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For the ‘Hous­ing for All’ ini­tia­tive to suc­ceed, the govt needs to bring in PPP re­forms

Governance Now - - INFRASTRUCTURE - Kshi­tish Nadgauda Nadgauda is se­nior vice-pres­i­dent and man­ag­ing di­rec­tor (Asia) with Louis Berger, a Us-based engi­neer­ing and in­fras­truc­ture so­lu­tions com­pany.

Aim­ing to pro­vide af­ford­able hous­ing for all by 2022, the cen­tral gov­ern­ment has in the last two years un­der­taken am­bi­tious plans to im­prove hous­ing in­fras­truc­ture, re­sult­ing in ma­jor op­por­tu­ni­ties for eco­nomic growth. How­ever, an in­fras­truc­ture deficit has hin­dered these plans and the gov­ern­ment needs to raise ad­di­tional re­sources to bridge the gap.

To this end, in­creased in­vest­ment is cru­cial. The cen­tre will re­quire over $1.5 tril­lion in in­fras­truc­ture in­vest­ments over the next 10 years to suc­cess­fully com­plete some of its big­gest ur­ban de­vel­op­ment ini­tia­tives, and this will call for greater in­volve­ment of the pri­vate and for­eign sec­tors. How­ever, le­gal and con­trac­tual is­sues in pub­lic-pri­vate part­ner­ships (PPP) are con­strain­ing ef­forts by the cen­tral and state gov­ern­ments to at­tract pri­vate in­vestors. There is a need for the cen­tre to im­ple­ment PPP re­forms, such as en­act­ing PPP laws, stream­lin­ing pro­cure­ment, and launch­ing mu­tu­ally agree­able dis­pute res­o­lu­tion meth­ods.

an­other key fac­tor that I be­lieve will help in at­tract­ing more in­vestors is the re­serve Bank of In­dia’s (RBI) re­cently pro­posed ap­proach: spe­cialised banks. The RBI will be of­fer­ing li­cences to pri­vate com­pa­nies to set up in­fras­truc­ture banks that will help serve the in­dus­try’s long-term fi­nanc­ing needs. Un­like the chi­nese ap­proach to in­fras­truc­ture de­vel­op­ment fund­ing, which re­lies on bond sales, in­creased PPP is what In­dia needs in the com­ing years to over­come its in­fras­truc­ture deficit and to keep its econ­omy grow­ing.

From the start of its im­ple­men­ta­tion, the af­ford­able hous­ing ini­tia­tive has re­lied heav­ily on PPP poli­cies. With about 843 mil­lion peo­ple ex­pected to move into cities by 2050, ac­cord­ing to an as­socham re­port of 2017, hous­ing has be­come one of the top pri­or­i­ties of the gov­ern­ment.

In a step to boost the ini­tia­tive, the cen­tral gov­ern­ment con­ferred in­fras­truc­ture sta­tus to af­ford­able hous­ing as part of the 2017 union bud­get. This strength­ened sta­tus will en­cour­age in­vest­ment in the hous­ing sec­tor and will bring down the over­all cost of con­struc­tion, boost­ing ur­ban in­fras­truc­ture de­vel­op­ment. ad­di­tional changes also will en­sure easy ac­cess to in­sti­tu­tional credit and cost bor­row­ing poli­cies. This is a big push for pri­vate com­pa­nies to en­gage and in­vest in the de­vel­op­ment of ur­ban in­fras­truc­ture, re­sult­ing in the suc­cess­ful im­ple­men­ta­tion of the ‘Hous­ing for all’ ini­tia­tive.

The cen­tral gov­ern­ment’s move will also help sim­plify the ap­proval process for var­i­ous hous­ing projects, in­creas­ing trans­parency. The in­dus­try re­cently wit­nessed an al­most 53 per­cent in­crease in bud­get al­lo­ca­tion for af­ford­able hous­ing. ac­cord­ing to the 2017 bud­get, the cen­tral gov­ern­ment has in­creased the al­lo­ca­tion for the Prad­han mantri awaas Yo­jana from ₹15,000 crore to ₹23,000 crore. This will stim­u­late pos­i­tive, longterm de­vel­op­ment within the sec­tor. To achieve the af­ford­able hous­ing ini­tia­tive’s goals, the gov­ern­ment will have to rely on part­ner­ships with pri­vate de­vel­op­ers, banks and tech­nol­ogy in­no­va­tors to ease ac­cess to lands and fi­nance.

The cen­tral gov­ern­ment’s de­ci­sion to abol­ish the 25-year-old For­eign In­vest­ment Pro­mo­tion Board (FIPB) will pave the way for for­eign com­pa­nies to in­vest in projects in In­dia. ad­di­tion­ally, the gov­ern­ment plans to lib­er­alise for­eign di­rect in­vest­ment laws across var­i­ous sec­tors that will en­hance busi­ness op­por­tu­ni­ties for for­eign in­vestors and multi­na­tional cor­po­ra­tions vested in In­dia’s growth econ­omy.

The re­cent re­forms and in­sti­tu­tional im­prove­ments put into place at the na­tional level are open­ing up op­por­tu­ni­ties to bring for­eign and pri­vate in­vest­ment in sup­port of much-needed in­fras­truc­ture im­prove­ments. With fur­ther gov­ern­ment in­vest­ment and even fur­ther re­lax­ation of PPP norms, In­dia will surely sus­tain its place as the world’s fastest grow­ing econ­omy.

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