Not for the rich alone

The Delhi Development Authority and the ministry of urban development have published a draft Transit Oriented Development (TOD) policy for locations with a very high floor area ratio (FAR), a model that has a high likelihood of being taken up across the country. TOD is a form of city development that involves mixed-land-use communities centred around a high-quality train/metro system and high level of pedestrianisation. High concentrations of people live, work, travel and entertain within a limited area, thereby minimising travel. High density enables the maturing of local markets for a large range of goods and services. Collateral benefits to the environment, energy use, public health and innovation can be massive if done well. Real estate values at such concentrations are significantly higher, which, in turn, enable investment to flow in. 

However, if not implemented well, TOD can easily worsen conditions. For instance, without adequate public spaces and local markets, little extra economic values are created locally, thereby compromising returns to real estate investments. As is well known, a large part of the non-performing asset crisis in banking originates from real estate investments that did not yield expected returns over a long-time horizon. Inclusiveness is another critical element; low-cost housing enables lower-income citizens to live in high-value locations and provide a range of important services. Today this function is carried out by slums by providing household help, vendors, sanitation and garbage workers, beauty services, security guards, mechanics, gardeners, etc. As such, done poorly, TOD can destroy values, public health, environment and city landscapes for many decades into the future. But if done right, it can power India’s desire for creating innovation, opportunity, inclusiveness and high growth. 

The draft TOD for Delhi rightly touches upon all of the points above. It, however, needs to overhaul three core aspects in its drafting. First, high density is critical, therefore a high FAR needs to be combined with a high ratio of housing for economically weaker sections (EWS). Without a large proportion of dwellings for EWS, high FAR-oriented TODs are merely enclaves for the rich, with few environmental, social or economic benefits. At least half, or even more, of the units, therefore, need to be allocated for EWS housing. Second, sound management of local markets, public spaces, vendors, parking, etc is more important than creating infrastructure. Without these being administered well, clutter and disorder become the norm, and the TOD model of value creation collapses.

Property prices have already fallen in neighbourhoods with Metro stations where such clutter and jams rule. Merely dumping such functions on local bodies is obviously not enough and a governance model along with answerability of the managers/officials must be incorporated. The TOD policy, therefore, must incorporate specifics on the day-to-day management of public spaces against encroachments, answerability of public officials to the residents and commuters, and quality provision of public utilities. 

Third, the TOD plan has rigid elements such as land use classification and without a well-designed mechanism of flexibility and change. It effectively is allocating planning and design to private developers who neither have the capabilities nor the incentive. That is why planning and design should be conducted by empowered and capable public bodies. Finally, there is a strong link between good urban planning and management, the real estate market, and long-term economic growth. Improved planning effort now will yield dividends for long.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel