'Easier access to ECBs will attract higher investment'

Easy and dedicated access to institutional financing, and higher limit on external commercial borrowings (ECB) will attract more investments and assure sustained growth of affordable housing in India, according to Sriram Kalyanaraman, Managing Director and CEO of National Housing Bank.

Sriram, who inaugurated the ASSOCHAM National Summit on Housing Finance for All here on Thursday, opined that Foreign Direct Investment (FDI) and Foreign Institutional Investors (FIIs) would play a key role in boosting supply of houses and infrastructure projects in urban areas.

"On the other hand, long-term financing at lower rates will reduce costs of construction for developers allowing them to pass on benefits to consumers. Also, in India there is a need to develop a secondary mortgage market either in the form of Reverse Mortgage Backed Securities (RMBS) or covered bonds. Simplification of ECB guidelines has opened a new window of funding for housing finance companies in India, increasing the prospects of a fresh round of overseas borrowings," he added.

Another instrument, Kalyan said, is the Real Estate Investment Trust (REIT), which has the potential to transform the real estate sector, especially in commercial real estate and rental housing.

However, the National Housing Bank head opined that despite being centers of opportunity, the cities of India bring with them a host of environmental and infrastructure challenges, from pollution to lack of civic amenities like drinking water, sewage, housing and electricity, which disproportionally impacts the more vulnerable poor population.

"The challenges that this sector faces are multidimensional and require the support of all stakeholders. They can be summarised as 3A's (Availability, Accessibility and Affordability), and Sustainability. Availability of long term low cost fund is still the biggest challenge for the housing sector," he explained.

On a related note, the Centre in the Union Budget 2018-19 had affirmed the thrust on promoting affordable housing, by announcing the establishment of a dedicated Affordable Housing Fund (AHF) in National Housing Bank, funded from priority sector lending shortfall and fully serviced bonds authorized by the Government of India.

As per Kalyan, this will make available low-cost long-term fund for financing affordable housing.

For the Pradhan Manti Awas Yojana (Urban) or PMAY (U), the Union Budget 2018-19 has provided Rs. 6,500 crore through gross budgetary support and Rs. 25,000 crore through internal and extra budgetary resources under the Ministry of Housing and Urban Affairs (MoHUA).

Furthermore, with the grant of infrastructure status to affordable housing and the implementation of the PMAY under Housing for All by 2022 Mission, the government aims to usher affordable housing into a new era.

For those unversed, the Pradhan Mantri AwaasYojana (Gramin) has been made effective from April 1, 2016, with immediate objective to cover one crore households living in kutcha house/dilapidated houses in three years 2016-19. The minimum size of the house was increased to 25 sq. m. (earlier 20 sq. m.) with a hygienic cooking space.

As stated in the Union Budget, under the PMAY(Gramin), 49 lakh houses will be constructed and the outlay for the programme stands at Rs. 33,000 crore.