A brief history of struggle against hunger in UP
Shiv Prasad Singh (Adv.) and Tanweer Ahmed Siddiqui (ADV.)
Chief secretary of UP Sri V.K. Mittal formulized some rules under DO No. 4426/29-6-2004-146/2004 dated 22 December 2004 for the disposal of complaints in relation to deaths caused by hunger and malnutrition. This formulation is result of ongoing strenuous campaign against hunger in UP. It is also mentioned in the rules, “. ----- In spite of that this fact has been brought into the knowledge of the Government that the cases of hunger and malnutrition, occurred at village level, are not attended within time and redressed. Such incidents of hunger and malnutrition are publicized by media / news papers and brought into the knowledge of supreme court commissioners by NGOs and due to this state government has to face unpleasant situations.” Thus it is clear that the rules dated 22-12-2004 have been formulized due to the initiative taken by and pressure created by media and various social organizations. Before the formulization of the rules dated 22-10-04, Special secretary of UP Government Sri Prabhat Chandra Chaturvedi had sent a letter (letter No. 3872/29-6-04) dated 9 Novermber 2004 to supreme court commissioners Mr.S.R. Shankaran and Mr. N.C. Saxena and in this letter UP Government had explicitly stated about the formulation of aforesaid rules dated 22Dec.2004. Let’s make a review of this.
On the complaint of Dr Lenin of PVCHR about the cases of malnutrition of children in Varanasi, and on the complaint of sri BD Rawat of social development foundation about starving people of Ghasia tribe of village Raup in Sonbhadra and on the complaint of a woman for not to get the benefit of state family benefit scheme, Hon’ble commissioners of supreme court issued notice on 22-9-04 to chief secretary of UP Government. A high level committee was formed under the chairpersonship of state commissioner of food and supply to make an enquiry in respect of aforesaid complaints. Enquiry committee made a visit of concerned places from 4-10-04 to 7-10-04. Enquiry committee visited to the office of PVCHR and met with children Chandan ,Malka and their father Mr. Umashankar, who had been suffering from IV Grade malnutrition due to prolonged hunger. Convener of PVCHR Dr. Lenin had a talk with the members of enquiry committee and pleaded that there was a need of emergency fund and accountability mechanism at village level to fight against hunger and malnutrition effectively. Dr. Lenin and Smt Shruti raised two main demands in their complaint dated 28 August 04 illustrating the case of Malka and Chandan. First demand was made that if information was not provided to district administration within time in the case of hunger and malnutrition then action should be taken against village Pradhan and village secretary. The other demand was to reject the registration of Manav Vikash Evam Uthan Samiti, which boasts to work for the welfare of children. It should be noted that village head Lalman Pal of village Rassipatti was associated with this samiti and which had its office at the distance of 100 metres from the house of the hunger stricken family. This incident of hunger and malnutrition was reported to AHRC in Hongkong and AHRC issued an appeal on his website which has a worldwide network of 2 million people and exerted pressure on state government of UP. On the other hand newspapers gave wide publicity to this case. Especially a journalist named Surojit Chetarji of Hindustan’ created pressure on district administration by continuous follow up of the case. And thus as a result of long battle UP Government got awakened and took initiative to formulize the rules of historical importance. Chief secretary Prabhat chaturvedi in his letter dated 9-11-04 to the commissioners of Supreme Court, promised to make an action plan to check the incidents of hunger and malnutrition. He commented “The incidents of hunger and malnutrition are taking place at village level. District administration and Government do not get the information of these incidents of remote villages within time. Therefore serious consideration is being made to give appropriate rights to the village level officials and to fix their accountability in this respect”
He further said, “At present sufficient fund has been made available to every district magistrate to provide help to needy people and direction has been given to them to provide instant help to avoid incidents of hunger and malnutrition.”
Thus due to continuous and effective advocacy done by PVCHR based on the facts, first time UP Government accepted that there had been problem of hunger and malnutrition in the state and had also identified slow down in handloom weaving industry and problem of unemployment among weavers. PVCHR thinks that it should be made an effective tool to protest the policies of WTO, World Bank and IMF. PVCHR has been campaigning against the policies of WTO and World Bank since 1996. On the initiative of PVCHR Colombo declaration was made on 30 May 2004, Banares declaration was issued on 26 June 2003 and in January 2005, South Asian People’s Conference was organized and a South Asian People’s Declaration was issued against the policies of Free trade and WTO, which are milestones in the struggle against hunger. On the death of 18 children caused by hunger and malnutrition, belonging to Ghasia Tribe who having displaced from Marcuri got settled at village Raup in district Sonbhadra, Dr. Lenin prepared an extensive report and complained with NHRC. NHRC expressing his serious concern over it, issued notice to chief secretary of U.P. government.
After that National Television & Media gave much publicity to this incident of children’s death and attracted the attention of various National & International Organization and inspired them to take initiative to stop such incidents. PVCHR has been working hard to organize the people of Ghasia Tribe. 70 Red Cards and 10 Annapurna Cards were distributed and an ICDS center was opened and now many children are joining school. PVCHR by developing cooperation with AHRC and VOP and by the help of MISEREOR (Germany) has advanced in the direction of making this Ghasia ghetto of Raup into an ideal village, which would be free from hunger and malnutrition within three year and Ghasia Tribe would be the center of establishment of people’s right against hunger and exploitation. The land on which people of Ghasia Tribe have been livings since 2000 belongs to Forest Department. PVCHR has been strengthening the struggle to ensure the possession of Ghasia Tribe over the land under section 122 B (4f), ZA&LR Act, and has also been struggling to ensure their right to vote.
Meanwhile PVCHR taking the matter of Ghasia Tribe of Raup village up sent a letter to NHRC on 7 September 2004,in which 62 hunger and malnutrition cases of death were reported in Eastern U.P. and a copy of this letter was also sent to the Commissioners of Supreme Court. Supreme Court Commissioners issued notice to Chief Secretary of U.P. Government and stated that Musahar, Nut, Kanjar & Weavers were in pitiable condition and deprived. Supreme Court Commissioner also proposed to setup an enquiry committee taking representatives of social organizations and civil society, to look in to the cases of deaths occurred in UP.
After this Musahar Vikas Pahal highlighted the hunger death of Nagina Mushar of Doghara village in Kushinagar District. On its report Ashok Sinha of Action Aid complained with Supreme Court Commissioners (SCC). SCC issued notice to Chief Secretary of U.P on 25 Nov.04. Government. Soon after this under the Right to Food campaign of UP, PVCHR, People’s Forum and Musahar Vikas Pahal having made a visit of Kushinagar prepared an elaborated report and sent it to the Supreme Court Commissioners and NHRC. NHRC in this respect issued notice to District Magistrate of Kushinagar. Dr. Lenin complained that Maharajgang District administration had cooperated with Musahar Vikas Pahal and had done good job for the upliftment of Musahar but Kushinagar District Administration had not been cooperating. After the notice of NHRC, District Administration of Kusinagar cooperated with Musahar Vikas Pahal, which has been symbol of people’s movement. To collect facts, to develop people’s movement and to increase the participation of victims have been strategy of PVCHR and Musahar Vikas Pahal in struggle against hunger and malnutrition and it has been very helpful for marginalized communities. This booklet based on critical study is being published with definite purpose to organize struggle against hunger and malnutrition and being requested to use it for people’s mobilization at large so that any official, responsible for hunger and malnutrition could be exposed and punished.
Thus on the basis of the facts as above mentioned it is clear that right to food is very much linked with the rule of law.
Brief of ruling of UP state dated 22 Dec. 2004:
Ø UP Government has accepted that there are cases of Malnutrition and Hunger in UP.
Ø An emergency fund has been established to provide immediate help to the hunger victims at village level.
Ø Rights have been given to Village secretary and village pradhan to provide the emergency help up to 1000 Rs. Per victim to all hunger victims in village.
Ø There has been established accountability mechanism from Village level to state level.
Right to Food Campaign,UP
SA 4/2 A, Daualtpur, Varanasi-221002
Sunday, October 30, 2005
A brief history of struggle against hunger in UP
Friday, October 21, 2005
On behalf of the Silk Weavers of Varanasi please allow me to congratulate you on endorsing and setting in motion the Varanasi Weavers Trust on the lines of the Reports we have submitted to you, viz. the Concept Paper of 16 July 2004 and the Project Document “Bringing The Capital market Home To The People” of 01 June 2005.
The Union Government Minister of Textiles recognized the importance of this area and methodology and has launched this as a solution for the traditional industries, especially in textiles, facing problems in India. We would be grateful if the Honorable Minister would launch the concept and overall program as an Indian Solution. We believe the name “Social Investment Trusts” would be a suitable name for the scheme.
The Chief Minister of Uttar Pradesh, and his Government, has acted swiftly to make the Varanasi Weavers’ case the first test case or pilot project of this scheme. It would create a model and real experience to guide the application of the scheme by other authorities in India. We would be grateful if the Honorable Chief Minister would launch this specific Varanasi scheme within the overall concept of the Union Minister of Textiles. We believe that the name “Varanasi Weavers’ Social Investment Trust” would be a suitable name for the scheme.
We suggest that a simultaneous launch of the Government of India program for “Social Investment Trusts” and the UP program for the “Varanasi Weavers’ Social Investment Trust” be held at a convenient early date. Please be kind enough to consider and approve 15 January 2006 and to appoint a co-ordinator to assemble the necessary launch documents and events.
Friday, 16 July 2004
A PRELIMINARY PAPER TO LEAD TO
THE PLAN FOR THE
VARANASI WEAVERS TRUST
Dr Darin C Gunesekera
WIROS LOKH INSTITUTE
Chapter 1 OBJECTIVES 3
Chapter 2 The Present Situation 3
A High Growth 3
B Weavers 4
Chapter 3 The Concept 5
A System of Trusts 5
B Industry 6
Chapter 4 Implementation 7
A TIME 7
B BUDGET 7
Chapter 1 OBJECTIVES
1. To improve and bring to modern development the Baranasi Saree Industry
2. To implement the Master Plan for Varanasi District
3. To re-house in decent housing the workers and the poor registered as residents of Varanasi
4. To enable the craftsmen to become artisans or artists in the weaving of sarees or skilled workers of the weaving industry.
5. To recognise the Rights and Economics of the combination of home and workplace of Varanasi weavers.
6. To create share financing and trust financing of the business.
7. To develop business specialisation and competitive trade in the industry
Chapter 2 The Present Situation
A High Growth
The city of Varanasi and Varanasi District is growing rapidly owing to its role as a transportation hub, to the growth of domestic agriculture and industries and to the growth of tourism and specialised visitors to the Holy City of Benares, Sarnath and the Universities of Varanasi.
These are major growth factors. Owing to this, there is a transport plan for the District that has been implemented in part providing for new roads and bridges. There is in fact a need to revise these plans for greater than planned growth that is clearly happening.
It is also clear that the airport will have to be improved and a greater volume of air traffic planned for.
There is a master plan for Varanasi District that includes consideration of these factors. The master plan features the situation of Varanasi as a historic and holy city.
There is a growing possibility that the Master Plan under estimates the future growth pressure on Varanasi as there is greater pressure of inflows of people from the countryside and other less developed urban areas into Varanasi than has been imagined in the past. The reason is that the opening of India to tourism has been under estimated and also the pressure on population to migrate to urban centres of growth as a result of the policy of globalisation. One may speculate but cannot say for certain.
However it is clear that Varanasi is a growing urban area that may expect growth in its low income as well as middle class income population.
It is recognised that this will place great pressure on the social infrastructure of Varanasi District. That is, its water supply, sewage, drainage, electricity and phone services that are strained at present will have even greater strain. There will be greater demands on the education and health systems. There will be greater pressure on the road network, even though the major roadways are being built.
The Planners have taken these into account.
The Master Plan calls for a relocation of population away from the crowded city centre and the creation of new commercial/ business centres. A re-distribution of population and commerce is required. In general the familiar need in Indian cities for re-development, re-housing and re-generation is recognised.
India is a nation growing rapidly in modernisation and technology. It is not surprising that the cities of India, especially those that are transport hubs, will be of high urban growth. They have common problems, now compounded by the impact of globalisation.
However Varanasi has a further situation that is unique. It is the home of Baranas Silks. This has been its pride, joy and source of commercial wealth for many centuries. As a result it has a population of nearly eight lakhs of weaver craftsmen of whom 3 lakhs have taken up other employment and substantial others are leaving the industry daily.
Varanasi has the greatest name in sarees in India and its most famous tradition of artwork silks. It has most of the export market for craft silks of India. But this industry faces what experts suggest to be “certain” ruin. It has domestic rivals. It has its master craftsmen being spirited away to Nepal and China to develop new industries there. With China joining WTO, an end in 2005 to all systems of textile trade restrictions and China’s growing need for exports, under a centrally planned industrial strategy, the threat to Varanasi from China is very real.
The Varanasi silk industry faces collapse due to Chinese expansion into silks and sarees. The Varanasi industry also faces ruin due to cost increases in its input silk material from domestic producers protected from Chinese or other import competition under recent decisions. The industry also faces collapse due to competition from power loom and industrialised systems of saree production in other parts of India.
There is little doubt that the state of the industry as it exists today from an earlier industrial age is no longer tenable.
This creates a serious problem as the livelihoods of the largest number of persons in Varanasi are under threat of closure. Rather than being a growth city with a population of growing economic strength, Varanasi faces a prospect not unlike the ghetto ridden cities of America. The city has strong growth prospects. But at its core is an inner city population facing prospects of low income employment or unemployment.
Varanasi has a master plan. But the plight of the weavers threatens it, as it may destroy the economics of the plan at the core.
This is the ticking economic bomb at the heart of Varanasi.
Chapter 3 The Concept
A System of Trusts
The geography of Varanasi may be placed into a system of Trusts.
A Trust is defined for a geographic area that may be a few blocks of land and a few buildings or a large area. The lands need not be contiguous.
The Trust is a statement of intent for this area that will be a matter of commercial and residential and social development. It can become operational only if ALL the landowners and the persons possessing encumbrances or rights on the properties join the Trust. They will do so by surrendering their rights to the Trust and accepting Certificates stating their new beneficial rights under the Trust. The ONLY beneficiaries of the Trust shall be these Certificate owners and new Certificate owners who enter through cash investment. All the rights and beneficial interests shall be defined fully in the Trust Deed and explained, with responsibility, to all.
In particular, the self employed and those who may become self employed shall be members of the Trust.
Weavers, with full description of current status, shall be within the Trust. The purpose of the Trust is to act as a co-operative for their work and also as custodian for their property.
Where property is concerned, it is very much more commercially viable to act under the Trust format than any other. It corporatises the interests of all concerned and its Articles enshrine their interests and beneficial outcomes.
The Trust must have a bare buildable land to start with. This will be built to a design that the members agree to move into. They give up their land and buildings that are to be replaced in the dense city area and agree to a new location. The land value that is given up in total will compensate for the cost of the new residences.
This is a market transaction. Where the weavers are concerned it is envisaged that they will be able to move into residences that provide workplace facilities. They will congregate around a centre for the trade. The Trust will build the trade centre as part of its regeneration of the lands. This will be an attractive trade building to best market the produce of the weavers. It will provide for warehousing.
As this commercial regeneration is needed. The current businesses that do the business of the weavers will also be asked to participate in the Trust and so secure their accustomed position in the value chain of the business.
The Trust shall reconstruct the value chain of the industry with the introduction of IT/ ICT (Computer and Internet Access technology) and markets into the industry.
Basically it is envisaged that the marketing and production will be enhanced by the use of
1. Computer aid in design (production of the punched card)
2. Placing artwork items on a computerised exchange system for bidding and sale
3. Placing of skilled work (not art) production runs on a bid and sale by lots basis.
The current businesses will graduate to be a modern management business acting as brokers and dealers as well as in the financiers and buyers categories.
Businessmen will recognise that what is being suggested is a variant of the system type used for Sri Lanka tea, French fine wines, American signed artworks, etc, in countries of their finest production, which shall be adapted to Varanasi by interaction with ALL participants.
It will be recognised that the object of the Trust system is to overcome the well known lacuna of the Planning system of urban Master Plans. That is the integration of the economic side, jobs and incomes, with the residences plan.
It is NOT the ambition of the system to replace planning. We wish to make it effective and certain by building in the economic factors, in a situation where the economics is very uncertain.
Financially, a certain institution gets created. This is an investment market. The investment market is two fold. One is the investment in the silks. That is a commodity exchange or auction system. The other is investment in the properties. The housing, the commercial space and infrastructure need to be invested in. This is a capital exchange. In other words the Trust will call into being a new investment market in Varanasi.
This shall be a very modern form of the traditional stock exchange. It shall be a market for investors and also residents and industry stakeholders and owners. They may acquire and exchange their stakes in the whole Trust and its commodity and capital components.
The reason for an exchange is that the redevelopment of Varanasi is a long term matter. It will have ups and downs. It will have a time frame that may be much longer than that of individual investors, even residents. So a method by which a person can make an investment and then sell it must be provided for. The Trust will be required to go public and be in this market.
This incidentally ensures transparency. For if the projects under the Trust require market investment, the information of the day to day status of the finances and prospects of the Trust must be provided. This will automatically create transparency and accountability.
Chapter 4 Implementation
The situation of the Weavers is deteriorating daily. The businesses also face very severe financial reckoning. There is no luxury of time for reflection and controlled experimentation. The ruthless global trade machines are at work. China is not going to go away. The competitive pressures will not let up.
Further, even though five lakhs of workers are involved, it is not reasonable to tell them to wait for several years for phased operation. Elsewhere in India, there was a successful five year programme of computer design introduction for thirty thousand weavers. But it does not seem that the Varanasi situation can survive that time frame.
A programme that will implement the re-housing and re-generation in Varanasi so that the 5 lakhs are covered in 3-4 years is needed.
Can the State afford it?
It is beyond the means of the State, even of a Union Government programme. Further for the State to undertake it, the planning period before anything is started will be of the order of the implementation period required.
But if the programme is effected through the stock exchange, the Trusts will raise capital based on rising land values, rising residence and commercial space values and rising values of silks marketed in a modern manner.
In fact, instead of needing a State expenditure budget, the programme will bring new revenue to the State.
This will be by providing ratepayers and payers for utilities provided newly. There will be an enhancement of any State or Corporation (municipal) lands in the Trusts or vicinity. There will be a reduction in the costs of handling the very poor.
It will however be in the interests of the State as the final beneficiary to grant this plan its blessings, some seed capital and Government regulatory and service support.
