Af­ford­able hous­ing in In­dia: Role of Hous­ing Mi­cro­fi­nance

Accommodation Times - - .. Edtorial.. - By Dr San­jay Chaturvedi

‘Af­ford­abil­ity’ can be de­fined as the con­sumers’ abil­ity to pur­chase but it is a rel­a­tive term that could ac­quire dif­fer­ent mean­ings un­der vary­ing cir­cum­stances. With a bevy of real es­tate com­pa­nies rid­ing on the wave of eco­nomic growth the fo­cus on the “for­tune at the bot­tom of the pyramid” has be­come an im­por­tant com­po­nent of their strat­egy ev­i­dent in nu­mer­ous low price hous­ing projects sprout­ing across the na­tion. For in­stance Tata Group has come up with a project at Boisar near Mum­bai, Go­drej Group is build­ing a town­ship out­side Ahmed­abad, An­sal Prop­er­ties is con­struct­ing homes for low in­come groups in U. P. and Ra­jasthan and the list goes on and on.

How­ever, the avail­abil­ity of ad­e­quate fi­nanc­ing sources for the con­sumers is a ma­jor fac­tor in de­ter­min­ing the sale of these projects. Thus, the role of mi­cro­fi­nance in­sti­tu­tions in en­abling the low in­come con­sumers, mostly em­ployed in the in­for­mal sec­tor in pur­chas­ing these “Af­ford­able houses” is of much im­por­tance. This is ev­i­dent from the fact that real es­tate de­vel­op­ers con­struct­ing low cost hous­ing projects are part­ner­ing with mi­cro­fi­nance in­sti­tu­tions like Mi­cro Hous­ing Fi­nance Cor­po­ra­tion Ltd. (MHFC) and SKS Mi­cro­fi­nance etc. De­mand for Af­ford­able hous­ing:

There is an enor­mous un­met de­mand for low-in­come hous­ing fi­nance. The seg­ment earn­ing be­tween Rs 7,000-Rs 15,000 has never been con­sid­ered sig­nif­i­cant for home loan of­fer­ings. While the prospects of get­ting a home loan for the for­mal sec­tor em­ployee do ex­ist, chances for in­for­mal sec­tor em­ploy­ees and the self-em­ployed like driv­ers, NGO staff, small cater­ers and oth­ers are bleak. This is de­spite the fact that they have mar­ketable skills, steady jobs/in­comes and em­ployer/cus­tomer rec­om­men­da­tions. More­over, ur­ban­iza­tion has played a key role in mak­ing In­dia’s hous­ing prob­lems worse. In the present, sce­nario the to­tal ur­ban land is es­ti­mated at 2.3% of In­dia’s to­tal ge­o­graph­i­cal area, which ac­com­mo­dates 30% of pop­u­la­tion. Pres- sure on land and in­fra­struc­ture is only go­ing to in­crease fur­ther with 40% of the na­tion ex­pected to in­habit cities by 2020 at which time ur­ban pop­u­la­tion is ex­pected to be 455 mil­lion. Apart from this, with 200 mil­lion people an­tic­i­pated to be liv­ing in slums and slum like con­di­tions by 2020, the fo­cus is bound to be on ur­ban hous­ing.

These people have the ca­pa­bil­ity and will­ing­ness to make a 20%-25% down pay­ment on houses cost­ing be­tween Rs 4 lakh-5 lakh and are happy and able to take on a 15-year loan obli­ga­tion, at mar­ket rates, in or­der to re­alise their dream home. Given that in these small-sized homes, the land cost rep­re­sents a small per­cent­age of the over­all cost, the spec­u­la­tive risk is low, with a very low prob­a­bil­ity of a drop in these property prices.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.