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Christine Auclair


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2 Liberalization and privatization of the housing sector in Chennai (India)

3During the 1980’s, a number of countries started liberalizing their housing policies. From attempting to provide housing directly the State took on an “enabling” role, one which aims at facilitating the activities of the private sector. The privatization of the housing sector, as a process of retreat of the State, has major implications, with new economic and social policies, particularly the development of new strategies of access to housing by different socio-economic groups.

4The “enabling approach” is presented as the solution to meet the challenge of shelter provision, especially in developing countries, experiencing important economic adjustments. This is the case of India, this “demographic” giant, where housing constitutes a major development issue, particularly in large cities. Despite the implementation of an important institutional framework, intended to contain social inequality, the Government of India has not found an adequate response to shelter needs. In this context, the question is whether privatization will be able to provide conditions for sustainable shelter?

5The objective of this research enquiry is to analyze the prospects of the so called “enabling” approach, by examining the past state “interventionist” framework, the implementation of the privatization in the Indian context, and its impacts in cities.

6The first part analyzes the question of housing for India as a whole Indian context. The second and third parts examine the case of Chennai, analyzing the State and metropolitan policies and the roles of the different actors which participate in the shelter sector.

7The impacts of the privatization process are analyzed from two perspectives:

  1. the introduction of market oriented programmes in public agencies;
  2. the strengthening of the private housing sector.

8 The first part analyzes the privatization on the Indian context as a whole: the past housing policies, the new directions and their implications given the economic and social Indian background.

9The idea of privatization has been slowly adopted by the Indian Government, after thirty years of a centralized and normative approach guided by the egalitarian ideals and objectives of the welfare state. It was only after the Fifth Five Year Plan (1975-80) that a new approach was initiated, as a response to budgetary constraints. At the same time, international organizations started major housing and urban projects in India. During her second mandate, Indira Gandhi initiated the idea of liberalization of the housing policies and at the end of the 1980s, liberalization was officially announced be Rajiv Gandhi with the launching of the National Housing Policy, proposing a “faciliting” approach in order to enable the private sector to produce more housing, with a package of incentives through reforms in land policy, building regulations, a new system of housing finance and rent laws. This policy was mainly based on the urban middle class, representing a large consumers market for goods and services. The development of the shelter sector would contribute to economic growth and stimulate other markets linked to housing. The lower Income groups were to reap the benefits of this econnomic growth. The “enabling approach” was then strengthened with Narasimha Rao, calling for a greater involvement of private actors in the housing sector. But the analysis of economic data at the beginning of the 1990s shows that the privatization implicity excludes the majority of the population from access to land and shelter, and that the expected impact may be too limited to improve shelter conditions of the lower incomes groups.

10Chennai, the fourth largest city in India and thecapital of Tamil Nadu, constitutes a relevant context for analysing the prospects of the privatization in India. After Independence, Tamil Nadu was characterised by an important public housing system intended to provide housing to both low and middle income groups. At the end of the 1970s, the instruments of privatization were introduced with the first World Bank Urban Development Project, innovating with liberal theories and programmes in the housing policy in Chennai at three policy levels: the Central Government, the State of Tamil Nadu and the local authorities.

11The Chennai case shows on one hand the limits of the “welfarist” housing policy, where major public investments have not succeeded in meeting demand, but constituted rather an instrument for consolidating the political basis of the State. On the other hand, the liberal instruments of the privatization have not demonstrated the expected success by improving the shelter situation, due to inadequate political structure and will.

12The third part analyzes the development of the different housing markets in Chennai over the last ten years and aims to identify new strategies of access to land and housing by different socio-economic groups, and their impact on the socio-spatial configuration of the city.

13The role of the different submarkets and actors, from both the demand and the supply sides, are examined in the context of privatization process. To illustrate the recent liberal trends, one of the most representative submarkets is analyzed: the “builders” and their target groups, consisting of middle and high income groups. The development of that submarket in the last decade shows new strategies of access to resources from certain groups in order to consolidate their position in the city and the constitution of new residential areas, which contribute to a changing residential pattern and development. In this context, new mechanisms of exclusion take place, which lead to the development of marginal areas for the poor in the periphery.

14Which role can play the State in order to contain the on-going segregation produced by the reinforcement of the private initiative? This is the final question addressed in the conclusion.

15By analysing the social, political and economic aspects of the liberalization of the housing policy in India, this study shows the major limits and problems which have to be faced. The Indian context is particularly meaningful given the major political shift the privatization implies and the specific social context in which it is implemented after thirty years of a “welfarisf” approach.

© Institut Français de Pondichéry, 1998

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