New India Manifesto – Chapter 3 : National Housing System (NHOS)

Table of Contents

Introduction

The central government allocates 48000 crore rupees in the Indian budget 2022 for Pradhan Mantri Awas Yojana. Each state government are also allocating their share for housing. Rs. 79,590 crore is allocated in the 2023 budget by the central government. However, it does not solve the housing issues of India. More than fifty per cent of the population lives in rental homes, in kutcha houses, forced living with joint families and waiting for an exit, homeless, vagabonds, living in unserviceable houses, and tarpaulin cubicle houses. It took nine years for the current NDA government to support almost 3.5 crore families. Accelerating the process is immediately required. 25+ crore pucca houses in 10 years can be achieved if various ideas mentioned in my work are implemented together.

Issues with PMAY Rural and Urban

Land use conversion of fields like wetlands requires a no-objection certificate in many states in India.
Lack of takers for housing units at distant locations from their workplaces.
Poor people are unable to purchase land due to high land costs.
Transaction costs of land transfer are an extra burden.
The sanctioned amount is not enough for the completion of construction. When the house is completed, most people are in debt towards money lenders and others.

Major Issues of Housing in India

Many people are excluded from the PMAY scheme under various rules and regulations. The funds are limited, and the government creates many exclusions to reduce beneficiaries.
People living in damaged and unfinished houses cannot get funds under PMAY.
Many people are unaware that such schemes even exist. Many people avoid coming forward to apply to such schemes as they believe it is a huge political hurdle they cannot cross.
People taking loans from banks to build houses cannot make timely EMI payments as they are not earning that much. So people are afraid to take loans to build a house.
Many of the population cannot go to the bank for home loans as they do not have land.
People do not want to choose lands in rural areas at cheaper rates due to the lack of job opportunities in rural areas.
The land is not part of PMAY; only some states provide free land for the landless.
The size of current houses of more than 80 per cent of the population is less than 500 square feet. Size is fine if the house has good structural integrity and facilities. The problem with smaller homes is that children may not have an independent room. Excluding that part, smaller homes are worth it, as having a house is better than not having a house. However, most houses under 500 square feet in India are kutcha or not serviceable.
There are many households and joint families in which married couples who are part of large families do not have separate rooms and are in dire requirement of a new house. Some people are also forcibly adjusting with joint family members as they cannot afford another house.
The real estate sector is not focussing on affordable housing for the poor and is concentrated on large flats. Profit from small apartments or small houses is less compared to large homes.
The absence of a single window clearance system affects the real estate sector.
People in the workforce are not making enough to spare for home EMI as there is high unemployment and low wages for most jobs.
The down payment required to purchase a flat is a roadblock for home loans.

National Housing System

National Housing System aims to generate an economy that provides shelter and employment at the same time. As a result, different individuals and governments will benefit in different ways by creating a housing economy. This system will provide homes and provide means for people to pay for the homes they secure. The government will engage in different types of investment that benefit the state socially, politically and economically.

Type A Investment

The structures will be built without immediate direct returns in type A investment under National Housing System. It is a public welfare measure in which everyone, poor and vulnerable, benefits. Here the investment is made by the government for the public.

A. Reverse Transfer Houses

A1. Without Land

Senior citizens above 60 without a home or land and who are not bedridden can claim reverse transfer houses. A house below 400 square feet will be allotted and built for such individuals. This home is provided for husband and wife together. They can live together, and the government will take back the house ownership when both die. There is no legal heir for such property. When one partner dies, and the other is financially sound and wants to continue living in the house, they can do so. However, if the person is struggling to live independently alone, then the government can request the person to shift to a care home and can take over the ownership of the house.

This facility of reverse transfer houses should be provided mainly to individuals ready to contribute via National Employment System. If they are bedridden or have serious health issues irrespective of age, they should be supported in care home facilities. Investment in land and infrastructure can be reduced if accommodated in care home facilities. People with retirement money and bank deposits can claim this if they do not have a house. So, the place is free, and they can use their savings to live there.

A2. With Land

Senior citizens above 60 without a home and with land can claim this. A house will be built which is below 400 square feet for them. It can also include replacing non-serviceable houses. It is only for individuals who are not staying with their adult children. In case there are adult children who are staying with them, they can opt for normal home loans.

