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The Bharatiya Janata Party manifesto promised a house for every family in India within 75 years of Independence, that is by 2022. To cater to the BJP vision for the next eight years, builders and consultants are rushing to ready their blueprint on affordable housing, a promise that has not been delivered effectively so far by any government.
UPA too had announced ambitious plans on affordable housing, but had failed to work on it. As for the industry, affordable projects, roughly defined as residential units costing between Rs 10 lakh and 30 lakh, have been few and slow to take off. In the absence of attractive incentives, some companies active in low-cost housing have also crossed over to mid-level or luxury category that offers better profit margins.
There's a current shortage of around 18.78 million houses, of which 95.62% are in the Economically Weaker Section (EWS) / Lower Income Group (LIG) / Middle Income Group (MIG), according to a latest study by business chamber Assocham.
When asked whether the BJP target was feasible, Anita Agnihotri, secretary, housing ministry, said, "let the new government take over." Replying to a question on the agenda for the next government, urban development secretary Sudhir Krishna said, "the main issue for the MoUD would continue to be the optimal strategy for making India's cities more liveable and harbingers of economic growth with equity and inclusion."
He added that specific to the new government at the Centre, an important issue would relate to the continuation of the Jawaharlal Nehru Urban Renewal Mission ( JNURM) in an appropriate form. Urbanisation and home for all are likely to be schemes in coordination with each other.
Lalit Jain, president of Credai, an association representing pan-India builders, said for an ambitious scheme like 'house for all' private sector must take the major burden. "It is difficult, but do-able." Once that goal is met, real estate will make for 30% of the country's GDP, up from 8% now. Some builders, it is believed, are already tracking international models, besides looking at Gujarat where affordable housing has been a success.
Builders such as Omaxe and Supertech, who are not identified so much with low-cost housing, have sounded enthused with the BJP win, and have focused on the significance of the affordable housing segment in the time to come. Even consultants who have been known more for luxury side of the business are now talking affordable.
Among companies, Tata Housing has been at the forefront in low-cost housing through a subsidiary, Tata Value Homes. The company is planning to launch around four to six projects in the value and affordable housing portfolio this financial year, according to A Harikesh, Vice President, Marketing and Sales, Tata Housing. Earlier this year, it launched New Haven Ribbon Walk in Chennai with a starting price of Rs 27 lakh.
Another project-Santorini-came up in Chennai at the same price range. Tata Housing began focusing on many high-income and luxury projects recently, though it was known mostly for affordable housing across Bangalore, Ahmedabad, Chennai, Pune, Mumbai and other regions of Maharashtra since 2009.
Value and Budget Housing Corporation, promoted by former Citibankers Jerry Rao and PS Jayakumar, is now looking at generating around 20% of the revenue from mid-income and 80% from affordable homes, according to a company spokesperson. The company, with eight affordable projects so far, was earlier focused just on low-cost housing. It is now coming up with its first mid-segment project, in Whitefield, Bangalore.
Assocham president Rana Kapoor pointed at the need for providing an infrastructure status for the affordable housing sector to attract more capital and investment formation, as an immediate step. Also, insurance/pension funds should be allowed to invest in the affordable housing sector and tax exemption should be given to those developing smaller dwelling units, Kapoor said.
In the medium and long-term, he suggested rationalisation of direct and indirect taxes in the real estate industry to enable competitive pricing for the end user as well as single window approval for the housing sector.
