India’s housing dilemma

Affordable Housing at fix price, says parliamentary panel

When it comes to providing homes to its citizenry, the government of India is showing genuine inclination. But good intentions can only take you so far!

Affordable housing is a difficult dream. India is lagging far behind when it comes to provide for basic amenities to its citizenry — with abject poverty and resulting homelessness being front-runner. In India, according to the 2011 Census, there were 1.77 million homeless people, or 0.15% of the country’s total population. There is a reported shortage of 18.78 million houses in the country. Although the 2011 census claims to see an upward trend in the number of houses (from 52.06 million to 78.48 million), the supply continues to greatly outpace the demand.

Coming up as a contrast to the prevailing backdrop is the Prime Minister’s dream of ‘Housing to All 2022’ under his flagship ‘Pradhan Mantri Awas Yojana (2015)’. The mission aims to deliver 2 crore housing units, to be developed in three phases, by 2022. The Narendra Modi government, under its guidelines for affordable housing segment, has given (and continues to give) incentives to both, buyers and suppliers. It provides for an interest subsidy of 6.5 % on housing loans to beneficiaries belonging to EWG (households that have an annual income up to Rs. 3,00,000) and LIG (annual income between Rs. 300,001 up to Rs. 600,000 ).  It also mandates house in the name of women and grants of tax exemption of an additional Rs 50,000 to first-time home-buyers. Additionally, it green-lits a provision granting 100 per cent tax exception on profit earned through construction of affordable houses of up to 30 sq. meters in four metros and 60 sq. meters in other cities. Subvention on service tax for construction of affordable houses up to 60 square meters has also been mandated. PM’s New Year Eve announcement of 3 and 4 percent interest subvention on home loans of up to 12 lakh and 9 lakh respectively is the out of fresh memory.

Laying where credit is due — there’s no denying the fact that government is taking genuine efforts to engage both, demand and supply side of the intended housing reforms. However, despite various incentives, ground reality paints a different picture altogether. There’s only so much a government can do, and without private developers’ intervention, wadding the 19 million housing deficit, out of which 95% demand comes from EWS and LIG segments, might be tricky.

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