______________________________Dr Darin C Gunesekera
Wednesday, 01 June 2005
The Varanasi Weavers Trust:
“BRINGING THE CAPITALMARKET HOME TO THE PEOPLE”
Dr Darin C. Gunesekera
Chapter 1 VISION & MISSION.. 4
A Vision. 4
B Mission. 5
C Ownership. 6
Chapter 2 STRATEGY FOR IMPLEMENTATION OF THE VARANASI WEAVERS TRUST 7
A The Project Strategy. 7
B Phases of the Project. 7
C THE SHARES MARKET. 8
Chapter 3 Phase 1 A: Set Up. 9
A Project Team.. 9
1 Project Team – High Level 9
2 Project Team – Executive Management 10
B Methodology/ Administration. 10
Chapter 4 Phase 1 B: Persons Registration.. 11
A Work & Challenge. 11
B Survey. 12
C IT. 12
Chapter 5 Phase 1 C: Land Registration.. 12
A Work & Challenge. 12
B Survey. 12
C IT. 13
Chapter 6 Phase 1 D: Trust Creation.. 13
A Format. 13
B The First Bargain. 13
C Launch of Pilot Project. 13
1 Plan. 13
2 Construction. 14
Chapter 7 Phase 1 E: Selling Methodology.. 14
A Work & Challenge. 14
B Business Selling Methodology with IT. 14
C VWT Center. 15
1 Plan. 15
2 Construction. 15
Chapter 8 NEXT PHASES. 15
Chapter 9 PROJECT BUDGET.. 15
A TIME. 15
B BUDGET. 16
Chapter 10 IMPLEMENTATION ISSUES & FAQ.. 16
A THE AUTHORITY.. 17
B COST – BENEFIT FOR PARTICIPANTS. 17
C WHO OWNS THE LAND? WHY HAVE A TRUST (REIT)?. 19
D WHY HAVE THIS STOCK EXCHANGE LISTING? CAN’T WE JUST BUY AND SELL? 20
E DO LANDOWNERS, INVESTORS AND RIGHTS OWNERS DO BETTER?. 21
F WHAT WE NEED NOW IS AFFORDABLE HOUSING.. 21
G DO YOU BRING DOWN THE COST OF HOUSING?. 22
This plan is based on a novel concept that I developed in 1998 and implemented in one completed cycle within three years within 1998-2001 in Colombo, Sri Lanka.
When exposed to the Varanasi Weavers’ situation, I used this concept and further ideas developed for a project in London in order to make a suggestion for this situation. This Plan was presented earlier and called “The Plan for the Varanasi Weavers’ Trust”. You are referred to this document for the background, concepts and substance on which this project document is based.
It should be realized that Varanasi Weavers and their industry are a valuable commercial resource of India, a country undergoing globalization. Therefore the structure of this industry and its details constitute a valuable commercial asset. The Plan of its future also has considerable commercial value.
Influence over its future, obtaining of details and use of the information in other rival sites and countries is a considerable risk. Part of the crisis in Varanasi is that many persons have moved out of Varanasi including moving abroad taking the technology of the industry with them. They have been producing small volumes. Volume in Bangladesh however is growing and not insignificant.
At this time of globalization, it is important that traditional and current knowledge and industrial secrets and plans be kept secret. So it is advised that the circulation of this Report be controlled.
However difficult this may be in the reality of obtaining funds and approvals, this need to deal with this project as an industrial and commercial one must be kept in mind foremost. It is true that the objective is social and a matter of peoples’ upliftment. But this will not be possible unless the status of Varanasi Weavers as an industry is maintained and developed further. Similarly some amount of confidentiality is needed on development plans for housing where lands have not yet been purchased or negotiated. It is clear that there are business negotiations of price that will be involved in bringing in business to the scheme. So it is necessary that despite the public nature of this process, the need for confidentiality in matters surrounding the business side is respected.
Chapter 1 VISION & MISSION
Modern India is well on its way to take its rightful place as one of the largest nations and economies of the world. This India is truly part of the World. The Indian economy, including the livelihoods and economic lives of all of its peoples, is being integrated within India and also without India with the world.
Varanasi is the ancient spiritual heart of India. Its people demonstrate the values and ethics of India. Varanasi is important as a model and reflection of India.
Our Vision is that Varanasi, in this modern India, shall not become degraded into long term poverty nor into losing core cultural productions nor the values of its several cultural communities. The vision of the economic program being embarked upon by this Trust is to use the economics and social mechanisms available at the most advanced level so as to reverse adverse globalization economics and international social impact that we can see advancing into the Weavers Industry.
We envisage that our plan and Trust shall use the economics of our situation to create a new industry that shall command global respect and place our weavers and the communities of Varanasi at a higher economic plane such that they may hold their own against any economic forces of the world.
India and the global public shall come to deal with the Trust’s Varanasi Weaving Industry through the most advanced marketing techniques and located in advanced modern selling premises. The weavers shall live as befits persons who are leading producers of a world recognized high quality product. The Varanasi community will in their economic life show the standard of life of a high quality community in India and the world.
The Mission of the Varanasi Weavers Trust is to reach the following Objectives:
1. Improve and bring to modern development the Varanasi Saree Industry
2. Implement the Master Plan for Varanasi District
3. Re-house in decent housing the workers and the poor registered as residents of Varanasi
4. Enable the craftsmen to become artists in the weaving of silks or skilled workers of the weaving industry
5. Establish the Rights of Varanasi Weavers as to their Homes, Workplaces and the Economics of their Trade or work activity
6. Establish share financing or equity financing of the weaving industry through the Trust’s Certificate financing on Stock Exchange lines
7. Develop business specialization and competitive trade in this industry.
It is part of the mission to accomplish these objectives with the blessings of the State and Authorities. Although the initial owners of the process are the People involved, that is the weavers, there are many other stakeholders who are brought in through the Trust. The Trust has in its mission the furtherance of the interests of all stakeholders that is the Varanasi District.
From the point of view of financing, it is the mission of the Trust to create a self-financing system where the State shall have no net cash outflow on the project. That is the value generated will enable re-payment of any State funds.
It is an important mission of the Project to create new value in the City of Varanasi and to create a steadily increasing value for land in the Varanasi District.
The following may then be added to Mission objectives:
1. Provide financing for regeneration construction and development through the market
2. Such financing should be with risk capital, preferably market risk capital, as then the investors would also provide more sophisticated analysis of the projects and the people would ride with them
3. Bank loan capital places heavy burdens of interest schedules and penalties and guarantees or mortgage on the promoters and people and so should be minimized or eliminated
4. The State should facilitate the process
5. The plan should provide the people with an asset that is market priced and related to their home development.
It should be noted that some market institutional development, by public – private co-operation, shall be necessary. These will not emerge of themselves but need Trust sponsorship. So the creation and development of the relevant stock exchange and capital markets shall be part of the Mission of the Trust.
Further, we are involved in creating a financial service to enable the re-housing and re-development (industrial) program. This is more over a mass based, all weaver involving, process. So further financial processes as IT cards will be necessary to achieve the Mission. We may term the whole of the Mission in regard the bringing of these financial services to the mass of the City of Varanasi as the Mission objective,
“Bringing the Capital Market financial services home to the People”.
It would be useful to observe that this paper provides an outline of a plan to be considered by policy makers. It is not how the Plan under implementation will arrive to participants.
