Governments Initiatives for Providing Affordable Housing in India

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The year 2013 belongs to affordable housing. Government of India is taking full blown measures to provide adequate residential arrangements at affordable costs catering to the growing demand. These initiatives are important as they display a positive intent signalling a shift of focus in the realty space for builders.

The first housing policy in India was formulated in 1988.  The introduction of policy was the most important shift in housing delivery which envisioned a facilitative role for government in ensuring that the low income group population gets the basic living facilities. The following years marked a new beginning for housing and real estate industry as private sector was given a bigger role than ever before. The new national housing & habitat policy announced in July 1998 introduced some landmark measures that included involvement of multi-stakeholders, repealing of the Urban Ceiling Act and the provision for allowing Foreign Direct Investment   in housing and realty sector.

Major Initiatives since post-liberalization era

It was in the 1990 draft of the National Housing Policy that the government realized and recognized the role of construction and housing sector in generating employment. In 1997, the government launched a National Slum Development Program that increased the funds for shelter upgrading with central money. The NSDP provided for better arrangements of community infrastructure, social amenities, skill upgradation and shelter upgradation. The dawn of new century saw the launch of another centrally sponsored scheme that targeted those segments of society who were living below the poverty line. This scheme was implemented through a 50 percent government subsidy and 50 percent of contribution coming from the state government and HUDCO.

Jawahar Lal Nehru National Urban Mission

In the 10th five year plan, the government observed that 90 % of the total housing shortage was in Low Income Group and Economically Weaker Section. It launched JNNURM in 2005, a scheme that aimed to bring in catalyic reforms for making Indian cities world class. It was recognized that to make the cities growth center for the economy, an adequate level of infrastructure is necessary. JNNURM currently covers 65 cities, of which seven are A class mega cities while 28 are B class metros and the rest 25 are classified as class C urban agglomerations. The scheme aimed to cover construction of 1.5 million houses for urban poor during the   period 2005-2012. It further set out its one of the objectives as to facilitate the poor with some basic services including water, sanitation, education, social security and affordable housing.  Under the scheme, over 1300 residential projects and 1.5 million houses have already been sanctioned to the poor at a total cost of INR 33, 860 crores.  Some modifications were later incorporated in the scheme to facilitate land assembly for affordable housing. To lure the developers, the centre promised 25% assistance in the total cost of civic services for projects that fell in affordable category. Under the new incorporated guidelines the states would encourage residential real estate projects in the Public Private Partnership and seed new areas for development through creation of housing boards and development authorities.

State sponsored initiatives

In addition to the various measures taken by the central government, local government of various states also introduced different initiatives to empower the affordable housing sector. Rajiv Gruha Kalpa is one such housing scheme launched by the Andhra Pradesh government that promises best civic amenities and free land to projects targeting the LIG and EWS. Under the scheme around 3,916 low cost Apartments in Hyderabad have already been handed over to beneficiaries. Construction of apartments was undertaken in Nizampet, Lakshmiguda, Kuntloor, Torrur, Chandanagar and Kowkoor in June 2006 under the scheme. Till the last count over 22,000 units has been completed, a majority of which are now occupied.

Interest Subsidy Scheme

The government started a pilot scheme that had provisions for providing interest subsidy on housing loans availed by the EWS and LIG section of society. The subsidy will be to the tune of 5% on the total interest, upto INR 1 lakh for the entire duration of loan. The Interest Subsidy Scheme will cost the exchequer INR 1100 crore in the ongoing 11th five year plan.

Image courtesy of Master isolated images /FreeDigitalPhotos.net

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