Replace isolated interventions with well-synergised approach

Ficci-CBRE White Paper suggests ways to bridge housing gap

PMAY is on track; it’s roaring, says MoS Hardeep Singh Puri

Discussions on issues related to policy and roadmap for slum dwellers’ rehabilitation, financing mechanism and Government initiatives for ‘Housing for All’ formed the core of a recent Ficci conference on PMAY and ‘Housing for All’. Saying that PMAY (Urban) was on track, HUA MoS Hardeep Singh Puri emphasised that slums had to developed on ‘as is where is’ basis. A Ficci-CBRE White Paper released at the conference provided a broad understanding of basic components of the affordable housing scheme along with the policy-level interventions by the Government to foster public-private participation in the sector.

To fast-track the pace of affordable housing development, it is imperative that isolated interventions be replaced with a well-synergised approach to address concerns of all stakeholders in the value chain, says a Ficci-CBRE White Paper.

The paper titled ‘Affordable Housing: The Next Big Thing?’ was released by Minister of State for Housing and Urban Affairs, Hardeep Singh Puri, at a conference organised by the Federation of Indian Chambers of Commerce and Industry in association with the Ministry of Housing and Urban Affairs, in New Delhi on March 16.

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The day-long conference, ‘Pradhan Mantri Awas Yojana – Housing for All by 2022’, discussed issues relating to the policy and roadmap for slum dwellers’ rehabilitation and the financing mechanism and Government initiatives for ‘Housing for All’.
Emphasising that the PMAY (Urban) was on track, the minister said that out of the required 12 million houses by 2022, nearly four million houses have already been sanctioned under the scheme. .

Hardeep Singh Puri
MoS Housing and Urban Affairs

“The urban planning in the country has suffered from criminal neglect for 67 years. The distortions in the urban space happened because of manipulations by vested interests.”

Puri said it was incorrect on the part of industry to assume that just because land was costly and a state subject, it had to be necessarily acquired in places far away from slum areas. It was important, he said, to remember that In-situ Slum Redevelopment, one of the components of the PMAY (Urban), is especially meant for making cities/towns slum free by providing pucca houses to the beneficiaries with basic civic infrastructure such as water, sanitation, sewerage, road and electricity. Therefore, slums had to be re-developed on ‘as is where is’ basis. It was no longer possible to lift people and relocate them 40-50 km away from their existing location, he added.

The minister said that urban planning in the country has suffered from criminal neglect for 67 years. The distortions in the urban space, he said, happened because of manipulations by vested interests. This was due to the absence of a regulator to check the brazen acts of developers who got unsuspecting buyers to sign agreements that were one-sided, took their money and invested in land banks. The Government has initiated rectification by bringing in RERA, but some state governments which adopted RERA have placed on-going projects outside its fold, he added.

He, however, expressed optimism that ultimately the resilience of the people would prevail and market distortions will correct themselves as demand picks up. The need is to get the first project right in order to remove the trust deficit among the beneficiaries and develop a model that can be replicated, he said, adding that the Awas Yojana “was not just succeeding, it was roaring” and therein lies an opportunity for the private sector.

The Ficci-CBRE White Paper, released by the minister, brings to light ways to bridge the housing gap in the country and key inhibitors of private sector participation in affordable housing segment. It provides a broad understanding of basic components of the affordable housing scheme along with the policy-level interventions by the Government to foster the public-private participation in the sector.

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The White Paper says although the Government has been proactive in providing incentives for private participation in the segment, especially in the past two years, there are still some steps that can be taken to connect the remaining dots.

Niranjan Hiranandani
President, Naredco, & MD, Hiranandani Group

“The challenge was that of availability of land for slum development”.

Among the various steps it recommended for providing a final push to the segment, the first is for clearer definitions. The Government, said the White Paper, announced last year that GST would be reduced from 12 per cent to 8 per cent for low-cost housing. However the circular does not define low-cost housing. Also, the Government has said the GST will be reduced for affordable housing projects, which have been given infrastructure status; however how and who will accord this infrastructure status is still unclear.