A Key issue is that the Trust must be adopted by the Weavers. The mobilizer of the ideas of this paper, PVCHR, has begun the process whereby the Plan markets itself very simply and easily to the Weavers. In doing this PVCHR has emphasized what everyone understands and instinctively, ownership. The scheme here is based on enhancing OWNERSHIP.
The alternative is a Cooperative of Weavers. We have selected the Gandhian notion of Trust and combined it with the simple and wide spread notion of ownership so as to arrive at a Trust with shares so as to ensure a process that shall be understandable and also authentic with our people and nation.
The Trust is one for Regeneration. To be realistic it must have a location and then a specific plan within that location. Developing this for each location is one of the tasks of the Trust.
Chapter 2 STRATEGY FOR IMPLEMENTATION OF THE VARANASI WEAVERS TRUST
A The Project Strategy
In order to arrive at the Mission and Vision above, it is essential to set up the Trust and take it forward to the point where it is self sustaining. A brief description of the strategic aspects of this development may be useful at this stage. It will immediately give way to the essential phases of the project.
The strategy is to create a Trust that incorporates all stakeholders as beneficiaries.
Then the following exchanges involving financial paper created within this scheme take place.
1. The exchange of Community Persons rights of occupation, tenancy, ownership or leaseholds for Trust Certificates.
2. The exchange of landowners, amenity or rights owners rights for Trust Certificates.
B Phases of the Project
The Phases of the Project are as follows:
(A) Phase One - The Trust is set up and the project office set up. The dimensions of the project in terms of persons and lands must be established. Further the sales enhancement and industry detailed survey needs to be undertaken at this time so as to prepare for modern commercialization. Within this Phase the pilot project will also be launched which will mimic the next two phases in experiment form. Several activities as detailed below shall be pursued concurrently in this Phase. This is the most extensive Phase where all officers and others connected with the scheme will realize the practical meaning of the scheme. It is training on the job, and this must not be wasted. It is important that committed personnel who will learn and be retained in the scheme be employed from the onset.
(B) Phase Two is the commercial launch phase. This is the phase of launching the Trust open for investment and commercial development. Thereafter the Trust will move out of Project stage to being a self-sustaining Trust.
(C) Phase Three is the extension of the pilot scheme to the whole community.
C THE SHARES MARKET
Redeem & SALES
REIT Stock Market REIT Certificates
2-3-1 and 3-4-5-6 :The cycle from Trust Certificate issue against value transferred to Trust TO extinction at Trust against value transferred out of Trust.
(1) Trust Certificates exchanged for project needs
(2) Trust Certificates exchanged for Holder’s agreements
(3) Trust Certificates exchanged for REIT Certificates.
(4) REIT Certificates exchanged for Money
(5) REIT secondary market .
(6) REIT extinguished at Trust for building unit or cash.
All those involved in contractual processes as Community Persons, Developers, etc., are members of the Trust so that they use the arbitration/ tribunal processes of VWT to resolve disputes/ market deals.
In particular, Community persons who want more than what they give the scheme, their Certificates are related to the vacant possession or other rights they give up, can go in for arbitration on what they get from the trading bargain. Similarly Developers having design or tenant or sale arguments shall be required to solve their problems at the arbitration process only, with no further recourse in terms of the agreements.
These safeguards are essential for financial viability and fairplay.
Chapter 3 Phase 1 A: Set Up
In accordance with our Strategy, the first Phase of the project, after it is cleared by Authorities and is launched, shall have the following elements.
A Project Team
The Project to set up the VWT or The Trust must be kept separate from the Trust itself. The latter will be composed of stakeholders and their employees. The Project on the other hand is a matter for a team put together for effective and speedy executive decision and management. The Project Team must never lose sight of this and that they are operating in a different capacity from their regular official or private positions.
The project consists of setting up and creating the Varanasi Weavers Trust and moving it to self sustained operation. The team shall be disbanded and replaced by the Trust management and parties upon the launch of the Trust into self-sustaining operation.
It is proposed that the Project Team shall be set up as follows.
1 Project Team – High Level
1. Commissioner/ Chairman VDA, Chair
2. Joint Director, Industries (Eastern UP, Varanasi), CEO/ Secretary
3. Nagar Ayuth
4. Chief Development Officer Varanasi
5. District Magistrate
6. Secretary VDA
7. Dy Director Bunkar Seva Kendra
8. Dy Director, Weavers
9. Dy Director, Handicrafts
10. Dy Director, Tourism
11. Dy Director, Culture
12. Sant Vivek Das, Acharya Mahant, Kabir Chaura Math
13. Dr Lenin, Convener, PVCHR
14. Advisor, VWT project
These persons will delegate an official to represent him or her fully with full responsibility whenever they are not available for a decision.
The team is not a Committee and so shall not meet like one. They are a team for the purpose of meeting an objective. They shall act with this goal in mind.
The project impinges on many other developments besides the VWT. So the town planning of Varanasi, the electricity, water supply, drainage and sewerage of the district will also be impacted. Under the circumstances, it would be wise for the team to form with other relevant personnel a Committee for developing Aid and Donor Finance for these other issues. A Full time donor relations office could be set up within this project to prepare needed reports and provide servicing to get and keep financial assistance especially for these ancillary essentials.
2 Project Team – Executive Management
1. Joint Director, Industries (Eastern UP, Varanasi), CEO/ Secretary
2. Personnel seconded from institutions in the Project Board
3. Advisor, VWT project
As the team cannot spare much time for the project day to day work, they will utilize (outsource) some persons from their offices for the purpose of managing and effecting the project. These persons will be on secondment.
Additionally the Project will hire or contract more staff and personnel as required. The CEO will be responsible for contracting of personnel and firms subject to procedures that will be laid out within the project. As the project represents a partnership of public and private interests, it is expected that the most efficient methods will always be used and the project freed from usual Government procedures and requirements.
B Methodology/ Administration
The administration of the Project should not be allowed to become cumbersome as then it would be easy for its simple requirements to be overshadowed and delayed.
The Project has been outlined in the document “The Preliminary Plan for the Varanasi Weavers Trust” dated 16 July 2004. It is an urgent project and must be fast tracked as once started it is essential to serve the entire Weaver population within three to five years so as to prevent discontent due to the feeling of delay.
In our present age where media create instant dissemination of news, there is a similar impatience with results. This fact must be borne in mind. The project has a high level team so as to ensure fast action.
For this reason we suggest further that a simple and efficient modern office be centrally set up immediately.
The functions that his office shall have to perform are as follows.