Once both parents die, the legal heir can claim the property in 1 year. If the heir claims the property, a loan amount spent on building the house will be charged. It can be paid back as a loan by introducing a new contract with the heir. If the property is not claimed in 1 year, the government can take back the property and house, which cannot be claimed after the takeover.

Type B Investment

Type B investment is part of social welfare initiatives to build extensive institutionalised facilities such as shelters and care homes.

B. Care Home and Shelter Facilities

The construction responsibility of these facilities comes under the national housing system. Existing large contractors can be provided opportunities to build care homes.

B1. Care Home for Senior Citizens, Bedridden and Diseased People

People who need support regularly will be institutionalised under the national healthcare system in care home facilities.

People who are abandoned by families, abused by children, lonely and desperate, homeless or want to join out of self-interest can join care homes. Wealthy older adults can have luxurious facilities inside care homes if they pay a significant amount.

Bedridden people and people suffering from diseases such as Alzheimer irrespective of age, will get lifetime free access to care facilities.

B2. Shelter Homes

Shelter homes are required to accommodate people for short-term nature especially abused children, victims of spousal violence or homeless people of different ages. In addition, people affected by natural disasters also need shelter homes.

Type C Investment

The government is building houses for all who need them and expecting people to pay back the spent amount in EMI or other forms. Enabling people to rise to the standards of paying EMI is the most critical aspect of this investment. In addition, they will be provided job opportunities under National Employment System. In this investment, instead of the government providing funds directly to the beneficiary government will provide funds to a third party that will be building a house which will be transferred to the beneficiary after construction is over. A person without land, without a down payment, is provided loans, and only EMI payment is required.

Type D Investment

The landholder is selling a part of their land to build a house for themselves. It is explained in Method 1 of Land Acquisition Methods.

Type E Investment

A person with land can choose this method in which a house is built for them by following all construction rules by a third party. They can select the design of the house from the available options. However, the size of the house will be only up to 600 square feet. The home’s investment must be paid back only with 2% interest. They have to compulsorily register under National Employment System.

Type F Investment

The government will build shelter homes for stray animals such as cows and dogs and a house adjacent to that facility. Taking care of the cows and stray animals is the responsibility of the person who buys the facility and home. The owner will be listed on government-approved websites as an animal care worker, and they can earn donations for their facility. The owner can have their animals in one part of their animal shelter. In the case of dogs, the owner can earn by giving dogs for adoption and breeding new dogs. In the case of stray cattle, the owner can earn from cow dung and cow urine and also raise some milking cows along with stray cattle. The owner needs to pay only for land and house in EMI. The animal shelter will be built for free, and the land area of the animal shelter is also free. There will be an additional clause to this type of investment. The government will also charge for animal shelters if stray animals are not supported during the EMI period. The EMI period will be a minimum of 15 years. In case a stray animal dies, it should be reported within 48 hours, and a replacement animal would be provided immediately. A cow shelter would be built to accommodate 20 animals, 10 of which will be stray animals, and up to 10 additional animals can be bought by the owner. After certification from the local veterinarian that the cause of death is the natural reason of a stray cow, the shelter owner can sell the dead animals to the leather industry in states where it is legal to do so.

Type G Investment

This facility will be provided initially to two generational farm labourers. Farm labour should be the occupation of parents and children. Three members from two generations should be part of it to claim this benefit. All three individuals doing farm labour activities regularly for two years and earning wages via NES are essential for claiming this scheme. If anyone of them is employed in any other industry other than farming, they cannot claim this scheme. Under this scheme, 50 cents of land with a 400 – 600 square feet house will be provided to farm labourers at 1% interest. The tenure of the loan should be a minimum of 30 years. The farm labourers can continue to be farm labourers, and at the same time, they can farm at their place under this scheme. If they have already received 400 square feet house or any other house, they can exchange it with the government, and the amount will be adjusted with the new home accordingly. This scheme supports farm labourers in India irrespective of caste and religion.

Type H Investment

The methods provided under BELRS can be applied to building houses, such as floor conversion. Homes with lower square feet can be acquired by NHOS and sold to people for a lower interest rate below market rate without a down payment.

