HOUSING AND LAND SUPPLY SCARCITY AMIDST...

Housing supply scarcity amidst abundance J. G. Royo-Olid

N-AERUS XIX Stuttgart, 08th – 10th November 2018

HOUSING AND LAND SUPPLY SCARCITY AMIDST ABUNDANCE: Insights over the complexity of financialisation of home in metropolitan Odisha, India

Jaime Royo Olid1 and Shailaja Fennell2

PhD candidate, Centre of Development Studies, Department of Politics and International Studies, POLIS, University of Cambridge [email protected] Senior Lecturer, Centre of Development Studies and Department of Land Economy, University of Cambridge [email protected]

ABSTRACT (Max. 300 words): Most explanations justifying the lack of affordable housing and land involve narratives of ‘scarcity’ i.e. insufficient resources to satisfy people’s wants. But to what extent is that a natural condition (e.g. a Malthusian demographic trap)? Or to what extent is it politically motivated (e.g. a form of extracting rents)? Spain, for instance, has simultaneously a highest average effort to buy (i.e. above six years of gross income after having reached 9 in 2008) and simultaneously a largest stock of empty houses (i.e. 4.1 million vacant houses for a population of 46 million). In India, there are an estimated 12 million empty urban houses which could account for 40% if we take 30 million units as a possible urban housing gap. So, what causes the ‘scarcity’ of supply even when there is under-utilised stock, urban land and people’s potential? The research explores whether financialisation may find an ally in ‘scarcity’ of supply in so far as it increases the value of financial assets. This has consequences over the social function of housing and wider economic opportunity costs. To explore the above, this paper focuses on the preliminary analysis of 15 in-depth expert interviews and of the perceptions of 206 households stratified across the cities of Cuttack and Bhubaneshwar, India. We build on local accounts that “housing is made scarce” in multiple and unexpected ways. The paper reclaims the relevance of a long history of alternative notions of the ‘scarcity principle’ from both sides of the political spectrum. It identified some manifestations of financialisation of home and proposes a preliminary typology of the dimensions of supply scarcity in the housing and land markets. This sets the basis for sketching complex ways in which different stakeholder push housing costs to the limit of a socioeconomic system. We suggest the paradox of ‘scarcity of supply in abundance of stock’ as a key complex characteristic of financialised assets. KEY WORDS Financialisation; alternative scarcity principles; housing; India; political economy.



INTRODUCTION ‘Not being able to afford housing because it is scarce’ and ‘scarcity being accepted as an unavoidable condition of most basic goods’ were the most recurrent perceptions we recorded in metropolitan Odisha, India. Our survey involved 206 households of different socio-economic status across the adjacent cities of Cuttack and Bhubaneswar. These accounts convey slum dwellers sense of surrender to a socio-economic order that seems natural to many of them, one in which ‘there cannot be enough for all’. This paper suggests that these perceptions are partly the expression of people and governing authorities internalising the pervasive narrative of mainstream economics that ‘all goods are scarce’—the so-called ‘scarcity principle’. This was most distinctively coined by economist Lord Lionel C. Robbins (1932) who defined economics as “…the study of social behaviour guiding in the allocation of scarce resources to meet the unlimited needs and desires of the individual members of a given society” (p.16). This definition has until today been widely accepted and taught internationally despite it usually requires the tautology of all goods being scarce because the factors of production are themselves scarce and the uncritical depiction of all consumers as megalomaniacs with unlimited wants. We take issue with equating essential needs and less important wants and will suggest a way of recognising their relevance.

[fig. 1] Inhabitants of Surya Nagar who expressed resignation to their impossibility to afford dignified housing

(Source, Jaime Royo-Olid)



But a few households from our survey and most of the 15 experts interviewed also brought up the issue of ‘housing being made scarce’. These fewer respondents gave accounts of multiple and unexpected ways in which abundant urbanised land and built houses lie empty and inaccessible to those living in undignified conditions next door. Other respondents complained of arbitrary restrictions to supply caused by renters (e.g. preferring to keep accommodation vacant rather than renting; conditioning rent to religion, caste or socio-economic status; etc….). Pervasive corruption in land markets and real-estate are denounced by almost all. Among the middle classes, such as information technology (IT) enginners, we also heard frustration for not being able to compete with speculative investors on land preventing them from building a house. Global capital seeks for high quality collateral (Aalbers, 2016). And fast appreciating markets such as real-estate in India are particularly appealing. But India remains known for its relatively protective policies on foreign investments, land and real estate. Legislative changes, however, partially liberalised India’s economy since the early 2000’s. Together with industrial booms, the rapid growth of money flows (national and partly international) have led to two waves of housing financialisation in metropolitan Odisha—to some extent in Cuttack and more pronouncedly in the adjacent capital city of Bhubaneswar. With regards to investments, expert Pankaj Pankaj Kapoor—founder and managing director of Liases Foras, a non-broking research company on real-state based in Mumbai monitoring 125,000 projects across India—explained that USD 54 billion in foreign direct investment (FDI) leveraged by private domestic funds and other sources came in as an equity input into real-estate of USD 600 billion into India. He explained that while this injection should have produced 8.8 million houses, it produced no more than 3 million country wide. This underlines the increasing non-productive role of financial investments in real-estate in India and some perceived spill-over effects. Accounts from residents and experts brought to light the complex political nature of ‘scarcity’ in housing, a grounded reality that does not sit comfortably with Robbins definition as explicitly critiqued by Shiller’s (2013) Nobel Price Lecture:

There is a problem, however, with the interpretation of economics that Robbins so persuasively gave. For his definition appeared to cast the economic problem as being exclusively about scarcity of production resources, like energy and food rather than also about scarcity of human intellectual and psychological resources. He casts the problem as humans against nature, when in fact much of the economic problem is dealing with humans against themselves.

Robert J. Shiller Nobel Price Lecture: Speculative Asset Prices, 2013

Alternative notions of the ‘scarcity principle’ date back to at least Locke. Classical political economists, ranging from Adam Smith, Ricardo, Marx, Keynes included in their treatises nuanced notions of ‘scarcity’ (or ‘scantiness’ for Smith) that underlined its human and political determinants. Harvey (1973, pp.113) more categorically argued that it is questionable “whether there is such a thing as naturally arising scarcity”. Yet, in so far as a society has the technological capabilities to overcome a problem but decides not to do it, calling any scarcity simply ‘scarcity’ seems frivolous for the ideological associations it already embeds. While all goods and resources are objectively finite and hence limited, scarcity in



contrast is not only subject—and subjective—to human wants but also to the particular political economy that governs supply and demand for a given resource. Among a long history of authorities, Shiller’s quote above is particularly relevant because he is a liberal economist who acknowledges the role of power relations in scarcity creation hence demonstrating that a more nuanced understanding of scarcity than Robbin’s is not exclusively a socialist proposition. The notion of scarcity is not only relevant conceptually but also for people’s claims over rights such as to dignified housing. The typical response of governing elites is often simultaneously one of empathy (e.g. recognising the right such as through endorsing the New Urban Agenda of 2016) and one of practical inability to attend the needs. Institutions will most often claim they lack the required financial resources since they conceive of housing mostly as the financial cost of supplying houses. And the scarcity of finances to meet the costs brings about a ‘natural’ end to legitimate demands over fundamental rights. Yet, housing supply may benefit from interventions that are not necessarily capital intensive such as by unlocking urbanised land, taxing vacant houses, applying value capture in land transactions or stimulating co-production of catalytic interventions that capitalise on people’s in-kind contributions. The uncritical acceptance of scarcity is characteristic of both local and international institutions in so far as questioning the politics of allocation is deeply at odds with prevalent power-structures. This is why in ‘The Limits to Scarcity’ Steve Rayner (p. xvii, Mehta 2010) posits that “to [ask why something is scarce] is intellectually dangerous”. Still, if we dare to do so, why is it that effort to buy a house grows? (i.e. why does the average number yearly gross incomes necessary for households to buy a house increase?). While we can intuitively understand there being inflation along with economic growth, why does the cost of housing outpace growth? Shiller argues, however, that in the long-term and in average the USA stock markets and growth have outpaced real appreciation of housing and suggests this will be the case elsewhere too. This puts in perspective the shorter-term nature of housing bubbles. The factors that determine the market value of assets are not only complex due to local power relations but also influenced by global markets including obscure financial products. In ‘Commodity price dynamics’, Pirrong (2011, p.x) explains that “[i]t has long been known that market power manipulation distorts price relationships, notably the relationship between forward (or futures) prices on the same commodity with different maturities… But to identify distortions it is necessary to understand how “normal”, undistorted prices behave in a competitive market”. Pirrong’s structural approach to commodity price dynamics exposes both the complexity and the limits of this endeavour for housing for which it will be practically unfeasible to know the “normal” price in the first place. Expert Pankaj Kapoor speaks of price ‘benchmarking’ as a powerful way to setting the normally accepted price of real-estate. In that sense, Shiller further indicates that housing markets tend to inflate prices and resist pressure for prices to fall as there are rarely agents—participating in investments—with an interest in prices reducing (i.e. property owners, a priori, benefit from increasing property values). This is also called the ‘rockets and feathers effect’. To compensate for this, Shilelr advocates for ‘housing futures markets’ that would introduce stakeholders who bet on lowering prices. This, according to him, would balance the vested interests and would moderate prices. Let us keep this proposition at the margin, particularly for the context of urban poor in India where market imperfections characterise it but let’s remember the importance granted to the interests of stakeholders for prices to be lowered.



Both socialists and liberals therefore agree that in the absence of competing interests (i.e. pro-appreciation and pro-lower-costs), investors will favour prices to rise. To that effect, scarcity can be instrumental since it induces value change as eminently depicted by phycologist Brock’s (1968a) Commodity Theory. While his experiments were conceptually formulated to address the ‘effectiveness of messages’, the theory’s postulates can be extrapolated to commodities and assets in an economy. Brock (1968a) also introduced the term “commodification” which “leads to increased message and cognitive response elaboration, which, in turn, leads to valuation polarization” (Lynn, 1989). According to Brock’s theory, scarcity enhances the value (or desirability) of anything that can be possessed, is useful to its possessor, and is transferable from one person to another… Its principle claim is that "any commodity will be valued to the extent that it is unavailable" (Brock, 1968 p.246). The theory implies a profit incentive to inducing scarcity via a psychological—or behavioural—channel. This effect is not accounted for in mainstream economics descriptions of supply and demand curves. Brock’s proposition depicts a more contentious relationship between the two sides of the transaction that help us explain why, empirically, supply and demand graphs are more like third order curves than straight lines. This reflects that value of rarefied resource grow at higher rates and vice-versa.

Agents’ instrumental use of scarcity to induce value change comprises of multiple, mostly hidden, supply and demand games characterised by power asymmetries. By looking at these from a behavioural and spatial perspective, this research adds to the re-emerging critical literature that challenges the reductionist—mainly Neo-Malthusian—scarcity hypothesis. The conceptual significance of this paper hence lies in that building on a rich history of nuanced notions of scarcity and abundance that account for their causes can help making cases for overcoming at least some of them. This paper now provides preliminary insights about scarcity as perceived by different residents and experts in metropolitan Odisha. CASE STUDY: BHUBANESWAR AND CUTTACK, STATE OF ODISHA, INDIA The case study involves the adjacent ‘tier 2’ cities of Cuttack and Bhubaneswar. Cuttack, is the former capital of the State of Odisha but remains the judicial and commercial capital and an important hub for textile industries. According to the 2011 census, Cuttack city had 606,007 inhabitants and including the metropolitan area the population is 658,986. In contrast to Bhubaneswar, Cuttack city lies in a geographically tight Mahanadi Kathjori delta system. While this limits the scope for its urban sprawl, there remain significant under-utilised land. Activist sources claim that Cuttack accounts for over 300 so-called slums. Bhubaneswar was originally designed to accommodate 10,000 inhabitants, but now it houses close to a million of which 35% live in slums (BMC, 2015) or more than 40% according to the Government of Odisha (2015), though figures keep on changing. The Perspective Plan–Vision 2030 and Comprehensive Development Plan for Cuttack and Bhubaneswar metropolitan areas (IIT Kharagpur, 2007) currently holding about 2 million inhabitants will eventually merge and turn into the Bhubaneswar-Cuttack Urban complex. Given the low urbanisation rate of Odisha, this urban complex might become a tier 1 metropolis in the future.



[fig. 2] Street view of typical slum in Cuttack city.

(Source, Jaime Royo-Olid, 2017) The capital of the Indian State of Odisha, tops the priority list in India’s Smart Cities Programme that claims having engaged in an “extensive citizen engagement process to guide its journey for transformation […]” (BMC, 2016). Although there is no pre-agreed definition of ‘smart cities’ Bhubaneswar puts forwards the following seven components:

1. Governance—citizen participation, intelligent government services 2. City Planning—design-mixed land use, compact cities 3. Urban Utilities:

a) Water: water supply, water management b) SWM: waste management c) Sanitation: sanitation, waste water management d) Energy: energy supply, energy source, energy efficiency, underground electric wires e) ICT: IT connectivity

4. Urban Mobility—street design, public transport 5. Shelter—inclusive housing 6. Economic Development—economy and employment 7. Social Development—identity and culture, education, health, open spaces, safety and

security, air quality ‘Inclusive housing’ features as a pillar under the Smart Cities Programme to tackle the pervasive inequality in this sector. The development plans for Bhubaneswar and Cuttack region of 2007 estimated a housing shortfall of about 150,000 units. More recently, according to a State-wide estimate by the Technical Group on Urban Housing Shortage (2012-17), the Bhubaneswar-Cuttack regions account for a housing gap of 410,000 housing units (Government of Odisha, 2015). It is further estimated that approximately 360,000 affordable dwelling units would have to be added in the Bhubaneswar-Cuttack region, exclusively, to accommodate their growth during the next ten years.



[fig. 3] View of Pattia, north of Bhubaneswar city.

(Source, Jaime Royo-Olid, 2017) Journalistic sources explain that the housing shortage in Bhubaneswar and Cuttack is induced by increasing land values, high construction costs and absence of means for people to access affordable housing finance (Pioneer Newspaper, Praharaj 2015). According to brokers interviewed, the increase in land values benefit from the lack of taxation when money is reinvested on land and from the fact that most of the transactions value of purchases of land are simply undeclared. Brokers claim the discrepancy between official and undeclared value has been reduced since the implementation of the demonetisation policy in November 2016, since it has restrained black money in the form of cash. These journalistic sources are also critical of the exclusion resulting from a housing sector catering almost exclusively to High Income Groups (HIG) and Middle-Income Groups (MIG) while marginalising the Low-Income Groups (LIG) and the Economically Weaker Sections (EWS). The widespread presence of empty apartments followed two waves of financialisation that resulted from the mining and the information technology (IT) booms in the then called State of Orissa. The mining boom involved mostly the export of iron ore to China from the mid-1990’s to 2008. The IT boom involved exponential income through exports of software, hardware and related services starting in the 1990’s and reaching a peak in 2015.



[fig. 4] HIG apartments in Bhubaneswar resulting from the financialisation of mining and IT in addition to FDI.

(Source, Jaime Royo-Olid) Money flowed from mining into unrelated areas like gold, media, real estate and even education – the state saw a flurry of educational institutions open during the mining boom. When the mining boom ended, these mini-booms collapsed as well.

Rajshekhar, M, Scroll.in One of our interviewees explained that the combination of mining and IT money with low bank interests rates led people invest on land in the outskirts of the city. “To build a house? No. As [speculative financial] investment. Then, farmlands no longer produce”. And those who would like land to actually build, cannot afford it. To deliver on the ‘Housing for all’ (HFA) policy in urban areas, the Pradhan Mantri Awaas Yojana (PMAY-U) was launched on 11 October 2015. It target the construction of 20 million houses by 2022 for EWS and LIG with investment of US$31 billion from central government. This a 6.5% interest on 20 years’ loans it is expected to leverage, according to the press, “a housing boom worth $1.3 trillion, and it would change the economy like never before” (BI India Bureau, 2017). PMAY-U covers 42 cities in Odisha where the Government set up the Odisha Urban Housing Mission (OUHM) and 30 District Urban Housing Societies (DUHS) one at the Bhubaneswar Municipal Corporation (BMC). The OUHM “aims to create surplus housing stock through different strategic development models and ensure shelter for every identified homeless in the state including temporary migrants, through provisioning of



permanent residential EWS & LIG units, as well as rental housing.” 1 The mission statement is promising and responds to criticism of the current situation. For instance, the PMAY-U (Government of Odisha 2015, p.6) also points out that “[t]he housing market showed ‘investor’ orientation rather than a ‘user’ orientation. And it also denounces the long and cumbersome process for allotment of Government land as one of the alleged reasons for developers only engaging with upstream housing market. The resultant stock from recent housing development was mainly apartments in the range of 1,200 sq. ft mid-sized […] to luxurious […] of area 2,500 sq. ft and above”.

[fig. 5] MIG apartments lying empty in the outskirts of Bhubaneswar metropolitan area.

(Source, Jaime Royo-Olid) Simultaneously, it is estimated that about 12% of the houses surveyed by the 2011 census may be laying vacant (Gandhi and Munshi, 2017). Liases Foras accounts for 5,431 empty houses (i.e. above 7 million Sq. ft) out of 128 monitored recent real-estate projects in Bhubaneswar. While it is normal for housing stock to lie empty for a while, this suggests housing developer may not be in a hurry to rent out. This, according to interviewees is due to the complications of managing tenants, the low rental yield and that speculation relies more on land value increases and on rental income. Also, many houses belong to Indians living and working elsewhere in India or abroad. And the fact is that while houses which benefit from infrastructure and urban amenities lie vacant, above a third of the population lives in undignified conditions.

1 Department of Housing and Urban Development, Government of Odisha, see http://www.urbanodisha.gov.in/Awas.aspx



METHODOLOGY This research commenced with more quantitative than qualitative ambitions. However, it became apparent early during fieldwork that accessible secondary quantitative data would fall short from the accuracy required to quantify ‘scarcity in abundance’. For instance, local real-estate brokers, explained that land and house actual prices could be up to three times the officially declared value. Hence, the scanty data obtained on real-estate transactions could be underestimated by a factor of three. The most comprehensive source of quantitative data is the 2011 national census which does not engage with the level of detail required here. A more detailed survey is being carried out in mid-2018 that will provide valuable insights and will be used for our consolidated analysis. Other important data sources such as the Land Governance Assessment Framework (LGAF) State level Report of Odisha of 2014, provides rich insights. But the LGAF did not involve primary data collection other than expert advise and did not involve inhabitant’s perceptions on governance. Given the above limitations, we decided to focus the identification of qualitative issues important to inhabitants relative to housing scarcity. We operated under the research paradigm of social constructivism in so far as we want to share our understanding of reality as perceived by households affected by housing scarcity. We then triangulate perceptions and quantitative data to develop ‘grounded theory’ based on a case study and building on the theoretical underpinning of alternative scarcity principles. Given that it was unfeasible to survey a statistically significant sample of households nor to get much information on their real income and house values, we decided to go for a semi-structured questionnaire with 60 questions/entries and a sample of 206 households stratified by socio-economic categories across the Bhubaneswar-Cuttack metropolitan area. We also interviewed 15 experts mostly in Odisha, three in Delhi and one abroad. The map below illustrates the GPS coordinates of all households interviewed. This shows the diversity of urban contexts on which households conveyed their opinions about housing.

[fig. 6] Location of 206 households surveyed across Bhubaneswar and Cuttack metropolitan area.

(Source, Jaime Royo-Olid)



It is important to mention that about a third of households either rejected being interviewed or abandoned mid-way. We found that postponing questions on income and household finances helped in retaining the respondent until the end of the survey. Keeping them bellow 50 mins became imperative. Those who responded did not always understand the question and hence we went through five iterations of the questionnaire until we felt they did. Households where interviewed with enumerators who speak Oriya, the local language. While instructed to record the exact accounts of households, a tendency of enumerators was to interpret subjectively people’s responses. We had to use proxies and audit the transcriptions by reviewing the audio recordings to identify instances where the accounts were not faithful to what households had said (e.g. respondents reported to have said exactly the same words were likely to be incorrectly transcribed). Further, the translation from Oriya to English, adds to the distortion of accounts. Despite the limitations, we have been able to identify some emerging themes. INSIGHT FROM PRELIMINARY DATA ANALYSIS A first observation emerges from responses to the question “Why did you move to the current house?”. None of the respondents expressed a having ‘desired’ to move to Cuttack or Bhubaneswar. Some were born or ended up living there for reasons beyond their control. Those who made a choice, gave utilitarian reasons such as being guided by business opportunities, access to jobs and social infrastructure facilities. Some expressed nostalgia about their prior village life but also underlined the unviability of remaining there. The of moving to the city was portrayed as necessary ‘sacrifice’ as a long-term investment on their children’s education and ease of access to health services in view of old age. The non-viability of staying back in the village seems indicative of the well-known urban bias resulting in relatively poorer provision of social infrastructure and access to economic opportunities. This suggests more of a ‘push’ than a ‘pull factor’ in so far as the latter would have been backed up by more romanticised ideas of city life which did not emerge in people’s accounts. In contrast, the ‘Smart cities’ intervention seems to have infatuated some real-estate investors and property owners who expect benefiting from a dividend resulting from appreciation. Regarding families’ incomes and estimated effort to buy a house (or share of income if they were to rent their house for 18 years), EWG households living in precarious slums reported they keep it bellow 1 year of gross income. This illustrates the little financial margin they have to spare beyond the very essentials. Several EWS explained that they regularly sacrificed food intake and tuition for the children in order to cover for housing costs. Moser EWGs interviewed living in slums conveyed their priority over obtaining secure tenure before more income. Lack of tenure was portrayed as the major barrier for investing on their house. The fear of eviction discouraged them from investing any funds or in-kind inputs such as labour or materials. About a dozen households declared an effort to buy beyond 10 yearly gross salaries and more than half of those above 20 years of salary. The latter were either living in houses owned by extended family members and they would not be able to afford or resided in houses that they built when prices were lower or inherited but that currently they would not be able to afford anew. The primary data suggests that households’ effort to buy is clearly associated with their circumstances such as family composition and capacity to save and spend on housing beyond basics.



[fig. 7] Enumerator interviewing female household head in the oldest slum of Cuttack. Respondent claimed slum

exists since the 1930’s and that residents have been expecting land tenure rights for decades. (Source, Jaime Royo-Olid)

Obtaining factual evidence of the mechanisms through which supply of housing is restrained is not a straight forward task. Yet, it emerged both as a recurrent reality perceived by locals. Also, from a quantitative perspective, it is relevant to mention that 65% of land covered by the Bhubaneswar Municipal Corporation (BMC) belongs to the State Government. This is why, experts interviewed explained, most private development is happening in the periphery and much of it lying empty. Also, this is why, the majority of EWG and LIG respondents insisted in the political nature of lack of housing and that it was within the reach of Government to unlock urban land or regularise the tenure of long-term slum dwellers. While this was promised prior to the last elections, the State Government did not deliver. In light of the forthcoming state elections and the potential of Prime Minister Narendra Modi’s party BJP in taking over, the current Government of Odisha has gone beyond the promise and enacted the regularisation of thousands of informal households. Meanwhile, The BMC is engaged in developing housing in public land through public private partnerships (PPPs), whereby private developers get a share for commercial development and, in exchange, they build low-cost housing for the EWG and LIG. Qualitatively these PPP developments are not always the house-type slum dwellers aspire for in so far as they are particularly small (i.e. often below Sq. ft 400) and detached from the ground. Quantitatively, these apartment might not suffice to meet the housing needs. At national level several policy changes have also been geared towards improving the affordability of housing and hence facilitating the role of private developers in delivering for EWGs and LIGs. Namely, the confederation of real estate developers of India (CREDAI) welcomed that housing would be declared an industry and low-cost housing declared as infrastructure. According to CREDAI, the tax benefits that will accompany these measures are likely to make lending easier and cheaper to develop projects. Another major national Real Estate (Regulation and Development) Act 2016 that established the Real Estate Regulatory Authority (RERA). RERA “seeks to protect home-buyers as well as help boost investments in the real estate industry. …[registering with RERA is] mandatory for



all commercial and residential real estate projects where the land is over 500 m2, or eight apartments […] in order to provide greater transparency in project-marketing and execution”. The detailed analysis of all narrative is still ongoing in this research. But, on the basis of the preliminary analysis we can make some tentative suggestions discussed in the next section. SKETCHING A TYPOLOGY OF THE DIMENSIONS OF SUPPLY SCARCITY Both from the accounts of interviewees and the notions of scarcity, we propose the following working typology of scarcity. One which recognises both the scarcity inherent to the limited availability of certain goods in nature but that also distinguishes scarcity that is mostly human-induced, hence artificial or contrived. Originally, we proposed a typology that categorised natural versus artificial scarcity. However, we came to the conclusion that is so far as scarcity is relative to human wants, there is inseparable. While there can be instances where scarcity is most due to the rarity in nature, there will always be an element of human-induced scarcity. The question is therefore how much and of which nature. We suggest distinguishing scarcity mostly affected by insurmountable barriers from artificially induced or human-contrived scarcity. Table 1 Proposed working typology of scarcity

Mostly insurmountable dimensions of scarcity

(i.e. cannot be overcome with current technology in the short-term)

Mainly artificially-induced dimensions of scarcity

(i.e. can be overcome through current technology or policy change)

Spatial: e.g. land where humans can make a living Architectural: e.g. design, planning Temporal: e.g. lifetime to do things Functional: e.g. something may be

dysfunctional due to managerial incompetence Material: e.g. rarity or mass required of material for construction

Positional: e.g. wants may be guided by social competition for goods beyond essential need.

Energy: e.g. batteries storage capacity Legal: e.g. of rules formal and customary Environmental: C02 that climate stability can take Financial: e.g. exploitative debt or rents Biological: e.g. rate of production of honey by bees Political: e.g. democratic choice Intellectual: e.g. human limits to comprehension Behavioural: e.g. tradition’s inertia

THERE IS NO SCARCITY WITHOUT NEEDS AND WANTS But the above may be insufficient for its application. Scarcity is a relative term that mediates between the level of availability or supply of something with regards to demand or people’s perceived sense of need or want. It seems unsensitive, like in Robbins definition, to categorise essential needs equally to facies. For instance, every human being requires a few litters of drinking water per day to survive. Even then, people’s want for water to survive is not infinite. It can be estimated as the volume of water required to survive multiplied by the number of people on earth. Some people may want water for long showers or even for jacuzzies. That demand is of different nature and it would be useful that policies involved in the allocation of goods treat these differently and ‘smart metrics’ may make this possible. While it can be contentious to judge the legitimacy of wants, differentiating the extremes of basic needs from fancies can be feasible. In the case of housing, shelter is a fundamental basic need for anybody and EWG or LIG might require assistance to access one. Shelter is more urgent than the want of additional



comfort or luxury of a large apartment for the MIG or HIG. Accordingly, it is suggested that for any refence to scarcity, to make sense, we need to clarify scarcity of what for what purpose. There will always be housing scarcity if that is to be defined uncritically as the pervasive human aspiration for more. But the provision of sufficient housing for essential needs, in contrast, is more quantifiable and manageable. For as obvious it may seem we contend that public policy can more legitimately intervene on fundamental needs and less so on the realm of wants, fancies, luxuries. Having accepted that needs be prioritised over wants, the question becomes what are ‘meaningful’ needs. For Chambers (1983) meaningful development depends on what people value. Therefore, even if we deal with essential needs according to us, the qualitative and the quantitative assessments of well-being by the people concerned are inseparable. Well-being and poverty are multidimensional and even the widespread notion of ‘human development’ with three dimensions (i.e. income, health and education) might not suffice to assist people in ‘affording’ the subjective good life that they value e.g. some might cherish social acceptance or contact with nature rather than longer life expectancy. The proponents of the ‘new basic needs’ approach suggested providing the poor with opportunities for a full life rather than simply commodities (Clark, 2005). Sen went further by proposing well-being or development as freedom (Sen, 1999). At the same time, as we get closer to the poverty line, people’s capacity to enact their existential freedoms, expectations or capabilities get more dependent on whether they can afford access to certain goods and services—such as sufficient nutrition, basic education, health or housing. Sen suggests a chain relationship between ‘commodities’ as instrumental to ‘capabilities to function’ and ‘utility’ (Clark, 2005). Therefore, commodities or assets—such as houses—remain instrumental to development. And it follows that whether people can afford those remains central to many of their freedoms. The notion of ‘affording’, might be read in a broader or narrower sense depending on whether we refer to commodities, capabilities, function or utility. If development is associated with ‘capability expansion’ (Sen, 2003), any notion of affordability would evolve over life and necessarily vary for different societies. Expectations—of being able to afford—are also central to development. For instance, a young professional who cannot afford a house today, will keep up motivation if there is a credible aspiration of attaining it in the future. In contrast, when the enactment of generalised freedoms is restrained, particularly in a wider context considered to be progressing, it may lead to a pronounced sense of regression. This is important because as societies evolve, as technologies improve comfort, as economies and even per capita income increases when developmental aspirations and demands grow faster, development becomes an elusive process. And when fundamental aspirations do not materialise, such as when affordability of commodities is restrained, the perception of development recedes. Reconciling the scarcity typology and the nature of wants we propose hereby a first draft of a framework for identifying why there is scarcity and how it affects people’s capabilities. This framework is currently being developed as part of my PhD theses.