1. Mobilization of the Weavers and ancillary persons
2. Awareness and mobilization of other stakeholders
3. Awareness & mobilization of investors
4. Survey of existing equipment, land and buildings and those of potential stakeholder members of the Trust
5. Creation of the Trust
6. Initial urban design and architectural plan to accompany Trust
7. Initial commercialization buildings and computer system
8. System of continuous information flow and public decision making in relation to Trust Activities.
It is expected that the Project Office will be small and efficiently designed for rapid decision taking. The surveys and mobilization activities will be coordinated by this office. However the recruitment of personnel and supervision of these activities should be done by contracted civic organizations and other specialist organizations. The same shall be true of the professional work required.
Legal matters should be handled within existing legal parameters and through the personnel available through the organizations mentioned and locally. It is always desirable to have better legal foundations, but this sort of program has been done elsewhere within our type of legal system as it currently exists and we should do the same.
Chapter 4 Phase 1 B: Persons Registration
A Work & Challenge
A basic parameter that must be fixed at the outset for purposes of expenditure control is the extent of the scheme in terms of persons.
As a matter of fairness, it is necessary to enter all Varanasi Weavers into the scheme.
The work is then to register all the Weavers and associated and ancillary businesses and trades persons. These are the traditional manual and power weavers.
The difficulties compounding this task are that firstly there are persons who have moved out of Varanasi in reality to better themselves and who may still wish to have their names on the lists for any benefits that may accrue.
Secondly, this is a traditional art and craft. Persons pride themselves in the length of their family association with the business. So persons who have no real current work in this business, whop are completely lacking in practical knowledge but have family affiliation may claim Weaver status.
The challenge is to design a fair registration process that meets the objectives of a good and thriving industry and social fairplay with means of redress through a tribunal within the process.
Certain clear administrative discipline will be needed and must be enforced.
The need is to have an administrative survey that will register once and for all the persons involved. This will be gazetted or administratively displayed and confirmed by due process.
As the survey therefore needs to be done in a matter of a few months, a large number of persons, perhaps university students or recent graduates, will have to be organized to implement this task.
The persons will be registered through questionnaire and photograph of persons, families, house and workplace that shall be permanently filed electronically.
This is an IT exercise that will be combined with the IT exercises needed below.
Chapter 5 Phase 1 C: Land Registration
A Work & Challenge
The other basic parameter that must be fixed at the outset for purposes of expenditure control and planning of the project and of the industry is the land involved. This is the current housing, workplaces and business premises of the persons registered above.
It is also necessary to ensure that data of the entire neighborhoods of these persons be obtained or gained form existing sources within the District administration.
The extent of the “land” registration is exactly that pertaining to all of the persons registered above plus planning information of the lands in their neighborhoods.
This is not a simple matter.
Varanasi is an ancient city. It has ancient disputes and lands and businesses involved in legal or socially recognized dispute. This is the challenge of this task.
It is essential that in order that the Trust and scheme be workable that all these be known and resolved for purposes of the scheme to whatever extent possible.
The need is to have an administrative survey that will register once and for all the lands and fixed assets and business assets that will be part of the scheme and Trust or Trusts. This must be gazetted or administratively displayed and confirmed by due process.
As the survey therefore needs to be done in a matter of a few months, a large number of persons will have to be organized to implement this task. However these must be persons who will show some mature judgment in the finalization.
This is an IT exercise that will be combined with the IT work on registering people.
It has to be emphasized that this survey and data entry must be done as part of this project and there can be no resort to existing lists or plans except as a guide. The project must be able to state with due diligence that the facts on persons and fixed assets are true, verified and confirmed by the parties concerned.
Chapter 6 Phase 1 D: Trust Creation
The format of the Trust is that of a Trust by Declaration of avowed and thereafter set detailed purpose. The Trustee Company shall be the team core of the project and other stakeholders who pro-actively want the desired result or goal declared by the Trust. The Trust shall appoint managers to actually do the various needed activities, as set out by the Trust and supervised by the Trustee Company.
So the actualization of the Trust shall be in rounds of bargains and work that shall be the work programme outlined in the Varanasi Weavers Trust document.
B The First Bargain
The first bargain is between the Trust, the Authorities and the first pilot group of Weavers. It involves the complete re-development of the Weavers into a model situation and done at market valuation of their condition. The Weavers give up into the Trust and receive from the Trust. The medium of exchange is the Trust Certificate.
C Launch of Pilot Project
In the pilot area the Trust will open sites for bidding for reconstruction or new construction.
Within the overall master plan of the trust, developers will place their bids for redevelopment that will satisfy housing, workplace and business needs.
Those persons within the pilot project shall then choose by voting the plans that they would be willing to settle in. Single plans and developers for each site will be thus chosen with the core clients who will be moving in.
Further units that will be sold or rented to investors in the Trust will also be planned and constructed.
Using the seed capital of this scheme, the Trust will award the contracts on behalf of the voting and affirming groups and also appoint the supervisory bodies. The Trust will oversee the construction as final arbiter.
The investors and Weavers will compensate the Trust through their immediate release of assets and pledged earnings or sales through the Trust selling system.
Chapter 7 Phase 1 E: Selling Methodology
A Work & Challenge
Simultaneous with the construction programme there must be an industry selling or marketing programme that shall be launched.
The work is to bring the marketing of the industry to an advanced state worthy of the product and proposed new products. The Trust shall be a coordinating and umbrella body with teeth, as it shall act itself as the prime mover.
From marketing requirements, the production and distribution, selling and shop services, shall also change and improve.
The challenge is to bring this industry to the forefront of globalized industry inclusive of IT system for production and sales and advanced selling, while retaining the numbers actually employed and improving the traditions of the art and craft. The result will be more artistic and also securely quality rated.
The Trust shall work through and with existing businesses and channels of commerce.
B Business Selling Methodology with IT
The Trust will create a subgroup of the selling persons in the industry and develop the new methodology.
There will be a strong IT basis for selling as sales must be global in final end user customers but production and export point is Varanasi. There shall be individualization to the maximum of sales. At the same time there will be central channeling through the Trust, which shall issue the Secure Quality Certification.
C VWT Center
As the iconic center for the IT system and the super-modern emblematic sales point, there shall be a VWT Center at a central location in Varanasi. Sales will be done in many places but this will be the symbolic spot of demand and supply price creation and supply trends display. It will be the “Stock Exchange Building” of the Varanasi Weavers’ industry. The exchange market of VWT Certificates shall also find display there.
The team of the project will gain stakeholder approval and develop a plan for the VWT Center and parking and delivery facilities with architects of its choice and under its direction. The final building must meet the esthetics and needs of all stakeholders. An iconic structure is recommended.
Construction of this center must be started at once, as it will house the IT center that is the core of the money earning capacity of the system.
