More than 55 per cent of the population in the mega city of Mumbai resides in slums. The need of the hour is affordable housing. Surprisingly, the affordable housing movement has made the biggest splash in tier 2 and tier 3 cities and is all set to positively impact the mortgage-to-GDP ratio in India. It has been estimated that 95% of the housing shortfall is in the Lower Income Group (LIG) and the Economically Weaker Segments (EWS). The affordable housing budget was raised under the PMAY from Rs.15,000 crores in 2016-17 to Rs.23,000 crores in 2017-18. Providing incentives to the housing sector will have have a multiplier effect on the economy and employment situation.
The government built 10 lakh houses under their flagship housing scheme Pradhan Mantri Awas Yojana within the stipulated time according to the Rural Development Ministry. This feat was possible only due to direct financial assistance into the beneficiary accounts and by providing quality re-skilling to rural masons for house construction.
The affordable houses in rural India are transforming countryside and are equipped with facilities such as toilet, LPG connection, electricity connection, drinking water etc. The government aims to construct 50 lakh homes for the poor in rural areas across the country by March 31 . The dream of owning a home is finally in the reach of the masses.
The Cabinet increased the carpet area of houses under the government’s affordable housing scheme for the middle income category from 90 to 120 square metres (or 968 sq ft to 1,184 sq ft) and 110 sq mt to 150 sq mt (or 1,291 sq ft to 1,614 sq ft) for the 12-18 lakh per annum income bracket.
The government has approved construction of 112,083 additional affordable homes under its flagship Pradhan Mantri Awas Yojana (Urban), with an investment of Rs 8,105 crore, the central assistance for the same being Rs 1,681 crore. The total homes sanctioned under PMAY(Urban) has risen to 3,052,828 with 11,523 homes sanctioned with an investment of Rs 860 crore in Maharashtra. This will open the doors for the lower and middle classes and income groups.
Mahindra Lifespaces has joined hands with HDFC Capital Affordable Real Estate Fund-1 (HDFC Capital) to develop affordable housing and fulfill the demand-supply gap. IFC and HDFC recently announced the joint creation of an $800 million affordable housing fund.
DHFL raised loan disbursements worth 9,950 crores in the second quarter of 2017, and sees potential in in tier 2 and tier 3 city, affordable housing segment. DHFL even plans to conduct 100 ‘Griha Utsav’, an exclusive affordable-housing exhibition in tier-2/3 city locations. They have already conducted 17 such exhibitions.
While initiatives such as these are of course required to take a step towards accomplishing the 20 million home target, affordable housing as a segment per say is far more complex. The concept of ‘affordability’ differs greatly from Metros to Tier 1 to Tier 2 regions and onwards. The price of land remains a key component of the development cost, which directly impacts the price to the end buyer. In urban centers, affordable housing developments continue to remain at the periphery and hence infrastructure development needs to almost outpace the housing development. The taxation of affordable homes, especially since they have been included within the GST, also needs to be reviewed independently of the taxation of regular residential and commercial properties. Building technologies also need to support the scale of development required. And the list continues.
While the Government continues to take measures in the right direction to accomplish the ‘Housing for All’ agenda, scaling affordable housing is no doubt challenging and will require an even greater thrust if we are to make it a reality.
State level initiatives:
Maharashtra has initiated the World Largest Affordable Housing Project with 30,000 houses on Public Private Partnership basis in Rayanagar, District Solapur. This ambitious project shall implement greentechnologies, such as rainwater harvesting, use of recycled water from sewerage treatment plant for flushing and gardening, zero use of natural sand, and solar streetlight etc.
Slum Rehabilitation Authority (SRA) came into the picture to uplift the standard of people living in shanty structures and in the unhygienic environment. The Government of Maharashtra is identifying such people and checking if they are eligible under PMAY. The State is also using innovative technologies like Precast Method, Rainwater Harvesting, Earthquake Proof Construction, Solar Energy, etc in its overall affordable housing sector development. Along with this, the Government of Maharashtra is also formulating policy for Green Buildings.
Affordable housing is far more complex than it seems. The concept of ‘affordability’ differs drastically from Tier 1 to Tier 2 cities. In urban areas, the affordable housing still remains ambiguous as infrastructure development needs to almost outpace the housing development.
While the government is taking considerable measures to push affordable housing agenda in the right direction, there is no doubt it will be challenging and require a greater boost than it already has to make it a hassle-free reality in 2018.