Govt is looking for partnership to create more affordable homes: Minister

To encourage state concessions and creations of affordable housing stock for construction of half a million houses for Economically Weaker Section (EWS)/ Lower Income Group (LIG) segments, the Centre has recently launched a revised affordable housing in partnership schemes, informed Union Minister for Housing & Urban Poverty Alleviation Dr. Girija Vyas.

Inaugurating the 6th Affordable Housing Summit & Excellence Awards,’ organised by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) in New Delhi recently, the Minister said, to create more housing stock under affordable category, the government is looking for partnership between various agencies i.e Central &  State government/ housing boards and development authorities and Urban Local bodies (ULBs).

Informing the gathering that the scheme now gives increased subsidies to the tune of Rs. 75,000/- to economically weaker section (EWS) or low income group or LIG dwelling units of size 21-40 sq mt, in affordable housing projects being undertaken through various public private partnerships (PPP), the minister said, “Between Rajiv Awas Yojana (RAY), Rajiv Rinn Yojana (RRY) and Affordable Housing in partnership schemes (AHP), the government of India will support establishment of 2.5 million housing units.”

  

She said, the Rajiv Rinn Yojana (RRY) scheme focuses on demand side incentives wherein ministry of housing & urban poverty alleviation provides 5% interest subsidy on housing loans up to Rs. 5 Lakh. This scheme is also likely to be launched by August this year, mentioned Dr. Vyas.

She said, “The top 10 cities in India viz. Mumbai, Delhi-NCR, Bengaluru, Chennai, Kolkata, Ahemdabad, Kochi, Chandigarh, Pune and Hyderabad account for 15-20% of the overall supply in urban India.”

With the effort to reduce the demand-supply gap in this segment, it is noteworthy that from 2007-2012, housing shortfall has declined from 24.8 miilion to 18.7 million, a 25% reduction, she informed

Speaking on the occasion, Arun Kumar Misra, Secretary, Ministry of Housing & Urban Poverty Alleviation said, government in its last cabinet meeting would likely take a decision on Foreign Direct Investment (FDI) in Real estate sector.

On the popular demand on single-window clearance system, being demanded by developers across the country, he said, “At least a large part of central clearances out of 45 are digitized and should be online for clearance system. In the last one year, more than 43 towns in India have adopted the single window clearance system.

He also pointed out, “Without the amendment of rent control laws, we really add much to the system. Nearly 30% people live on rent and more than 10% of houses are lying vacant because of the rent control laws archives.  We can’t have the central law, it has to be state law because the guidelines are already there, and next group of engagement will have to be amendment of rent control laws with the state government.”

The state will have to come out with the urban housing policy (UHP). The transport and affordable housing has given us clearly what exactly requires to be done and I am very happy that states like Rajasthan, Karnataka and Haryana have taken a lead in affordable housing policy, said Secretary.

The real estate sector in India has been a high growth story.  The construction industry is the second largest industry of the country after agriculture accounting for 11% of India’s GDP. Indian construction industry employs 32 million people and its total market size is estimated at Rs. 2480 billion.

Dr. Vyas said, “Ministry focuses on housing for the urban poor, housing represents a key component of economic growth contributing 5% to the GDP and there still being a shortfall of 18.7% million units. I welcome and laud theses developers in supporting the government of India in progressing towards its goal of provision of housing for all”.

Ranan Kapoor, President ASSOCHAM said, “Nearly 28% of India’s population lives in cities and urban areas, a figure that is expected to rise to 40% by 2020. Majority of housing in urban areas caters to the premium segment; thereby a large section of society is unable to own homes. According to the National Housing Board (NHB), an investment of INR 8.5 trillion is required for construction of Affordable Housing in slum and non-slum areas.

Establishing policies that mandate developers to make provisions for the Economically Weaker Sections (EWS) and Low Income Groups (LIG) will encourage the private sector to take up Affordable Housing projects and ensure their timely delivery. Measures like ensuring availability of developed land, TDR, long tenor finance and cheaper loans, Priority Sector Lending, Viability Gap Funding and Single Window clearances will encourage private sector investment and provide much needed impetus to the Affordable Housing segment”, added Kapoor.

Other who also spoke during the conference were Navin M Raheja, Chairman, Real Estate Committee, ASSOCHAM & CMD, Raheja Developers Ltd., B C Jain, Co - Chairman, Real Estate Committee, ASSOCHAM & Chairman, Sunrise Housing Constructions Limited and D.S. Rawat, Secretary General, ASSOCHAM.

