BROTIN BANERJEE elaborates on the role of the private sector to enable the government´s vision of ´Housing for All´.
India is on the cusp of large-scale urbanisation over the next few decades, with more than 1 crore population being added to its urban areas. It is expected that by 2050, 60 per cent of the population will be living in cities, meaning that the demand for houses will shoot up in these areas. According to data compiled by Cushman and Wakefield, 11 major Tier-II and Tier-III cities are expected to witness a rise in housing demand, driving cumulative incremental residential demand to about 900,000 units between 2016 and 2020.
Various reports and statistics suggest that affordable housing is an issue in India. However, with the country experiencing a robust phase of urbanisation, the government is making efforts to ensure housing is made available for all. Through its various strategic policies and robust implementation methods, it is committed to fulfilling its vision of providing ´Housing for All´ by 2022. But for this to come to fruition, a number of challenges need urgent attention. A few of these are involvement of the private sector, availability of land and easy credit.
Encouraging private participation
Participation from the private sector brings with it not only expertise, but technology that plays an extremely important part in developing affordable homes. Broadening their role in government housing schemes such as the Rajiv Awas Yojna (RAY) and the Pradhan Mantri Awas Yojna (PMAY) will be a step forward in the direction of ´Housing for All´ by 2022. Incentivising these schemes will ensure sufficient returns for developers, along with fulfilling the task of constructing the required number of homes.
Liberalising development control norms and regulations for construction of such homes will be a step forward to achieve the affordable housing dream. To solve the problem of land availability, accessibility, and curtail its spiralling costs, state governments should tap the option of forming land banks made easily available to developers with the requisite approvals in place.
The use of prefab and precast technologies is most useful when it comes to building affordablehomes. The main advantage of the prefab method is the celerity with which the construction process takes place. Prefab technology allows us to deal with the issues of tremendous shortage of skilled labour and the need for hassle-free construction, enabling homes to be built faster. Providing tax benefits to low-cost construction technologies will positively contribute towards holistic growth of the sector and help achieve the goal of building homes faster.
Introducing elements such as pre-approved land parcels and adequate infrastructure facilities will be instrumental in significantly bringing down the time taken on projects as well as cost overruns, which are a catalyst to soaring housing prices. Increasing the purchasing power of individuals, especially of those from the lower-income groups, will also help in making a success of the Housing for All by 2022 vision. Flexible payment mechanisms are an excellent medium to do so.
Easing lending norms for real-estate projects as well as allowing banks to fund land purchase to reinvigorate the sector, which is going through a slowdown, will take us closer to the goal.
With the initial tremors of demonetisation settling down and government measures in terms of interest rate cuts and increased infrastructure spending, the domestic consumption story in India is expected to take a positive turn. There continues to be an overwhelming deficit of affordable housing in India and this is only expected to grow given the rapid pace of urbanisation in the country. The housing schemes announced under PMAY will help boost the sentiments of the middle and low-income groups. The interest subventions will bring in relief, incentivising more people to avail affordable housing under the scheme. Rate cuts announced by banks will boost consumer sentiment, especially among first-time home buyers. These are welcome steps that will boost demand in the affordable and rural housing segments and help improve sentiments among the urban homebuyers.
The government has also actively been working to create an inviting environment for the industry to participate in fulfilling its commitment to providing housing to all. For their part, developers are realising the opportunity this sector holds and a number of them can be seen investing in the segment and expanding their portfolios.
About the author:
With a career span of 14 years across key Tata Group companies; under the leadership of Brotin Banerjee, Managing Director and CEO, Tata Housing, the company enjoys the unique position of having large in-city real-estate properties in major metros and mini metros.
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