Land Acquisition Methods

Government chooses different methods to acquire lands required for building these sites. These land acquisition methods can also be applied to all types of investment.

Land acquisition authority will be developed, connecting various methods of acquisition mentioned here.

Land Acquisition Method 1

Landholder is selling a portion of their land in this method. If a person has a land parcel, they must temporarily transfer the land to the government. First, the national housing system authority will check facilities such as land, water and electricity; later on, if they are acceptable, the authority will accept the temporary ownership.

The land owner can choose a location within the land as a prime location for the house. The land owner will be asked how much land should be given away, and the government will reach an agreement with the landholder.

Example 1

The landholder has 20 cents of land in a rural area. The prime location where the landowner needs a house is almost 10 cents of land. The remaining 10 cents of land has two plots in which two houses can be built. In the 10 cents, a house of 600 square feet is the maximum government-allowed square feet under the housing system scheme. However, the owner wants 1000 square feet. A non-serviceable house in the 10 cent needs to be removed to build a 1000 square feet house. The 20 cents is the owner’s only land, and the owner has no other house besides the non-serviceable one.

The construction square feet value of the region is 2000 rupees charged by contractors. So the total cost is 20,00,000 for a 1000 square feet house. The market value of the property is 50,000 per cent. The land value of the 10 cents the owner is willing to give to the government is worth 5 lakh. So the government will subtract 5 lakh from 20 lakh and allot a 15 lakh bank loan on the 10-cent property where the owner is building the house. Normal interest rates of home loans will be applicable in this case. The government will own the remaining 10 cents. The landowner is building the house, not the government. In the remaining 10 cents, the government will build 2 houses between 400-600 square feet each under the housing scheme. If the owner wants to build a house above 1000 square feet and needs a higher amount as a loan, the person taking the loan should have the potential to pay the EMI of the higher amount.

Example 2

The landholder owns 20 cents of the land and decides to give 15 cents of the land. So, the landholder receives 7.5 lakh for the property given away. Five hundred square feet house is built, costing 10 lakhs. For the remaining 2.5 lakh, the government will provide it as a loan at a subsidised rate. So, the landowner will build the house of the landholder, whereas the other three houses for 15 cents will be built under the housing scheme by the government.

Land Acquisition Method 2

Properties collected under Burden Easing Loan Restructuring System

Land Acquisition Method 3

Collecting large and small land parcels at lower than market price from different sellers. If a person sells 100 acres at 30,00,000 per acre, the government can negotiate and purchase at 20 lakh per acre. Government can create a division under the National Housing System controlled by acquisition authority to create a website allowing the public to register their lands, and the public can find out the value government is willing to pay in case of sale. The public will quote their price first, and after analysis, the government will quote its offer, which will be lower. The land will be acquired for various projects under the national housing system if the offer is acceptable.

Land Acquisition Method 4

The public will be requested to contribute land for charity like the Bhoodan movement. Government should accept small lands even if it is less than 5 cents. The government will bear all the expenses regarding the land transfer. All contributing individuals will also receive a signed certificate from the President of India acknowledging their contribution to nation-building.

Land Acquisition Method 5

The Land and Building Accounting System will expose many benami properties, and taking over such properties will help the government to achieve land acquisition targets.

Land Acquisition Method 6

A law will be introduced to support a land ceiling. The family members can jointly own only up to 25 hectares of land. The government will buy back lands at market price from such landowners, especially estate owners who own land above 25 hectares.

Creating Employment and Raising Living Standards of Ordinary Citizens

Most beneficiaries might not have the capacity to pay EMI. So, it is the government’s responsibility to raise the individual to the potential of paying EMI. All family members will have the opportunity for employment under the national employment system, who will be paying EMI and co-owning the house. It will be a driving force for women’s empowerment in India. This model provides guaranteed employment opportunities for all beneficiaries. EAC Integration Centres and the National Employment System have a significant role in ensuring the success of this system.

Loan repayment by the public via EMI will help the government consistently create new markets and employment opportunities. If the government promises a home loan waiver, it will increase unemployment. So, in the future, no government should stop fund flow via EMI for political gains.

Options Available to House-purchasing Beneficiaries in the Housing Scheme of the NHOS

Type E, F and G are all part of the housing scheme of the NHOS.

