for computing distribution of income by household is the National Sample Survey (NSS) data. The NSS rounds provide survey data on expenditure by household. The data is compiled by district, then divided into rural and urban samples. Therefore the closest approximation of the area of our study within the NSS framework is the Ahmedabad urban district, of which the AMC population is over 80% of total population. The NSS rounds of measuring household expenditure are available for 1999/2000, 2004/05 and most recently 2009/2010, which was released as this study was being prepared. It is generally recognized that the 1999/2000 round is not comparable with the more recent rounds so we did not use it for estimating household expenditure distribution for the start year of our study of 2001. Instead, we took the expenditure data from 2004/05 and rebased it to 2001 using the growth rate of nominal per capita income in Gujarat State between 2000/01 and 2004/05 as published by the Central Statistical Organization. Unfortunately, income growth for the AMC or Ahmedabad Urban Agglomeration is not published in Gujarat, unlike in some other states. Income growth in Ahmedabad could well have been higher over this period, since urban areas tend to grow more rapidly than rural areas. On the other hand, Gujarat has experienced exceptionally rapid agricultural growth over the last ten years, so the difference in Gujarat may not be as pronounced as it might be in other states. The correction factor applied for this purpose is 0.71. To estimate income distribution in 2011, we used data from the sample survey of the NSS 2009/10 round. This was then adjusted to 2011 by multiplying by the increase in net per capita income for the state of Gujarat between 2009/10 and 2010/11, which reflected growth of 14% in nominal terms. Since we measure affordability in relation to nominal housing prices, it is important to estimate the income distribution in nominal terms as well. As can be seen in Annex 2, prices of housing appear to be rising more rapidly than incomes for the state as a whole.

To test the slight difference in coverage between the AMC and the Ahmedabad urban area, we generated an expenditure distribution for the AMC area using the poverty mapping methodology prepared for the Planning Commission by the India Development Foundation based on mapping the 2001 census data and the 2004/05 NSS expenditure survey data<sup>33</sup> . To do this, we included those census areas that were outside the AMC in 2001 to obtain census data for 2001 covering the same geographical area as the current AMC. This methodology also permits us to increase the sample size considerably and hence improve the reliability of the estimates. This was compared to the expenditure distribution for the same area in 2004/05 using the NSS data. The difference between the NSS median expenditure for 2004/05 and the AMC estimates for 2004/05 using the poverty mapping methodology is 2.8%, which gives us confidence that we have a reasonably reliable estimate of the NSS expenditure distribution as of 2004/05. Using the NSS data for both 2004/05 and 2009/10, we were able to estimate two different expenditure distributions at two points in time and capture recent developments in the income distribution.

> 33 See Hentschel, Jesko, Jean Olson Lanjouw, Peter Lanjouw, Javier Poggi. (1998). “Combining Census and Survey Data to <u>Study Spatial Dimensions of Poverty and Inequality.”</u> _<u>The World Bank Economic Review</u>_ for a description of this method.  We are most grateful to the IDF and Ms. Purti Sharma of the IDF. She  applied their poverty mapping model  to the  AMC area for this purpose.
<u>Annex1</u> Page 2 Once the 2011 census data are available, in principle it would be possible to apply the poverty mapping methodology for refining the expenditure distribution.

For examining housing affordability, most rules of thumb are based on income, not expenditure. However, estimates of income distribution by detailed income classes are not prepared in India. To convert expenditure to income, we assumed that the savings rate across income classes was 65 percent which is close to average propensity to consume out of household disposable income in the national income accounts in recent years. Lower income groups, which are of most interest to us, may save at lower rates, so to the extent that this is true, these estimates of income may be on the high side. We also corrected for the well documented difference between household consumption as estimated in the national income accounts by increasing consumption expenditure by 30%. For those who feel that this adjustment is not warranted, then our estimates of income are biased upward by the same factor for the two periods under study. As such, estimates of affordability of residential real estate based on these income distribution figures may be somewhat biased upward by our choice of adjustments. However, this may compensate to some extent for the perceived bias of NSS data toward lower income groups. Our results are striking in that—even with such generous estimates of income growth –a large share of the population, 50 percent, would have difficulty affording a new well located formal home. If one were to adjust income estimates downward, this implies an even larger share of the population would find new formal housing unaffordable.