DDA & the market's revenge

A DDA flat was a privilege in a city where almost nobody could build anything. Its inventory of unsold flats exceeds 40,000 at Rs 18,000 crore. It's still building more

Applying the Delhi Development Authority (DDA) test is an instructive way of understanding the evolution of India’s political economy — what has changed, and what hasn’t. For the better or for the worse.

The almighty DDA has had a monopoly over land and its development — even commercialisation — in Delhi for most of the period since it was founded in 1957. In the course of a very short time, it grew to be a Soviet-style development agency for Delhi.

Why I have sometimes called it the Delhi Destruction Authority, I will explain in a bit. For now, let me just say how delighted I am to see that the DDA has now launched a marketing blitz with snazzy advertisements to sell houses it has built. And how I’m just as delighted to see how it’s struggling to find buyers. This is how the mightiest, with the full weight of the Indian state behind them, are slain by the market.

It isn’t a small number of flats the DDA is trying to sell. Its inventory of unsold flats, Minister of State for Urban Affairs Kaushal Kishore told the Rajya Sabha last year, exceeds 40,000. For emphasis, the value of the DDA’s unsold inventory is estimated at Rs 18,000 crore.

This, for a product, the once coveted DDA flat, for which there were decade-long waiting lists, where buyers applied and flats were allocated based on a draw of lots and only a few fortunate ones made it.

Of course, it helped if your uncle was a big shot, or if you belonged to any of the special categories with reservations, which even included judges of the Supreme Court. A DDA flat was a privilege and a gift from mai-baap sarkar if not God, in a city where almost nobody could build anything. It is now searching for buyers.

For perspective, or that more notorious expression these days, “context”, the value of the unsold inventories is more than twice the DDA’s reserves, which stand at Rs 9,028 crore. 

But you know what — the oldest principle with state-run businesses always seems to be: When you find yourself in a hole, keep digging. The DDA already had 16,000-plus flats in its old unsold inventory, mostly in a ghost township it developed in what used to be the village of Narela in outer Delhi.

Why did these not sell at all? Mr Kishore told the Rajya Sabha in 2021 the reasons were the remote location (which genius chose it and why? Did anybody survey the market before building?), the prices being high (again, did somebody check the market?), lack of Metro connectivity (hello, we thought Metro plans and maps were available to anybody with a keypad in Delhi, and certainly to the DDA), and, hold your breath, the flats were small.

If you think its failure to sell any of these would deter it from building more, you don’t know the Indian state. Or any state for that matter. Even more so, a state seasoned for seven decades-plus in the cast of socialism. This is why Winston Churchill famously described Christopher Columbus as the first socialist: He didn’t know where he was, didn’t know where he was going, but could keep travelling nevertheless, at the taxpayer’s expense.

This is probably why the DDA has added another 23,955 newly destructed flats to its inventory in 2022-23 while the earlier 16,000 remain unsold.

It’s also trying to bring in variety, appealing to a larger clientele. The idea is also to move up the value chain. So the latest on offer are 14 penthouses in New Delhi’s middle-class mini-city of Dwarka at more than Rs 5 crore apiece.

Imagine for a moment that your government was still making a branded cola drink, bread, scooters, television sets, and computers. And if it was, would you still buy them? Chances are, you certainly wouldn’t. But that’s exactly where we have come from.

We made a ‘Double 7 (77)’ cola after George Fernandes banished Coke, we made Modern Bread (later sold to Hindustan Unilever), scooters made by state-run firms (Vijay was the familiar brand in the north) were the only ones available with a reasonable waiting time (a year or two) and a Bajaj (Vespa) might take up to 13 years (again, unless your uncle was a big shot, big enough to have access to a quota).

Again, you bought these only if you didn’t have that NRI uncle returning with goodies like these, along with that pair of Levis, Nikes and your favourite brand of underclothes.

The good news is the private sector has taken over all of these products and the state has retreated from the market. That is the fruit of three decades of reform.
 

In Delhi, however, if the government still insists on persisting with the home-building business, there must be a special reason. And the reason is ownership and control of land, and the manner in which Delhi/New Delhi have developed, creating institutionalised inequalities. All rooted in the Nehru-Indira era’s fake socialist fixations.

Lutyens’ Delhi was built by the British by grabbing several villages generally south of Old Delhi, notably the villages of Raisina and Malcha. Villages were given not even a pittance as compensation. The rulers who succeeded the British continued the operation in the same spirit, acquiring land in a sort of concentric semi-circles, radiating from Raisina Hill to the south.

Many villages were similarly acquired in full, the most prominent for our discussion today being Munirka. The compensation given to the native inhabitants was something like six “annas” per square yard. For those born in the metric era, the rupee was originally divided into 16 annas. One anna was six paise. It’s critical to understand what happened to this land then.

In the socialist mai-baap raj, smart people were “encouraged” to set up cooperative societies and large parcels for this land were allotted to societies formed by those that the establishment considered worthy. The smartest civil servants, especially from the home ministry then, were the first off the block.

To them, we own the rise of the finest, the most premium residential colonies in New Delhi -- Shanti Niketan, Vasant Vihar, and so on. You name me one top (especially leftist) civil servant and advisor from the Nehru-Gandhi era and I will show you the mansion the person left for her or his progeny in these colonies. Their own interests sorted, they reached out to the others. No smart bureaucracy wants to leave powerful enemies behind.

Thereby came the lawyer/judge cooperative that built Niti Bagh further south. Next, the most senior journalists built Gulmohar Park, and so on. As you went down the hierarchy, from top civil servants to lawyers and journalists aliases, the colonies became more distant, plot sizes smaller.

All of this done, the social pecking order settled, the state now banned all private development in Delhi. This was the early sixties. The future generations then, our parents, but mostly even mine, were left at the mercy of the DDA.
 

Hence the years-long waiting lists, the black market, corruption, and the wide sense of resignation. For a long time, the best a middle/upper-middle class professional could hope to own was a pokey, ridiculously named “HIG” (higher income group) flat, built with wafer-thin brick walls, with no beams or columns. You had to keep the construction cost really low for people of India you see.
 

Especially when you had secured your own 500/800/1,000/2,000 square yard plots next to Lutyens’ Delhi, guaranteeing the fortune for your next many generations in property value alone. Meanwhile, those in the lower-middle or poorer classes continued to build scores of semi-slums, glorified in Delhi as “unauthorised colonies”. That’s where the voters reside now, the reason all political parties promise to preserve these.

It is for this reason that I call these enclaves that India’s old rulers gave themselves in the name of socialism “New Kremlin”. And this is also why I call the DDA Delhi Destruction Authority. There’s been some change in Delhi, some competition especially after the new master plan, only partly implemented. It’s the competition that has come from Gurgaon and Noida that’s now demolished the DDA’s arrogant monopoly.

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