City think tank floats proposal to offer slums a feasible makeover

In the backdrop of the Cabinet’s decision to increase the carpet area of houses eligible for interest subsidy for Middle Income Group (MIG) under the Pradhan Mantri Awas Yojana (Urban), this proposal mooted by MIPR holds even greater significance for developers in the city. 

MIPR proposes a scheme to create a substantial stock of affordable housing that can be available either for ownership or for rentals. Government lands locked up in slum tenements and vacant temple lands held by the Hindu Religious and Charitable Endowments Department (HR&CE) can be channelised for redevelopment. 

To drive this point, the implications of twin models were captured through a case study on Kannamapet site in T Nagar. The total project cost of 1,000 units of 1-BHK flats (400 sq ft), including registration, works out to Rs 95.89 cr, the MIPR document notes. It adds that the amounts that need external funding after the state’s contribution for registration costs and sales is around Rs 55.23 crore. MIPR proposed that the CSR route be used to meet external funding. Incidentally, TN’s CSR projects undertaken during 2015-16 comes to Rs 261 crore, putting the state in the 7th position after Maharashtra (Rs 1,138 cr), Karnataka (Rs 408 cr), Andhra Pradesh (Rs 379 cr), Gujarat (Rs 322 cr) and Rajasthan (Rs 285 cr).

Likewise, under the rental model, the monthly instalment works out to around Rs 4,200, while yielding an annual savings of over Rs 15,000. “The model generates 1,000 flats of 400 sq ft each under a FSI of 3.0 (from the current 1.5). The existing slum dwellers are assumed to take up 600 flats, with the balance sold at a discounted price of Rs 7 lakh each. The EMI for new buyers under PMAY scheme will be an affordable Rs 4,200 monthly on borrowings of Rs 6 lakh. Construction costs are assumed to be Rs 2,000 per sq ft to provide an adequate developer margin,” it was pointed out. 

MIPR believes that the proposed ownership and rental models including the funding strategies have the potential to make a drastic impact on affordable housing in the city, that will have a cascading effect on the urban infrastructure and quality of life. MIPR has utilised the services of Akara Research and Technology for the 1-year-long readying of the proposal.