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'Housing For All' Can Change Trends In Real Estate Sector

Monday, March 16, 2015
By Mona Jalota

Mona Jalota VP, Strategies & Operation, Coldwell Banker India

The ‘New’ Development Plan:
For the 75th Anniversary of India’s independence, the new government has come up with the ‘Housing for All’ 2022 Scheme which aims at providing affordable homes for every Indian while creating better connectivity through developed infrastructure. The Union Budget 2015-16 has allocated Rs. 14,000 Crore for the ‘Housing for All’ programme which includes Rs. 10,000 crore for ‘Indira Awas Yojana’.

The Central Government together with the State Governments and according to the plan, will build close to 4 crore homes in rural India and 6 crore homes in the urban area to meet the housing demands of the increasing population. For this, the government has also announced the increase in FSI from current 2.5 to 8 which will help in decongesting the cities, though even with the increase; one may see it as low when compared with other urban cities like Manhattan and New York, both of which have an FSI of 15, while Singapore has FSI of 13.

The ‘Focus’ on Mumbai:
In the city of Mumbai, the government plans to renovate Bandra Kurla Complex into a smart city with International Finance Center while also drawing projects to improve connectivity to the region by 2022. The metropolis area of Thane is too under inspection for developing it into a smart city on the lines of BKC.

As per the government plans of providing homes under the scheme of ‘Housing for All’, there is a demand of 16 Lakh homes in Mumbai which may even go up after demand assessment through baseline survey for housing and identify resource requirements. Therefore, the periphery of Mumbai will now witness further expansion and development to create affordable housing given the extremely high land rates in the city. This is expected to be augmented by developing satellite cities by 2022.

Connectivity in terms of railways and roadways or Mass Rapid Transport will also be focused on considering Mumbai being the financial and commercial capital of India; most of the jobs generating activities are based here in the main Mumbai Island. Therefore a seamless inflow and outflow of human resource will be focused on which is essentially, a need of the hour.

The ‘Hopes’ of every Indian:
A large part of the Indian population, today, is residing in slums or on streets even though housing is the most important need for any individual. While the ‘Housing for All’ scheme has definitely raised hopes of every Indian with its special focus on the EWS (Economically Weaker Section), homes for everyone is still a distant dream.

The ‘Hurdles’ in the roadway:
The Government’s scheme of ‘Housing for All’ has brought the focus on low income groups; there is still a long way to successfully complete this grand task. While planning and allocation of funds is imperative, there are a large number of hurdles in this venture as well. Prima facie, it is important for the Central Government to work in co-ordination with all state governments, government departments and ministries to ensure a strict implementation and proper execution of this initiative. Other shortcomings like insufficient land in Mumbai, clear title, building homes with connectivity to sanitation and 24/7 water and electricity supply cannot be ignored. For the state of Maharashtra, there is a requirement of 50 lakh new housing units by 2022 to meet the rapid rate of urbanization. The ‘Housing for All’ is a big step towards development but there are many a slip between a cup and a lip.

The ‘Hopeful’ India by 2022:
‘Housing for All’ program by the government is aimed not just at providing affordable homes to one and all, under this policy, the government will also largely contribute in providing the basic infrastructure in rural and under developed areas. With the much needed support from the state governments, the realty and infrastructure industry will now expect to have ease of approval process, enhance transportation and other infrastructural advancement by creating developed satellite and smart cities.

Working hand in hand with the real estate private players through PPP model should be encouraged by the government as it will largely benefit and accelerate the course of action. Private companies’ participation will stimulate entrepreneurs to expand business in other geographical regions by virtue of which there will be higher employment opportunities in rural areas and an increase in disposable income for the population at large. This will reduce urban migration while increasing demand for rural housing units and affordable homes.

The ‘If possible’ Aspect:
While focusing on infrastructural development, the government should also make possible the streamlining of policies for faster land acquisition to avoid project delays and tax benefits to real estate sector which can be passed down to the end users. The Ready Reckoner Rates that have been increased recently from 15-20%, the highest being 40% should also be streamlined with the market rates so that the end users do not feel the pinch, as it defeats the purpose of this policy completely. The government can also offer incentives to involve private players in developing affordable housing units or should undertake projects jointly with them.

The humungous project of ‘Housing for All’ should be monitored by government agencies to avoid any misuse of funding. Funds should be made available to the lower strata of the society through banks to ensure equitable distribution. While government is making sturdy efforts to settle the BPL Indian population through affordable houses and proper connectivity, an equal amount of focus should also be given to support facilities like water, sewage, gas lines, energy, communication etc.

The Government should give an industry status to the Real Estate sector to enable players to get better deals from other industries like cement and steel thus improving the cost control on over two major cost components of this industry.

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