It said the Government needs to release regularly land parcels for affordable housing projects, identified within municipal limits and bring more peripheral lands into developable limits of the city authorities. Easing FAR and density norms will also be critical for the development of affordable housing. The paper said the Government should also review the master plan/zoning provisions on a regular basis so as to allow for optimum allocation of land for affordable housing.

According to the paper, the emphasis cannot be on releasing land parcels only, but focus also needs to be on providing the necessary connectivity and social infrastructure, to allow these projects to develop as habitable and vibrant communities. Building approval process needs to be streamlined, added the paper, and a separate fast-track process needs to be put in place for affordable housing projects.

There is an urgent need for alignment of state level affordable housing policies with the Central Government policies to remove ambiguities around availing Central incentives, while ensuring compliance with the state policies. The Government also needs to improve the institutional environment for the lower income categories to access housing microfinance and other financial tools.

To further strengthen the demand for such units, the Government should look at rationalising/waiving registration charges, as well as stamp duties for affordable housing units. And lastly, the paper said there is a need for developers to invest in innovative construction technologies to promote mass housing developments at subsidised construction costs.

Outlining trends that will define the affordable housing segment in the coming years, the Ficci-CBRE White Paper says that policy thrust will determine its pace of growth. Although the term ‘affordable housing’ has been around for many years, the past two years have seen a renewed focus from the Government to spur activity in the segment; via various initiatives undertaken. While these initiatives, said the paper, have done enough to set the ball rolling, the growth momentum of the sector will be directly proportional to the proactive as well as reactive pace of the Government.

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As of now, affordable housing in India is more of a local game and most of the supply in this category is fragmented and driven by local developers. With the Government keen on addressing key concerns such as profitability as well as ticket sizes of affordable housing units, national/regional developers are now keenly evaluating the segment, according to the paper.

The sector, said the paper, is likely to emerge as the new focus area for housing finance companies with the Government providing it a determined push. Quoting a Crisil report, it said the assets under management of affordable housing finance companies are expected to grow at a CAGR of 40 per cent over the next four years, as compared to 17-18 per cent for the housing finance sector, as a whole. With leading housing finance companies already devising roadmaps to tap the sector in the coming years, NBFCs are also expected to make inroads into financing this segment.

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The paper said, of late the trend of private equity players and NBFCs investing in housing finance companies (especially those focusing on the affordable housing segment) has started to pick up. This trend, it said, is likely to strengthen in the coming years and the inflow of formal capital is not going to remain limited to the demand side but extend to the supply side as well.

With the expected entry of credible players into the segment, the scope for use of advanced technology and transfer of technical know-how is likely to increase significantly in the coming years, concluded the paper. Developers, it said, are likely to invest in innovative construction technologies to promote mass housing developments and minimise construction costs.

Navin M. Raheja
Chairman, Ficci Real Estate Committee

“The challenge was to rehabilitate all slum- dwellers and their families in the same areas as before so that they do not migrate away from their origin and place of livelihood.”.

Earlier, speaking at the conference, Niranjan Hiranandani, President, Naredeco, & Co-Founder & MD, Hiranandani Group, said the challenge was that of availability of land for slum development. He underlined the need for taking up a couple of projects and execute them successfully in a specific timeframe.

Sanjaya Baru
Secretary General, Ficci

“Ficci would continue its active engagement with the Government from framing of policy to implementation and would work in sync with it to take the Awas Yojana forward.”

Citing the enormity of slums in Delhi, Navin M. Raheja, Chairman, Ficci Real Estate Committee & CMD, Raheja Developers, said there are around three lakh slum households covering 802 hectares of Government land. Around 10 lakh people living in these jhuggis are prone to all water-borne diseases, unhygienic lifestyle and other inhuman activities. The challenge, he said, was to rehabilitate all slum- dwellers and their families in the same areas as before so that they do not migrate away from their origin and place of livelihood.
Ficci Secretary General Sanjaya Baru noted that the demand for housing had revived and hoped that it would, and can be sustained. Ficci, he said, would continue its active engagement with the Government from framing of policy to implementation and would work in sync with it to take the Awas Yojana forward.

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