Chapter 8 NEXT PHASES
When the success of the pilot project begins to unfold, it will be possible to gain more persons to enter the scheme and to sell investors certificates to raise the needed funds. The Trust must as soon as possible, start on this expansion.
What we are doing is to create a specific market and method to handle risk. We take out a lot of the risk normal in these projects. We really create a Capital market which the People can appreciate and participate in from Home and with and for their Homes. We have brought the Capital Market Home to the People.
Chapter 9 PROJECT BUDGET
The situation of the Weavers is deteriorating daily. The businesses also face very severe financial reckoning. There is no luxury of time for reflection and controlled experimentation. The ruthless global trade machines are at work. China is not going to go away. The competitive pressures will not let up.
Further, even though five lakhs of workers are involved, it is not reasonable to tell them to wait for several years for phased operation. Elsewhere in India, there was a successful five year programme of computer design introduction for thirty thousand weavers. But it is not likely that the Varanasi situation can survive that time frame.
A programme that will implement the re-housing and re-generation in Varanasi so that the 5 lakhs are covered in 5-7 years is needed.
This is a cash flow budget inclusive of first year Capital Commitments and recurrent expenditure.
Phase One (Capital plus one year recurrent)
(Lakhs of Rs)
Trust Set Up
Selling IT wireless System with hardware
Pilot Buildings for weavers
The pilot scheme could be doubled (that is plus another 10 Crores) and thus generate greater impact. However the enthusiasm of landowners and weavers may be limited at the pilot stage.
Estimate total is of a cash outlay of 26 Crore 40 lakhs, all of which will be returned with profit by the end of the scheme.
This budget will take the scheme to the point of commercial launch.
The programme will from the start be geared to Stock Exchange financing creation. So the outlay is to be recouped by the sale of the shares to investors and business and the resale and rental of developed properties through the Trusts. The Trusts will raise capital based on rising land values, rising residence and commercial space values and rising values of silks marketed in a modern manner.
In fact, instead of needing a State expenditure budget, the programme will bring net new revenue to the State.
Further, the programme will be providing new ratepayers and payers for utilities and the municipality. There will be an enhancement of any State or Corporation (municipal) lands in the Trusts or vicinity. There will be a reduction in the costs of handling those entitled to relief and handouts from the State.
It will however be in the interests of the State as the final beneficiary to grant this plan its blessings, some seed capital and Government regulatory and service support.
Chapter 10 IMPLEMENTATION ISSUES & FAQ
A THE AUTHORITY
AUTHORISATION/ APPROVAL/ CLEARANCE TO PROCEED ACTIONS.
Authorize Trusts (VWT)
Approve VWT concept Plan
VWT mobilizes Communities, firms.
Approve & Regulate Stock Market
Each REIT proposed & entered
REIT Plan clearance
REIT marketing/ if accepted by primary & secondary market
REIT completion of Building – approval.
B COST – BENEFIT FOR PARTICIPANTS
PERSONS IN THE DESIGNATED AREA
The person is rewarded in terms of securities to the extent that his household occupies space or amenities. By increasing household members he does not gain. As the reward available for the community is fixed once the contract is determined, it is not to their advantage to import others and swell numbers. At the same time their final reward is determined by the value of the total development in attracting outside buyers and leaseholders. So it is in the community interest too to have an increased development in the area. Progress as measured by wealth increase is what favours the poor as well as the rich and this is direct and visible and measurable. People like it as the ownership and reward is clear and value by price quotation is tangible. This tangibility is important. Then it is appealing.
Landowners have proverbially felt cheated in the real estate game. Land unfortunately acquires value by its own actual usage. Yet sale has to be by a process of valuation which is based on what has been going on in the area and nationwide. Now the landowner basically can get a clawback of the actual property profit, or realised value, through participation in the Trust. It is now a fair process.
They will find their role initially unusual. However the Plan meets the many complaints of the Developers and their buyers with respect contracts. Now the Developer is relieved of what is not his specialty, Finance. Instead he is able to concentrate on marketing his product and improving production delivery. He does not have to be tearing his hair trying to meet financial problems in the longest production time period industry in the country. Finance sourcing is concentrated in risk taking investors and not banks.
They will find that the opportunity to buy at an early stage when prices are low and yet to be relieved of the risk of advancing money on a construction, owing to the intermediary function of a financial Trust, very useful. They will also have greater choice and ease of purchase/ sale and taking up or not of an investment.
Investors have always been wary of real estate considering it a specialised field. Someone with no involvement in the company nor expertise in stock trading would buy a share in Escorts or Reliance, directly or indirectly through an investment scheme, guided by a lot of hearsay and accounts which have never prevented serious surprise. Yet he or she would be wary of taking a share in a real estate investment, even in the neighbourhood, usually ignoring the fact that the bulk of wealth that he owns is in any case in real estate, his own home. This is because the market is not especially transparent. Now a method of investment with safeguards, powerful investors with the same ends and an easy way of determining value (sale price of units) is available. It is welcome to most investors.
Lenders are actually not property operators nor developers. They are persons whose speciality is the determination of the repayment capacity of the individual borrower. It is a great improvement for him to have his asset to be a market security and later a market price quoted title. Mortgage lenders like the scheme.
The Planning exercise work is increased as to detail examination. However the situation of pious resolve, and even contracted resolve, of developers vanishing into thin air when it comes to social benefits is ended definitely as the Trust commits; and contracts the developer for itemised work. The Planning control is more but yet simplified. Where the Planner is also committing public land or resources, he has clawback on profits and much greater clarity of the overall picture and much less worry. The old problem of being pushed by developers claiming extraordinary benefits to be given to the community, economy, etc., and the Planner being unable to make up his mind is solved by the need for market investor acceptance and proposal acceptance by those directly affected. Decisions of choice are handed over to those involved socially and privately and not incumbent on the Planner to work out economic scenarios, except if wished as advisory.
“It has appeared to me that the difficulty with the tenements is not that the persons are ignorant or that they do not know how to find their place in the sun. Rather they seem to be having the difficulty of facing a failure of market or not having access to the marketplace. The solution, I thought, was to replicate the market mechanism, that is the institutions through which people come into the market, for these persons. The key elements of markets are reproduced faithfully for the poor as for the rich. It is just to give all the benefits of markets, warts and all.
The small timer will then be able to exercise individual choice of purchase and not be alienated from what they have. It is necessary that they have a budget to spend which can provide enough to cover the identified need of workplace and housing. They shall face the financial and choice parameters that the middle class also face. That is, they will purchase housing which moves with actual costs, asset market prices and interest rates on relevant finance and other features of the housing and building construction markets. “
C WHO OWNS THE LAND? WHY HAVE A TRUST (REIT)?