[Table 2] Proposed working typology of scarcity vis-à-vis needs and want

Scarcity

dimension

Specific scarcity manifestation Essential needs or functionings affected

(i.e. required for survival)

Wants: capabilities affected (i.e. required to enact freedoms)

Mos

tly in

surm

ount

able

scar

city

Spatial e.g. Cuttack delta insufficient not-floodable space for housing given anticipated demographic growth by 2050

e.g. … compromised minimum amount of space to undertake vital functions such as sleep, eat, work...

e.g. Comfortable amount of space to enjoy life such as recreation

Temporal e.g. scope for human development in one generation’s time

e.g. …time for min sleep, eat, rest, basic education, work, etc…

e.g. time for recreation, learning, family time, etc…

Rarity/Mass e.g. locally-available construction material below demand

e.g. essential amount of construction materials and for furniture to make a shelter

e.g. material to satisfy the ambitions of households to expand, or beautify their houses

Energy e.g. unaffordable electricity costs during heat waves…

e.g. …for ensuring liveable thermal conditions

e.g. …for general thermal comfort

Environmental e.g. lack of clean water in urban areas during drought

e.g. … basic health and hygiene are compromised

e.g. …for a clean looking urban environment

Biological e.g. lack of affordable construction materials such as timber and clay bricks due to their natural rate of production

e.g. …unaffordable housing construction materials

e.g. … fewer choices available for more aesthetic or cultural choice of construction material

Intellectual e.g. inability (yet) of governing structures in comprehending the complex externalities of financialisation of land and housing over local population

e.g. …EWS and LIG are trapped in land and housing markets which they cannot afford and are pushed to pay to their limits.

e.g. …MIG get trapped in mortgage debt despite potentially the housing and land bubble may burst.

Art

ifici

al/C

ontr

ived

/Ind

uced

scar

city

Architectural e.g. Cuttack delta insufficient space for housing at current density and given current zoning in masterplan

e.g. …lack of basic shelter given higher prices of land because it is rarefied by design.

e.g. …high effort to buy housing due to rarefied land compromises ability to save.

Functional e.g. non-provision of social services such as solid-waste management due to corruption

e.g. …compromised health of inhabitants in slums due to accumulation of garbage

e.g. …unpleasant urban environment full of garbage

Positional e.g. social aspiration for big houses and land of HIG beyond needs competes with essential needs of EWS and LIG

e.g. …elites leave no chance to EWS and LIG to buy land or houses

e.g. …MIG feel compelled to live in a rich looking house, hence might over-indebt themselves for the sake of appearance.

Legal e.g. zoning and tax policy favour speculative investment as opposed to productive.

e.g. …insufficient finance goes to producing housing. Housing gap means prices are higher.

e.g. …MIG cannot afford productive investments in land and housing since they are crowded out by speculative investors

Financial e.g. global investors and local partners rely on profits from land and housing in Bhubaneswar and Cuttack and hence lobby to ensure these materialise.

e.g. …investors discourage local politicians from developing affordable housing because it lowers the rents and the value of their investments.

e.g. …MIG and even HIG may be competing with international investors in the local land and housing markets.

Political e.g. as the share of owner-occupied households increases there is less democratic demand for affordable housing government policies.

e.g. …local property owners discourage politicians from developing affordable housing for EWS because it lowers the rents and the value of their properties.

e.g. …expanding housing rental markets are discourages (because they compete with property owner’s rents) and this reduces the scope for mobility.

Behavioural e.g. need to comply with traditional beliefs such as vastu shastra, limit acceptable housing choices

e.g. …EWS and LIG struggle to find housing that meets their cultural beliefs. Some feel the ‘wrong’ composition of a house may bring them bad luck. Lack of tenure prevents them from fixing it.

e.g. …freedom to be oneself and expanding or adapting a house freely is compromised by the need to conform to the norm.



CONCLUSIONS This paper has looked into how different agents involved in the urbanisation process of Cuttack and Bhubaneswar are affected by land and housing scarcity and how they perceive this affecting their lives—in the case of households—and that others—in the case of experts. Despite not apparent to all, scarcity is perceived as being deliberately induced—proactively or by omission—for the purpose of value inflation of housing and land. The role of stakeholders in this process is complex and unclear but there are apparent benefits for some and some clear incentives patters. For instance, incentives for scarcity of land and housing seem to be amplified when along with it there is (over)provision of liquidity—either from speculative financial markets or credit. Induced scarcity seems a plausible mechanism of value extraction where there are no productive financial investments. Those with a stake on scarcity range from any local modest property owner to local elites and global investors. Recognising that all goods are limited but that their relative scarcity is partially induced by humans is the starting point to disentangling the complex dynamics of scarcity. We have suggested a working typology of the dimensions of supply scarcity such as to better identify ways in which housing and land may be restrained. The paper aims, in practical terms, at helping citizens, activists and urban policy makers identify and overcome obstacles to supply. This is work, however, is in process and the proposed framework requires further elaboration.

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