The housing deficit in India is estimated at 24.71 million. Out of this 21.78 million is accounted for by the economically weaker sections. It is estimated that the real estate sector alone could add 1-1.5 per cent to the nation’s gross domestic product (GDP) if efforts are made to reduce the shortage in urban housing.
INFRASTRUCTURE UNDER STRAIN
The Eleventh Five Year Plan has estimated that due to burgeoning urban population, the big cities, in particular, metropolitan (million plus) and mega cities are under severe infrastructure-related strain. Urban dwellers have low access to infrastructure services such as water supply, sanitation, power supply, and solid waste disposal. The availability of at least a minimum level of these services is regarded as necessary for conducive human settlement and habitat. In addition to the absolute shortage of services, there is the problem of inequitable distribution across states and different income strata. The brunt of deficiencies in services is borne mostly by the low-income and poorer sections.
Besides inadequacies and inequitable distribution, the absence of efficient and effective management worsens the situation further. It leads to service leakages and financial losses, and consequently, has an adverse impact on urban productivity and economic growth.
INDUSTRY BODIES DEMAND
The Confederation of Real Estate Developers' Associations of India (Credai) has been demanding that fiscal incentives be offered to encourage affordable mass housing. The government has provided a tax holiday to lower income group (LIG) and middle income group (MIG) housing projects under Section 80-IB (10) of the Act. Prior to the Finance Act 2009, tax holiday under section 80-IB (10) was available for housing projects approved prior to March 31, 2007 which was extended to March 31, 2008 only in the last budget. The tax holiday was available to housing units of up to 1000 square feet in Delhi and Mumbai and up to 1500 square feet in other cities. Since high land and construction costs driven by input costs make affordable housing unviable in the vicinity of developed cities, Credai is now demanding extension of tax holiday for housing projects under Section 80 IB (10) to allow for conceptualising of new projects while also encouraging more projects to come up in view of the incentive.
Rohtas Goel, president of National Real Estate Development Council (Naredco) wants the government to consider a dedicated affordable housing fund. “Government should establish a dedicated affordable housing fund in line with infrastructure fund exclusively for construction of EWS / LIG housing and lend it to developers at low rate of interest,” he says.
The industry bodies have advocated in their budget proposal exemption from various direct and indirect taxes to boost slum redevelopment. These incentives are vital in the light of the government’s own resolve to make urban India slum-free in five years. About 80 million of India’s urban poor live in sub-standard and unsafe housing conditions where they are under the constant threat of eviction.
“For all slum or dilapidated housing redevelopment projects, we have asked for tax incentives. However, the government can impose restrictions on the maximum area of the units so that tax exemption is enjoyed only by developers who are keen on improving the social infrastructure,” says Santosh Rungta, president of Credai.
DEVELOPERS’ VIEWPOINT
According to DLF chairman K P Singh, development of low-cost housing in the urban sector is not proceeding according to expectation. He says that policy makers should focus on augmenting supply instead of managing shortages. "Only through increased supply can prices be brought under control," he says. He demands that all existing town planning and urban development laws and regulations, which currently impose restrictions on Floor Area Ratio (FAR), should be replaced by more liberal norms. Praising the government’s Rajiv Awas Yojna as a good plan for making India slum free, Singh adds that there has been no worthwhile progress in redeveloping slums due to lack of adequate incentives to the private sector. “One innovative idea would be to treat slum redevelopment at par with the development of SEZs,” he says.
GOVERNMENT INITIATIVES
The rising cost of inputs is one reason why the problem of urban housing shortage has become so acute. Minister of state for Urban Development Saugata Roy has said that careful planning of urban cities is of utmost importance for evolving a low-cost housing programme, the main themes of which have to be economy and speed. “The optimum utilisation of available resources would give the most economical solution to this grave problem,” he says. He further adds: “Low-cost housing can be developed through effective budgeting and use of techniques that reduce the cost of construction. For this locally available materials could be used along with improved skills and technology. At the same time, there should be no compromise on the strength, performance and life of the structure."
The government has been promoting research in the field of housing and construction to achieve this goal. This has led to the discovery and development of a number of new alternative building materials and innovative techniques that reduce costs while improving the performance of conventional building materials and techniques. Roy says that energy-efficient manufacturing processes and use of renewable raw material resources out of wastes and by-products of industry, agriculture, and forestry have resulted in the development of cost-effective and eco-friendly (CEEF) products. To promote understanding among beneficiaries, the government has initiated a programme of demonstration, education and counselling among the poorer sections.
Referring to the National Urban Housing and Habitat Policy 2007, which lays emphasis on promotion of cost-effective and environment-friendly building materials and technologies, the minister says that this will help the housing sector achieve savings in the use of scarce conventional materials like cement, steel, burnt brick and timber, thereby bringing about economy in cost of housing, particularly for the EWS and LIG categories.
The government is also urging state governments to constitute technical groups to examine various new building materials and construction techniques that are suitable for their regions and include them in the schedule of specifications and rates so that tender/contract documents automatically include the various options. This will enable agencies to reduce the cost of construction. Roy has called upon states to ensure that the building by-laws and schedules of specifications followed by local bodies/development authorities, PWDs and Housing Boards are updated to incorporate cost-effective building materials and innovative construction techniques.
ENCOURAGING PPP MODEL
Real-estate developers are keen to join hands with the government in developing housing for the poor. “The government just needs to grant us land and we are ready to construct houses for the poor,” says Kumar Gera, chairman of Credai.
Singh of DLF says that the public-private-partnership (PPP) model should be actively encouraged to tackle the gigantic task of urban development. The public sector's role, he says, should be confined to that of a facilitator and regulator, leaving the conceptualisation and execution of projects to the private sector.
Many schemes of the Slum Rehabilitation Authority (SRA) that have followed the PPP have seen success in Mumbai. “Akruti, HDIL, Unitech and Hiranandani are some of the developers that have successfully implemented the PPP model in slum redevelopment. In fact, this model has managed to boost a name like Akruti to a high level of national recognition, though the company has no significant land holdings in the city. The PPP platform is currently a very workable one through which slum rehabilitation proposals can be implemented, though the possibility that an even more progressive model will evolve cannot be discounted,” says Shubhankar Mitra of Jones Lang Lasalle Meghraj.
When the Budget is presented on Friday, hopefully the finance minister will propose incentives and policies that provide a boost to low-cost housing. Source: Expressrealty;
