With a view to give a fillip to the affordable housing segment, the government will appoint real estate experts and consultants to develop state-specific affordable housing policy, Arun Kumar Misra, secretary, ministry of housing and urban poverty alleviation (HUPA) said at an ASSOCHAM event held in New Delhi.
"We are thinking of engaging large number of experts, consultants, groups for each individual state and ask them to study various rules, regulations and laws which decide about building plan approvals and simplify them as each state is different and they will also help the state government to formulate an affordable housing policy for the state," said Misra while inaugurating 'Real Estate Summit-cum-Awards,' organised by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
The central government would largely bear the cost of the appointment of consultants and we’ll see if the states are also willing to bear the cost, he added.
He further informed that these people will also develop a software which the state can adopt as it is the fastest way to get things done. "We'll identify 12-15 important states with huge presence of promoters & developers and where there is need for a housing stock."
"To give further incentive for public housing we’ve just sanctioned two schemes which will mobilise money by the government and institutional sectors to do about two million houses in next four years i.e. upfront investment and for this government has earmarked Rs 40,000 crore," said Misra. "To facilitate private sector participation in the affordable housing segment we have redesigned affordable housing in partnership scheme in which we’ll give a subsidy of 10-15 per cent of housing cost to build a house and make it available for the poor sections."
"These two schemes are there to cater to the requirement of poorest of poor and may be total to about 2.5 million houses," he added.
"One million houses will come through Rajiv Awaas Yojana and that is capital funding i.e. we’ll give support of 50-75 per cent of capital expenditure and for remaining one million houses that will be through institutional financing i.e. banks will give loans for one million houses and they will subsidise the interest by five per cent," said Misra. "While another half million houses will be built in affordable housing segment through partnership and this will be done with private sector where they will give about 10-15 per cent of capital subsidy and private sector will develop it and sell it but prices will be determined by the state government. All these three schemes have been sanctioned and we plan to carry it out in next 3-4 years time."
On the issue of FDI in real estate sector, the secretary said that cabinet note has already been circulated and regarding the Standing Committee Report on the Real Estate (Regulation and Development) Bill, 2013, the secretary said that first round of discussions is over and the process is going on.
Considering that land availability is the single biggest bottleneck for the private sector which has contributed significantly in creating housing stock in last one decade, the secretary said there is a need to change the land policies. "Land policies have to be changed in such a manner that we are able to extract the maximum out of it through - change in TCR norms, allow a bigger FAR, allow a better FSI and allow TDR facilities and others and that is an aspect we are going to work on through a transparent process of monetising land in every city."
He further said that another way for growth of real estate sector is to develop new areas, satellite towns and provide them proper transportation network and other infrastructure as it would also create employment opportunities.
"Transport led growth and development has to be there and we cannot get away from it," said Misra. "Streamlining of procedures is another significant bottleneck as it delays the projects, adds to the cost which though cannot be recorded properly as it is an invisible cost."
He also said that the Real Estate (Development and Regulation) Bill, 2013 will create transparent & non-opaque system, bring in fair-play and give confidence to buyers, investors, developers and promoters as they will get a decent return over a longer period of time.
Considering that about 25-30 per cent Indians live in rented accommodation, the HUPA secretary also batted for amendment in rental laws. "The rent law amendment has to be a very big activity in future and we'll have to engage with state governments in such a manner that rental laws are amended and once that is done lot of money will come automatically come in the housing sector as people will get assured of getting a decent return.”
"Easier mobilisation of funds and strengthening of local area administration across cities in India are other important things that need to be done," said Misra.
He also conceded that due to slowdown in economy the housing sector in India had slowed down slightly in past 2-3 years.
Amid others who spoke during the ASSOCHAM summit included: Navin M Raheja, chairman, ASSOCHAM Real Estate Committee; Sunil Dahiya, co-chairman; B.C. Jain, co-chairman and D.K. Aggarwal, senior ASSOCHAM Managing Committee member.