Housing, a rejuvenated sector
The concept of affordable housing had remained a dream for most of the time for lack of any cohesive policies or genuine efforts on the part of successive governments. However, the current government has given it an impetus with specific schemes and programs and supported by legislations. The ‘Housing for All by 2022’ program and significant schemes like Pradhan Mantri Awas Yojana Grameen and Pradhan Mantri Awas Yojana Urban are indicators of the government’s intentions in this regard. Under these schemes, some 50 million houses are to be built by 2022. The government has increased the budgetary support for these schemes from `11,600 crore in FY16 to `29,043 crore in FY18.
The estimate is that India would need 4 crore houses (at the current level of the population), which figure may go up taking into consideration factors like the growth in population, migration, better living conditions and rising income levels. Some of the sops that the government is providing to home seekers are a subsidy of 6.5% at the lowest rung of the ladder, crediting the entire subsidy of a 20-year loan to the loan account of the applicant, which reduces the EMI, and even 90% withdrawals from the provident fund accounts. Another positive decision is according infrastructure status for affordable housing. Besides, the new public-private partnership policy for affordable housing allows extending central assistance of up to `2.5 lakh per house to be built by private builders even on private lands.
Housing sector, as a whole, has also been positively impacted by 3 major developments - the enactments of Real Estate (Regulation and Development) Act 2016 in March 2016 leading to the constitution of Real Estate Regulatory Authority (RERA) in states and the Goods and Services Tax in March 2017 and the demonetization of `1000 and `500 notes in November 2016.
A December 2017 survey by FICCI-NAREDCO-Knight Frank has indicated that the realty sector in the country is gaining momentum. While there has been a lag in quarter 2 and quarter 3 of 2017-18, because of the uncertainties of the legislations, there are visible signs of recovery, says the survey.
It is estimated that affordable housing finance would be a `6 lakh crore business opportunity by 2022. The opportunities in the sector has given a fillip to housing finance companies to take up the challenge. Most of them are positive about the impact of the government initiatives and are gearing up to meet the demand for finance.
There is always a flip side. A substantially high portion of the shortage of affordable homes is experienced by the economically weaker sections (slum dwellers) and lowincome groups. How would members of these two segments become capable of meeting the financial requirements of owning houses needs to be visualized. Otherwise, developers will build homes and there could be a glut in the market, which may in turn lead to a collapse of the sector. There are also issues like availability of land, lack of special finance packages by banks for developers undertaking low cost housing, as well as much-improved inflow of formal credit to the segment.
These issues must well be addressed for this novel effort to be made a reality.