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Parekh pitches for low-cost housing

Press Trust of India  |  New Delhi 

has sought immediate changes in the government rules and necessary incentives for developers to make low-cost homes a commercially viable proposition.

Putting forward a 'five point doable housing agenda', Parekh said that there was "a need for a complete overhaul in archaic land laws" and said that the gravity of the situation was fast reaching a critical tipping point.

The five points presented by him include merger of the urban development ministry and the Ministry of Housing and Urban Poverty Alleviation, streamlining all existing government housing finance programmes and incentives for affordable housing projects.

Besides, he has also called for compulsory implementation of e-auction for land transactions and a special 'Settlement Commission' for the Urban Land Ceiling & Regulation Act (ULCRA) cases.

"These baby steps will go a long way in alleviating the housing problems in India," Parekh said in his annual letter to the shareholders of HDFC released today.

"Housing continues to remain out of the reach of the common man... What is more important at this juncture is to recognise that affordable or low cost housing is commercially viable, provided the enabling environment is conducive," Parekh said.

"India has seen success in frugal innovation across various sectors -- automobile, consumer products and telecom. So the question is, why not in housing?" he said.

Parekh said there was a need for putting in place sufficient financial resources, a strong urban governance framework and political will to push for sufficient affordable housing.

Talking about an international debate on whether a $300 (Rs 13,500) house could be built, Parekh said that such a low-cost house in Indian cities might be "a pipe dream".

On a positive note, Parekh said it was encouraging to note that there were a handful of new and existing developers who have demonstrated this and they must be incentivised to continue participating in this segment.

Parekh said, "The longer we drag our feet on the passing of the Land Acquisition Bill, the more detrimental it will be in slowing down overall economic development."

Seeking a single ministry to deal with urbanisation and housing, he said that a holistic framework of urban planning cannot happen by segregating housing. Parekh said similar merger of departments should be done at the state level as well.

Parekh also said there were too many fragmented government housing finance schemes and these programmes had little impact in terms of the scale of the housing problem.

"Many of these schemes are flawed in design and embedded with too many restrictions. This calls for a one-time thorough re-assessment of all existing government housing finance programmes," he noted.

Pitching for incentives to build affordable housing projects, Parekh said that the developers of such houses should not be subjected to multiple approvals and the subsequent delays and cost overruns.

"It makes imminent sense to have a single window approval mechanism for affordable housing projects where the per unit cost is under Rs 10-15 lakh. A time bound, fast-track approval process is clearly a preferable option over lobbying for tax sops," he said.

Supporting e-auction route for land deals, Parekh said that several government entities, such as the railways, defence and public sector units, were hesitant to dispose land.

"An e-auction mechanism will leave no space for discretion and arbitrary dealings. This will allow entities to unlock value from land as well as pave the way for a more transparent system of acquiring land," he said.

First Published: Thu, June 09 2011. 20:46 IST