Published on: Jun 28, 2015 @ 12:11
The Prime Minister Mr. Narendra Modi on Thursday launched his government’s much awaited mega urban schemes, including Housing for All under Prime Minister Awas Yojana (PMAY) and other.
Under Prime Minister Awas Yojana, the centre plans to create 2 crore houses for urban poor including Economically Weaker Sections (EWS) and Lower Income Groups (LIG) in urban areas by the year 2022. In this project, the central will provide a grant of Rs 1.00 lakh to Rs 2.30 lakh per house by way of a 6.5 per cent interest subvention scheme.
Mr. Modi observed that, ”A house was a turning point in the lives of poor, which leads towards a better life and the government‘s effort was to not just provide a house, but to the right environment to live life to the fullest.”
Regarding the existing housing shortage of 2 crore units, The Prime Minister said India would complete 75 years of Independence in 2022, and by then, it was our responsibility to provide a house for all.”
Development of large-scale affordable housing projects can play a key role in achieving the mission of housing for all and proper growth of urban India. Indian cities lack low-income housing , which has resulted in the proliferation of slums and unorganized real estate across the country. An affordable housing project should be located within reasonable distances from workplaces and should be connected adequately through public transport.
The objective of creating affordable housing is to provide a house for all. It means provision of adequate shelter to those whose needs are not met by the open market. People who look to buy houses in urban areas are mainly those who have been in the city for a long time and require new houses due to growing family size. Another segment that requires affordable homes are city migrants who cannot afford to buy houses currently but are capable to rent housing premises.
Developing affordable housing in Indian cities faces significant challenges due to several economic regulatory and urban issues. The lack of availability of urban land, rising threshold costs of construction and regulatory issues are supply-side constraints.
Government agencies such as Urban Local Bodies and Urban Development Departments are responsible for laying down guidelines and bylaws for affordable housing. Generally, the developers have to get 50-60 approvals and clearances to start the residential projects. The approval process is horrendous and needs to be improved. The government should streamline the process of approvals and clearances by creating a single-window clearance system so that developers can join the fold without being worried about such hassles.
The government has adopted several policies to create an environment of growth for this sector. The policy includes providing greater access to funding on the one hand and extending liquidity to the end user to strengthen their buying capacity.
The Government has allowed FDI of up to 100 per cent in real estate projects. There is a provision for reduction in the area from 50,000 sq. ft. to 20,000 sq. ft. and reduction in minimum capitalization for FDI investment from $10 million to $5 million. This will boost the affordable homes sector which were struggling to develop large projects. Making them smaller and more manageable will attract FDI ( Foreign Direct Investment) and expertise in setting up new township and cities.
Some developers are developing low cost and affordable housing projects for the low-income group of the society. The government have also looked at PPP (Public Private Partnership) model for development of these properties. Private sectors, which comprises residential developers develop affordable housing projects and sell them in the open market.
The Prime Minister said the central government would protect consumer’s right and the Real Estate Regulator Bill would be approved by Parliament in the monsoon session. The current Central Government has plans to provide housing for all by 2022 and this plan can be successful only when we have a perfect balance between affordable housing projects and others.
Ajay Verma is a founder and writer of The Housing World, a real estate and mortgage news website. He brings with him 20+ years of rich experience in the real estate and mortgage industries. He has worked in senior roles in Delhi and NCR in the above-mentioned sectors.