The Modi Government’s ambitious ‘Housing for all by 2022’ scheme, approved by the Union Cabinet recently, is in the right direction but might be tough to execute, many in the Real estate industry feel.
Earlier, the Congress Government had also come out with an affordable housing policy that never took off, as companies saw little reason to venture into the segment in the absence of sufficient incentives.
While most companies have praised the Government for its housing policy, the numbers seem beyond reach. Currently, there is a shortfall of 23 million houses in India, and it is impossible to meet the gap in seven years, according to a real estate analytics firm. The need is for more than three million residential units a year, against 7,00,000 houses sold in 2014. The supply has to grow by more than three times to fill the gap, say analysts.
The numbers look even more worrying if one was to look at smaller or affordable units. For instance, of the 7,00,000 houses sold last year, 3,00,000 were in the 500 to 700 Sq.ft. category. Since the shortfall of 23 million is mostly in the affordable and mid-size segment, the increase in supply has to be that much more. At present 70 percent of the demand or shortfall of the 23 million shortage is in the 700 to 1000 Sq.ft., bracket.
Housing for all by 2022 scheme, should not be seen just as a policy to build houses. One has to build sufficient infrastructure too. Also, companies would not get into such a project without the Government announcing incentives.
After toying with the proposal to provide interest subsidy on loans to economically weaker section (EWS) and Low Income group (LIG) category home buyers for one year, the Government has finally come with a seamless policy with clear clauses on subsidies and other defined norms. However, it is felt by the economists that though the interest subvention scheme is a step in the right direction, the success of this scheme will depend on the right targeting of actual beneficiaries, which, is a big challenge in a country like India. Further, in the back drop of the fact that the definition of EWS and LIG has been changed to bring in more beneficiaries, there has to be a commensurate growth in the supply of low-cost housing across appropriate locations to make this move a successful one.
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