Developing The Ability To Adapt

Not even a recent crisis caused by the fall of the government, which stalled reforms in the sector, nor the prospect of imminent elections, has dimmed the outlook, industry-watchers say.

"There is no doubt about the political consensus over reforms in the housing sector." said Prithvi Nath, executive director of the National Real Estate Development Council.

"Whichever government comes to power has to take forward the unfinished agenda." Nath said.

Bound in redtape for decades, India's housing sector has made big strides in the past 17 months - with major tax breaks, less bureaucratic tangles, the end of a cumbersome land law. And construction activity is surging, the officials said.

"I think we are on the thresh-old of a great leap forward in the housing sector." Mr Nath said.

"What the government has 'done for the housing sector will be visible in terms of an economic turnaround."

Under the caretaker prime minister Atal Behan Vajpayee the state has begun to move out of thehousingsectorthisyear.

It repealed a decades-old law that restricted ownership of urban land - a move expected to unlock some 2,00,000 hectares (4,94,000 acres) of land and help land prices come down sharply

In the last budget, it also extended tax breaks on housing loans and proposed to develop primarily and secondary markets for mortgages as well as cut interest rates for small borrowers.

"The biggest change which this Government has brought about is that they are now playing the role of a facilitator instead of the builder," said Mr. P.S. Rana, director of corporate planning at tho Housing and Urban Development Corporation Ltd.

But the government, which lost the confidence of parliament in April after bickering within the ruling coalition, leaves some unfinished business.

Mr Nath said the most important reforms yet to be enacted were the government's "big plans" to allow 100 percent foreign direct investment in housing and to develop mortgage-backed securities.

"All the laws relating to these have been formulated," Nath said. "It was just a matter of time for the laws to get passed but the government fell. The ground work has been done." Industry analysts agree that there can be no looking back. Another looseend is the government's policy, announced last year, to create surplus housing stock "either on rental or ownership basis" and to build two million dwellings every year. Officials said the government had already met the target in the first year of the new policy, and analysts said a surge in housing activity was now flowing through to infrastructure works.

Industry officials say the housing sector has linkages with 289 industries, including steel and cement. Disbursements by housing development finance corporation grew by 35 percent in the three months ended june to Rs 656 crores ($150.8 millions). "Demand at the retail level has been very good," said Mr K C Chakraborthy, deputy general manager, Bank of Baroda. "We recently opened a specialised branch for the housing finance businest. This has been doing very well." With a new government set to come to power in September, industry-watchers feel the industry too is set for a boom.