Creating affordable housing for all :Hindustan Times

One of the much-awaited programmes — the Housing for All by 2022 initiative — was recently approved by the Union cabinet. The program is designed to address the current housing deficit, with an emphasis on creating affordable housing for the economically weaker sections (EWS) and lower income groups (LIG) of society.

Through the Housing for All initiative, the government aims to cover 4,041 statutory towns, of which the immediate focus is on addressing the housing need in the country’s top 100 cities. The large mandate of the programme is a result of rapid urbanisation that has led to the economically vulnerable section of India’s population not having access to basic necessities such as safe housing, access to proper sanitation facilities, etc. This, in turn, has put pressure on the existing infrastructure in urban locations.

The economics of developing affordable housing is affected by high land costs in urban areas, which has only added to the housing deficit situation in the country. While the government has set the agenda for this initiative, the implementation needs a multiple-pronged approach that must include restructuring of urban local bodies (ULBs), addressing financial exclusion to boost demand, whilst promoting private sector’s role to ensure adequate supply. Further, robust finances for the programme, coordination between ministries and governments are significant.

The current government structure needs to be decentralised and the ULBs need to be financially strengthened for effective local level governance and project implementation. These agencies must take efforts to unlock unused land in urban areas. Creating and upgrading infrastructure in cities needs to be given due importance. The state governments in consultation with urban planners and the private sector must endeavour to firm up plans regarding improving existing infrastructure.

While developing infrastructure comes under the purview of the government, the creation of housing cannot be done without the participation of the private sector. The government needs to promote private sectors involvement, which would play a significant role in bridging the current deficit of low-cost housing in urban areas. Incentivising the private sector by way of making land available, reduced raw material prices, providing additional floor space index (FSI) for such developments would give a thrust to development of low-cost housing units. Further, by providing tax exemptions and thereby reducing developmental costs, the government would be able to lure private developers. Ideally, the public sector should look at aggregating land for project, whilst the private sector should focus on the construction, financing the project, etc. Additionally, private sector participation, particularly in a public private partnership (PPP) model would also help secure lending from institutional lenders at lower cost and enable timely approvals. In the long term, the government could also consider increasing institutional lending to the sector so that more private developers come into the fold.

Along with the unavailability of affordable housing, access to credit is another challenge faced by a large portion of the population from the LIG/EWS segment. Easier access to cheaper structured finance to such low-income categories, would go a long way in addressing the issue of affordability. Under the Housing for All by 2022 initiative, the government has decided to grant Rs 1 lakh per beneficiary under the slum rehabilitation programme to lower the burden of expenses on the beneficiaries. Further, under the initiative, a central assistance of Rs 1.5 lakh per house for the EWS category will be provided by the government as outlined in the policy, apart from a credit-linked interest subsidy of 6.5% on housing loans for a tenure of 15 years to the EWS and LIG categories.

One of the biggest changes in the execution of the policy would be brought about by the higher income ceiling as notified by the government, which would help make the scheme more inclusive by covering a higher number of beneficiaries. As per the new rules, while families with an annual income of Rs 3 lakh can avail of economically weaker section (EWS) housing as compared with Rs 1 lakh earlier, the ceiling for low-income group (LIG) housing has been raised to Rs 3 to Rs 6 lakh from Rs 1 to Rs 2 lakh.

While charting out an extensive plan, it would be beneficial for the government to evaluate the various challenges that can crop up during the execution, the biggest being the acquisition of land. The government should assess affordable housing policies of various states to understand the merits and loopholes in the schemes.

Overall, the government has taken the right steps in introducing and planning the affordable housing scheme, and must execute the plan with the same gusto. In order to successfully meet its time-bound objective in a sustainable manner, the scheme must employ a holistic approach to simultaneously cater to the different aspects of the Housing for All initiative. The author is the executive managing director — south Asia of realty consultancy