The Bias Toward Sprawl

Understanding the American and Indian perspectives.

Over the past century, after the industrialization era, migration and urbanization were the town’s talk. Rapid urbanization has caused irreversible changes to the city, people and environment in all means. The resource management strategies, sustainability and compact developments were to heal the deterioration and preparedness for future growth. The major step toward resilience was the amendment of urban policies that would shape our cities. Policies like Urban Land Ceiling and Regulation Act, 1976, housing for all vision etc., in India and the Federal Housing policy act in America has led to similar impacts. It likely said every ideology had its drawbacks. Compact development or sustainability is not erroneous, but the rigid policies that control the land market causing distortions, thus creating artificial demand bubbles. (Dua, 2017)

Agreeing with the argument of Edward Glaeser on the Federal Housing Policy of America. “The central piece of the policy was the home mortgage interest deduction” (Glaesar, 2011). Observing the past trends, people suburbanize, we can’t fault people’s choice, but we could fault the system that creates artificial pressure and enticements for people to leave the cities. This policy caused a foolish uprise in the housing bust of 2006 -2008 as the policy subsidized home ownerships in income tax reduction and pushed people to spend more on housing. This is also in buying bigger houses on large lots that are often obtainable in the suburbs. Incentivizing people is not harm but having an upper limit would be more considerate for middle-class Americans.

Tax reductions are worth subsidizing but encouraging people to borrow money doesn’t make much sense. (Glaesar, 2011). The housing bust and disproportional non-urban housing damage the cities and also causes distortions in the market forces. The demand for housing ownership increased the land price of the city, and hence people invested in the suburbs. Most of such houses were tenant occupied. In cities, it caused multi-dwelling units to make it more affordable.

While in India, similar to the Federal housing policy, Urban Land Ceiling and Regulation Act, 1976 was amended. The act stated, “to provide for the imposition of a ceiling on vacant land in urban agglomerations for the acquisition of such land over the ceiling limit, to regulate the construction of buildings” (Observer Research Foundation, 2018). The ceiling limit was four categories varying from 500 sq.m to 2000 sq.m, while the state government acquired the excess land. This act has widely distorted the land market and unaffordability, eventually giving “rise to slums, artificial land scarcity and skyrocketing land prices” (Observer Research Foundation, 2018). These scenarios were a bonanza for the land mafia, profit for builders etc. Apart from the act, the Income Tax Act of India also provides a similar deduction in housing loan interest and principal repayments. But studying from the example of the housing bust in America in 2006–08, India revised its deduction policies in Income tax and tax benefit on the house could be claiming only if its self-occupied as per Indian Financial Budget, 2021. India’s vision of ‘Housing for All’ by 2020 encouraged the strategy of affordable housing. Privatizing affordable housing development has affected the land market, and the supportive policies have forced people to adopt the wait and watch policy. (Dua, 2017). As real estate market is one of the distorted markets which lacks in records of land transaction. I find the cause to be no periodic revision of government land rates and leaving market players to create an artificial demand bubble with high land prices. This forces people to move to suburbs and increase their travel patterns.

Apart from causing artificial demand in land and housing markets, the externalities of such policy are the infrastructural development and fund allocation for urban services to the suburbs. Thinking about making the rural/ suburban more accessible than smoothening the flows of people within dense urban areas (Glaesar, 2011) are anti recessionary usage of infrastructural money. But as per the per capita infrastructural consumption stimulus, the least dense cities are allotted twice the requirement and denser cities with half the requirement. I am skeptical about the need to speed or invest in more roads in spatially developed cities. Adding new roads would induce more traffic and congestion. Instead, the money could be used in transportation modes and other infrastructure like leaving more footpath space, cycle tracks, large commuters transit modes etc. India, a developing country, has to depend on loans and fund allotment from the World Bank and Asian development bank for significant investments, making it more challenging. This funding method and amending policies that entice people away from urban areas are not catering to the need or performance. Also, the compromise on significant, expensive investments and taking up difficulties in implementing roads where people already live in, one such example is the lower Manhattan expressway.

Many policymakers support the funding of transportation cost to more minor denser cities, inconsiderately thinking they are compensated for their gas taxes. Having the concern, more compensation should be given to urban employees who contribute to half of the American income and pay huge taxes. They deserve more federal money than gas taxpayers of rural or suburban. (Glaesar, 2011). Here, I agree with the author that gas taxes are paid for social externalities caused like pollution, congestions, traffic fatalities, etc., who shouldn’t be compensated with roads.

Policies and development regulations also cause similar concerns like height restriction in Bangalore, New York, Mumbai, etc., which caused unaffordability in the city core and forced people to move to suburban areas. Cities are ever-expanding limits; sprawls are not harmful to cities unless the land being used inefficiently, as the green belt implication in Hanoi. Also, according to Alain Bertaud, the confluence of urban land price and agriculture price could potentially change land use and land cover. The substantial tax implications and market distortions due to policies could be considered significant reasons for urban out fill and make the nonmetropolitan area more attractive. Taxes are to be considered with their antiurban effects. Also, it more genuine to give more benefits and revenues back to people who pay more tax. Expecting cities more affluent residents to pay for the needs of the poorer ones” (Glaesar, 2011) or building up rural areas with the tariffs would make people find more loopholes to exempt the tax payment and thus causing “hurt to urban engines of prosperity” (Glaesar, 2011).

Reference:

Dua, S. (2017). Will affordable housing create an artificial demand bubble. Economic Times, 1. https://realty.economictimes.indiatimes.com/news/industry/will-affordable-housing-create-an-artificial-demand-bubble/61848247

Glaesar, E. L. (2011). The Bias Towards Sprawl. In Excerpts_Triumph_of the_City: The Bias Towards Sprawl (pp. 39–42). New York: Penguin Press.

Observer Research Foundation. (2018). Policies that Shaped India. Gautam Chikermane. https://www.orfonline.org/wp-content/uploads/2018/07/70_Policies.pdf