Focus on Affordable Housing to Catalyse Investments

By Mr. Rana Kapoor, ASSOCHAM

India has about 495 urban cities with over 1 lakh population and  about 7,935 cities and towns, which can act as catalysts of economic growth.

ASSOCHAM ( Associated Chambers of Commerce and Industry of India ) believes that Affordable Housing sector has the potential to stimulate significant and immediate multiplier effect in creating employment and demand in key sectors, like Power, Steel and Cement, thereby reinvigorating the economy.

The country currently requires 1.878 Crore additional houses, of which 95.62 % are in the Economically Weaker Section (EWS) / Lower Income Group (LIG) / Middle Income Group (MIG).

 

Rana Kapoor, ASSOCHAM

ASSOCHAM recommends the following measures in the Affordable Housing sector:

Immediate / short term objectives should consider:

Providing an infrastructure status for the Affordable Housing sector to attract more capital and investment formation

Digitisation of land records..

• • Insurance / Pension funds to be allowed to invest in the Affordable Housing sector.

• •  Ease the conditions for Foreign direct investment (FDI)  in real estate and reduce minimum capital requirement from $10 crore $50 lakh and minimum tenure before repatriation from 3 years to 1 year.

• • Review / Repeal Sec 43C in the Income Tax Act on taxation at circle rate and restore 80 IB (10).

• • Tax exemption on income derived by an undertaking, engaged in development and construction of smaller dwelling units.

• • Review RBI (Reserve Bank Of India) norms for project finance; uniformity in the end user income ceiling norms for Affordable Housing units for EWS and LIG.

• • Impetus to the essential infrastructure at the outskirts of tier I / or tier II cities to ensure Affordable Housing clusters are well connected and cities are de  to  congested.

Medium / long term objectives should consider..

• • Rationalisation of Direct and Indirect taxes in the real estate industry to enable competitive pricing for the end user.

••  Single window approval mechanism for Housing Sector as against approvals through 150 tables across 40 departments of Centre, State Govt. and Municipal Corporations.

•  • Mandating developers across country to construct EWS / LIG units and authority to create enabling environment with increased Floor Area Ratio / Floor Space Index (FAR / FSI).

• • Incentivize low cost and innovative technologies such as prefab for producing large volumes of Affordable Housing units.

• • Develop a full proof mechanism for rental housing and ensuring implementation of REITs (Real Estate Investment Trusts ) under the same.

•  • Availability of higher FSI with relaxed density norms for Affordable Housing projects.

I believe India is at a crossroads of experiencing rapid urbanization in the current decade and addressing the concerns of Affordable Housing is the need of the hour.

Given the slowdown in the real estate sector, additional HNI (High Net Worth Individuals) investments in the sector at high interest costs and the increase in ready reckoner rates by some state governments, will only push up property prices further. Taking adequate and appropriate measures to increase Affordable Housing alternatives will not only create a GDP (Gross domestic product ) multiplier, but also improve the living standards of Indian citizens.

About the author

Mr. Rana Kapoor is President at ASSOCHAM

Share: