By Accommodation Times News Services
Venkaiah Naidu, Housing and Urban Poverty Alleviation Minister has specifically urged the States and ULBs to strive more to ensure housing for all the urban poor by the year 2022. Referring to mobilization of required funds and resources for urban housing scheme, he informed the States and ULBs that there is substantial scope for Foreign Direct Investment in construction sector including affordable housing.
Union Cabinet had cleared Rs 50,000 crore as central assistance for 100 smart cities. Each city can get Rs 100 crore of central funds annually for five years; the rest has to be financed by states, local bodies and private parties. Hence, states, local bodies and developers has to plan allocation of funds through various sources like FDI, External Commercial Borrowings and investments.
At the launch of three urban development mission Prime Minister Narendra Modi pitched for FDI, he said, “We should think how to bring maximum Foreign Direct Investment for urban infrastructure. We should think how to attract more and more overseas funds and change the situation in the stipulated period.”
Since long time relaxation of norms for FDI in the construction sector to boost investment in the real estate sector especially the affordable housing segment is quite high, as this will ease the development process of housing.
The PHD Chamber of Commerce and Industry in a representation submitted to the union ministry of housing and urban poverty alleviation said it has asked the government to allow real estate developers to avail benefits of an external commercial borrowings window to fund their low cost housing projects till interest rates in India come down.
Measures taken by government to promote investment in housing sector includes:
1. Reduction in minimum built up area from 50,000 sq.mt to 20,000 sq.mt and reduction in minimum investment norm from US $ 10 million to 5 million $;
2. Exemption from these norms for affordable housing;
3. Allowing External Commercial borrowings for Affordable Housing and Slum improvement at a level of US $ 1 billion for the current fiscal.
4. Enabling priority lending or Infrastructure Sector for construction sector;
5. Increased tax incentives for investments in housing; and
Modi government has taken up a huge task of building close to 2 crore houses by 2022 or 25 lakh houses every year, but without allocating required investment in the sector accomplishing task is difficult.