Schemes that help poor to own a shelter

 Though India can boast of having one of the highest number of High Net Worth Individuals (HNWIs), the Economically Weaker Section (EWS) still occupies the major portion of the population, and providing them with shelter is nothing but a daunting task for any government agencies. 

But still, how many of these people know that there are several Central and state-sponsored schemes through which they can realise their dream of having home? Riding on illiteracy, government apathy and corruption at high levels, these EWS always remain shelter-less.

Though there are several articles, write-ups and news regarding the presence or launching of such schemes, there have been no efforts, either from government agencies or financial institutions to take it directly to the doorsteps of these people.

An earnest effort was made by the Government to set up a Credit Risk Guarantee Fund (CRGF) Trust for Low Income Housing on 1st May, 2012 to facilitate economically weaker sections and low income households in getting credit from banks and housing finance companies. But how many poor people came forward to ustilise this scheme?

Recently, while answering to a question in the lower house of Parliament, Dr. Girija Vyas, Union Minister of Housing and Urban Poverty Alleviation (HUPA), stated that this Scheme provides guarantees for the loans given to EWS/LIG persons up to Rs 5 lakh by lending agencies without any third party guarantee or collateral Security. National Housing bank is the Nodal agency for operationalizing CRGF. 

She said, as on date, 39 Member Lending Institutions have executed the Memorandum of Undertakings (MoUs) to participate in the scheme. The total corpus fund of the Trust is Rs 1000 crore. Government of India has so far released Rs. 150 crore as corpus of the fund. But one thing, which is not clear that where a poor person could find a home with Rs 5 lakh? He could build a home if he has a piece of land. But nowhere in the country, a flat of 40 sq mt could be found for this amount, even in the remotest of remote places, says Diwan Singh, a property dealer and financial adviser from South Delhi.

The Credit Risk Guarantee Fund Scheme for Low Income Housing (CRGFSLIH) is already operational. Rs. 5 lakhs ceiling in guarantee has been prescribed keeping in view the average loan size for a 40 sq mt house and the repaying capacity of the people in Economically Weaker Sections and Low Income Group segments, the Minister added.

For those ill informed here are the list of pro-poor housing schemes floated by the government of India in the recent past.

Rajiv Awas Yojana (RAY): Government had launched RAY in June 2011 in two phases-  the preparatory phase for a period of two years which ended in June 2013.  The government has approved the implementation phase of RAY in September 2013 for the period of 2013-2022. The Central support under the scheme is admissible to States/UTs and Central Government Agencies for providing housing including new houses, incremental houses, rental houses, transit housing and development/improvement of basic civic & social infrastructure under the scheme.

Jawaharlal Nehru National Urban Renewal Mission (JNNURM): For rehabilitation of slum dwellers the Government had launched the JNNURM on 3rd December, 2005 for assisting State Governments in providing housing and basic civic services like water, sanitation etc to urban poor/ slum dwellers in 65 select cities under the Sub Mission Basic Services to the Urban Poor (BSUP) and in other cities and towns, under the Integrated Housing and Slum Development Programme (IHSDP).  JNNURM has been extended up to March, 2015 for completion of projects sanctioned up to March, 2012. 

One of the three pro-poor reforms under JNNURM is provision of basic services to urban poor including security of tenure improved housing, water supply, sanitation education health and social security. The reform is envisaged to be an outcome of JNNURM and is to be implemented in a staggered manner over the Mission Period (extended up to 31.3.2015) in convergence with the programme of other Ministries.

Affordable Housing in Partnership (AHP): As an integral part of RAY, the competent authority has also approved continuation of implementation of Affordable Housing in Partnership (AHP) Scheme. The scheme has been amended to provide Rs 75,000 per EWS/LIG dwelling unit of 40 sq m size for housing and internal development components with an objective to encourage private sector participation in affordable housing.

Rajiv Rinn Yojana (RRY): The Centre has implemented RRY with effect from 1st October 2013. Under this Scheme, an interest subsidy of 5 % per annum for loans up to Rs 5 lakh and for tenure of 15-20 years, will be provided to EWS/LIG housing loan borrowers in Urban Areas availing loans from Financial Institutions i.e Scheduled Commercial Banks & HFCs etc.