A. Pickup a Location

Beneficiaries can choose the subdistrict where they require the house. It does not mean it will be an exact location according to their preference. However, the location of the house can be nearby their preference.

B. Size Selection 400- 600 Square Feet

They can choose the house size according to their finances and ability to pay EMI. However, 400 square feet should be the minimum size of the house, and the largest house size should be less than 600 square feet for a nuclear family. If they need a large house above this, they should choose a home loan from the bank. The housing system should aim to provide everyone with homes; to achieve this, limiting the maximum size of the house is essential.

The houses in rural and semi-rural areas where it is built as independent houses the design will be made in a way it can be expanded in future. In the case of apartments in urban regions, it is not possible.

C. Select the House

Not only in terms of location but also in terms of house, they can choose whether they need to buy it. A home is not forcefully allocated in the housing system. The constructed houses will be sold like those in the real estate market.

D. Selecting the Tenure of EMI

The tenure of EMI can be selected between 5 to 30 years according to the buyer’s convenience. There is no downpayment, and the house can be purchased with a meagre EMI, such as 5,000 or 8000 per month. So, a person only requires the intent to purchase a home, and the person can buy with zero rupees in cash.

Third-Party Contract System

In most investment types mentioned above, the money is not directly transferred to the beneficiary in National Housing System. Instead of that, the third party is building the house, which is purchased by the beneficiary at the lowest interest rate. So, the third parties who are building the house can generate employment for one crore+ population directly and indirectly. I will explain a model in which third-party contractors can be developed quickly. The third-party contract system can be implemented via the single-person contract system.

Single-person Contract System

Every year two lakh+ civil engineering graduates and diploma holders in civil engineering complete their courses in India. Most of them cannot find jobs in their own field and are learning new skills that are different from their educational background to get jobs. Many of them are unemployed also. The single-person contract system is an opportunity for 30 lakhs+ civil engineers all over India. For the next ten years, at least 10 lakhs will earn in the field they are educated in. This is also an opportunity for civil engineers to get practical knowledge. People related to other construction technology degrees can also be part of this contract system.

Step 1

In this method, an exam authority will be developed to create a curriculum that includes various aspects of building a house. The curriculum information includes videos of different construction stages and materials procurements. It provides plumbing, electrical works, construction works, leakproof construction, disaster-resilient structure development and information required in the real world. A video course will be developed including all such information. In addition, it will include specialised generic detailing from different areas, such as mm used in wiring for power sockets.

Once the curriculum is developed in construction management and general areas, the exam authority will organise exams all over India. Civil engineers clearing the exams will be provided additional free training for 15 days about ethical business practices and general information.

Step 2

The government will use various land acquisition methods in collecting lands from different places in different states in India.

A sole proprietorship company will be registered in the name of the individuals who cleared the exam.

A building contract authority will be developed to regulate the engineers who cleared the exam. In addition, they will be provided with a contractor’s license after clearing the exam.

The land collected will be allotted to individuals who cleared the exam.

There will be a mechanism in which they will be assigned as temporary guardians of the land, and local sanctions of panchayat for the house will be allotted to their name.

Engineers will be asked to submit a 3d plan of the house, and the building contract authority will approve it.

Step 3

The software will be developed by the authority in which engineers can upload images of the construction and also upload the bills of the work. In addition, initial pictures of the land will be uploaded to ensure that cheating is caught.

The bills are uploaded for self-analysis of expenses and for the government to understand the materials’ quality.

The labourers employed will be paid via National Employment System. Labour drafting centres and EAC integration centres can help find labourers required for jobs.

The government will advance the total amount of construction in 3 instalments. The amount is paid in advance to the civil engineer instead of paying after the work.

There will be a monitoring authority who are well versed in construction activities and are civil engineers who cross-check the bills. In case of usage of low-quality materials, they will be flagged and asked to replace them immediately at their own expense.

In case of not following safety measures in construction, thereby endangering the long-term structural integrity of the building, they will be terminated. If found out after completion also, they will be liable for damages.

The contractors themselves will engage in doing some jobs to reduce labour charges, and the barriers of prestige and honour in doing such jobs will diminish slowly.

Once the work is complete, their completed work will be evaluated to ensure that construction and safety standards are met.

Step 4

The government will revoke the temporary guardianship and will sell the house to needed individuals under National Housing System. The cost of the land and the money provided to the contractor will be allotted as a loan to the buyer. The government will bear all the property transfer documentation expenses.

Step 5

The profit margins for the contractor will be less as it is just a single house. So now with the experience they should be able to increase their profits. To do so, rate the work of all houses constructed, select 50% of the total contractors based on rating, and allot funds for three houses on a single land. It can be three independent houses or a single house with three separate flats. For the remaining 50 per cent, allot them another independent house and guide them to improve their rating. Once they cross a particular rating, they can also get three houses contract. When granted multiple house projects, they can reduce transportation and labour charges.

Contractors with extremely unsatisfactory ratings should not be given further projects.

Step 6

Select the best among all the contractors and provide intensive training for three months under real estate developers developing larger projects like schools, hospitals and larger apartment complexes. Once the training is complete, allot them larger projects under the targeted shared company model. However, a larger company with five contractors will be formed and jointly own the contract. The government will also be a shareholder of that company and will advance money to the company. Therefore, the larger-sized company will have ample funds to complete larger projects.

Tourism project: The 400-600 sq. feet house limit is not applicable in tourism projects. The structures and paintings can be decided based on the whole project.

What are the Targets?

Ten lakh+ contractors can build 2 crore+ houses annually under this method. In 10 years, with a slight annual increase in the new workforce, the government can ensure 25 crore houses are built.

Choices for Contractor

Contractors will have a choice to pick up designs from many models designed by architects and send them for approval. From the rating system, contractors can identify which models are more acceptable to the public. There is no requirement to build every home the same way as in current housing projects.

The contractor who clears the exam will get nearby projects within a 50 km radius of their house and ensure they do not require relocation to the new place.

Rate of Square Feet

The government will fix different rates for each square feet based on city, village and town analysis. Statewise, there will be different rates for contractors.

Equipment Hiring Centres

3000+ construction equipment and machineries hiring centres should be promoted all over India. These hiring centres are essential for faster completion of work.

Benefits for Buyers

Government can ensure that many areas which were previously not addressed are addressed under this method. Government can provide certain free benefits when the house is transferred to the beneficiary. For example, a gas connection can be provided for free for house buyers. Piped water, bathroom facilities and clean homes can increase the residents’ hygiene. Cot, mattress, fan and table can be provided for free for all house buyers under this scheme. Documentation charges are completely waived off for beneficiaries and are borne by the government. The interest rate of loans secured under the NHOS housing scheme will be minimal.

Permanent Crew System

The civil engineers will be asked to hire a permanent crew of at least three members; the remaining can be temporary employees. To get contract work for more than one house simultaneously, they must compulsorily hire at least three members as permanent employees in the construction company. They can terminate and employ new people according to the contractor’s wishes; however, there should be a minimum of 3 employees at a time.

This permanent crew under a contractor can help mobilise people faster in completing larger public projects such as railway stations in a shorter time. This method can be applied in combing a workforce of 10,000+ workers for a shorter period.

Wiring Services Contract Company

More than 1 lakh electrical engineers can start such companies with electricians all over India after examination in a similar model provided to civil engineers. They will be asked to hire at least three electricians under them as permanent company employees. With two crores+ houses built in a year, each construction company under the housing system will be compulsorily asked to hire electrician services from newly registered electrical wiring service provider companies. The national employment system and wage transfer can be used to check compliance with this law.

The construction company will decide the payment for wiring services, and there is no external intervention in determining the price. The only requirement is to choose one among the wiring service contract companies.

Painting Companies and Interior Decoration Companies

House painting and minimal interior decoration are essential for every new house. So many sole proprietorship and partnership companies will be started in that domain.

Tiling work companies and stone block flooring companies will increase their reach. However, the contractors are free to do it themselves or give it to another person or company based on their interests. Anyway, more than 20 lakhs will be employed in these domains.

Loan Regulation

The success of the national housing system is dependent on many factors, including loan regulation and diverting funds. Many loans provided in India are damaging the real development of the nation. Banks are only ready to give loans based on salary slips and collateral. Banks are prepared to trust a doctor, not a farm or construction labourer. Banks have the right to think so, as the weak income standards of the rural sector are affecting the repayment of loans of more significant amounts. About 25 per cent of the Indian population will apply for renovating houses and constructing new houses if loans are accessible to them based on trust. The National Employment System and EAC Integration Centres are compulsory for banks to generate confidence in the commoners. Banks can develop trust if all the jobs done by rural labourers are accounted for via these institutions, and they are earning well. Loans provided in many other regions should also be diverted to ensure funds are available to the national housing system. The regulations are intended to restrict the usage of certain assets and collateral in the banking sector.

The regulations that are required:

A. Complete Termination of Overseas Student Loans.

No collateral should be allowed to be pledged in any banking institution in India to secure loans for overseas education purposes. It is weakening the Indian rupee as outward remittances are increased. Every loan, including property loan takers, should declare that money will not be diverted by taking loans in other names and using them for overseas education. In case of finding out about abuse of the process, the loan agreement will be cancelled, and the money has to be returned to the bank immediately. So a person cannot take a property loan and send that amount for overseas education. If people want to opt for overseas education, they must use cash in hand.

B. Reduce Loans for Larger Houses.

Every property has a larger square feet charge in rural and urban areas. Even if the collateral is available, the loan should be provided only up to cost, covering 2000 square feet. If people want to build a larger house above 2000 square feet, they must sell part of their property or assets or use cash. Bank services will not be available after a particular limit. It means collateral will not anymore automatically guarantee loans of a larger amount.

C. Gold Loans

All gold loans should be limited to 25 lakh per annum. Gold, as an easy collateral for getting a loan, is creating a colossal import liability. Capping of larger gold loans will increase sales of personal gold assets instead of pawning. Banks should have a mechanism to buy gold from the public. However, smaller gold loans below 25 lakhs should continue to ensure that the middle class and poor are not affected. There should be a high-interest rate for gold loans above 10 lakhs.

D. Profession-based Personal Loan

Profession-based loans and other personal loans should be limited to 25 lakhs.

Changes in Loans and their Broader Impact

In the same way, many other loans should also be capped to ensure funds are available to the national housing system. There are many benefits to introducing this loan regulation. Gold imports will be strictly regulated in the coming years. The savings of the rich will increase as people have to save money to make a significant transaction, such as buying a large house.

An increase in the cash holding period benefits the economy as investment in stocks, mutual funds, savings accounts, and assets will increase. Existing and renewable loans of all types should not be affected, and changes should be introduced only for new loans for the categories mentioned above. Business loans should be promoted vigorously and not be affected by the reforms.

Banks will witness losses, and new services must be added to adjust to the mounting losses. However, new services do not mean refurbishing life insurance schemes. Banks should be the window of various new categories of investment types, such as non-resident income channelling.

Having collateral does not automatically guarantee a loan of a large amount in the new banking reforms of India.

If the rich and people with large collateral assets can get the advantage of getting loans using their properties all these years, then the poor can also gain an advantage by channelling loans to them. Once the economy expands after all institutions mentioned in my book are operational, the loans for the current per cent of collateral value can be reintroduced. Setting priorities to help the masses is the primary objective of this regulation.

Targeted Multi-loan System

It is a loan model for promoting specific business categories in India.

Civil engineers in a single-person contract system can take loans for different specialised areas opened by the government for expanding their businesses. It means the same person can take multiple loans at various intervals or together. The specialised areas are construction equipment’s, rolling money loans, and pickup vehicles. In all these areas, they take loans, and one loan will not affect others as long as payment is correct. Moreover, EMI will be for a longer tenure, such as 15 years for goods vehicles, instead of the shorter term provided to vehicles currently.

Course Correction

Before the housing market becomes saturated, a minor section of new contractors from single-person contract system should be reallocated to commercial construction and tourism projects. Rules such as 400-600 square feet should be altered, or new innovative measures should be initiated to sustain the employment market.

Special Note: This is the third chapter of the book New India Manifesto by Blessen T. Sam. The concepts introduced in this book are unique, and referencing the book and the author is appreciated. Support the hard work of the author to modernise India by purchasing a print copy of the book from Amazon or Flipkart. For research collaborations, contact the author at blessentsam@gmail.com.