Trusts have traditionally been used by well to do persons with substantial property to secure their property. It is important to appreciate that Trusts enable clear beneficial ownership. Consider a landowner, say Mr. Landrich who owns a city property Landrich House that he wishes to preserve for his immediate family of himself, wife and two sons.
Landrich Trust is formed with say Bank of Baroda Trust Department as Trustee, Asset Managers Ltd as managers and Mr. & Mrs. Landrich and their two sons as beneficiaries, perhaps equally. Then Landrich House is transferred to it. Mr. Landrich is no longer the owner of the property but he, his wife and two sons will be the sole beneficial owners of the property. Asset Managers Ltd will rent out the units of the property and also spend money on maintaining it, paying dues and so on. The net income they will pay to the beneficiaries or Landrich family members equally. If Mr. Landrich passes away the remaining three persons will share the property and income equally. If the Trust is terminated, for instance under a clause that terminates it if the family members migrate, then the property will be transferred to the living members of the Landrich family. The Trustee is simply an umpire who ensures that the clauses of the Trust operate. The managers simply manage the property. Ownership ultimately resides with the beneficiaries.
An REIT is a Trust by declaration. It has beneficiaries but they are holders of its Certificates. It has a purpose, in our case of constructing a building on a property. Let us expand the Landrich case to his developing a field he owns.
Landrich Fields REIT is a Trust with a Manager Asset Developers Ltd, a Trustee Baroda Bank, and a Trust objective or purpose to develop and sell a real estate housing project on the site called Landrich Fields. Mr. Landrich its owner transfers the property to Landrich Fields Trust and receives Trust Certificates of face value equal to the market value of the land. He has lost direct ownership. But he has beneficial ownership of the Trust Fund, including the land and any building on it, to the extent of his certificates.
Others will also buy Certificates in Landrich Fields Trust by giving the Trust Fund the money purchase price. They will be beneficial owners of the Trust Fund to the face value of their share of the Trust Fund.
Suppose Mr. Landrich transferred 2 Crore Rupees worth of land and that 1000 investors put in 100,000 Rupees each paying face value. Then the Trust Fund would be owned by the Holders of Trust Certificates of face value 12 Crore Rupees. Mr. Landrich would be the beneficial owner of 2/12 share of the Trust fund or property and money in the Trust. Each investor/ buyer would similarly be the beneficial owner of 1/1200 share of the Trust Fund.
If the Trust were terminated while construction is going along they will share in the property as it stands and in the moneys still unused in that proportion.
The Trust is fair in that contributors to the project have ownership interest in proportion to their contribution in the project. As it is a project of a building on land, it is even clearer as the Trust assets are simply land and buildings and what is in the Trust bank account.
For public sector landowners especially it is useful as it allows them to retain an interest while releasing land for a project.
D WHY HAVE THIS STOCK EXCHANGE LISTING? CAN’T WE JUST BUY AND SELL?
The REIT assures investors and the landowners and rights owners contributing their ownership that the Certificates they get in return for their contribution will be listed for quotation on a specialised Exchange. This means that they can buy and sell these Certificates in a market.
Actually it means more than just that. It opens out the insides of the project for their information at any time. Because any Exchange is required to protect investors in its listed securities by requiring the issuer to make timely information available.
When an investor books an apartment or a landowner hands over his land for a project in some form of profit sharing, these investors in a development typically hand over their value to a developer and simply wait for the final result.
Under this Exchange based system, the developer has to provide information on progress or lack of it through an independent agency, the Exchange, to the investors.
If the security or Certificates were listed in a normal stock exchange, the reporting requirement would be too onerous. A Construction is a matter of many contracts. Each of these cannot be submitted to General Meetings of shareholders or the like. Within the project’s larger scheme, the contracts, buying and selling are normal business. However the reports of that business must be made available to the investors.
Especially where there is a public interest or public land or asset use, this is a tremendous advantage. There is oversight in a natural and business like manner.
E DO LANDOWNERS, INVESTORS AND RIGHTS OWNERS DO BETTER?
In the traditional system, the landowner and any right owner giving it up for the sake of the development has to extract an upfront payment. Development projects are of long gestation and money upfront is really revenue discounted at bank loan rates across that long period. So the cash value is definitely less than payment at the end.
Therefore sometimes owners, especially public sector owners or rights possessing authorities as Planning Authorities (Planning Gain, Conditions), specifically tie down developers with conditions on their sale of land. However it is difficult to enforce such conditions at the end of contract, especially where the project company may be a single project company.
Under the REIT in a Stock Exchange system, these difficulties are minimised. The project can afford to recognise the full value of land or rights and to pay a share of profits as well to them. Further information on activities will be released as a normal matter of observing the Exchange Rules. Investors and liquidity will be available for the project if the Rules protect interests and at the same time do not impede actually doing a project.
F WHAT WE NEED NOW IS AFFORDABLE HOUSING
Housing must be affordable to sell. What is meant by the idea of affordable housing is that neighbourhoods and towns need the services of many persons and these persons must all be able to house themselves in the neighbourhood or town.
Our REIT system is based on prior planning in concept of the elements in an area. It is important that the Planning incorporate the concepts of needed housing and other spaces. The REIT will then have different elements in its own development plan. The housing required for nurses, teachers, public servants, workers and so on have to be planned in. Everyone likes to construct apartments for the rich as the profit rate is higher per unit. But the plan must set out different concept areas yet without attempting architectural prescription.
Basically, one has to manufacture Morris Minors or Minis as well as Mercedes Benzes or Rolls. One achieves this by making the cars each fundamentally and in features different. Yet the cars are indeed each reasonable cars which will excite and give service and happiness to owners.
The REIT plans must have such differentiation by design of blocks and units. Differentiation which tends to occur without planning which is often by area address will not enable a vibrant community.
G DO YOU BRING DOWN THE COST OF HOUSING?
It is true that bringing down the cost of labour and materials brings down the cost of housing. This is the most obvious aspect and one that tends to be flogged to death in discussions. It may not be the major factor however.
Finance costs, selling costs and address premium or land premium are probably equal to the cost of pure production. In urban areas round the world, house building men and materials cost is supposed to be only a third of costs.
So our plan attacks the other costs more substantially. It eliminates the bank loan and replaces this with risk talking capital funds. This is a major saving as it eliminates the effects of Penalties. Location premia are reduced by the planning component for overall design taking into account variations in the income of local persons. By combining investment and saving, costs of selling are greatly reduced.
______________________________Dr Darin C Gunesekera