Along with the initiative, the Centre has also decided to streamline approvals for construction projects in urban areas to enable time-bound and hassle-free clearances for projects
New Delhi : Realising that affordable housing still remains a distant dream for a majority of people, the NDA government launched the “Housing for All’’ initiative under which two crore houses are targeted to be built for the poor in urban areas by 2022, coinciding with the 75th year of Independence.
However, it is easier said than done as housing projects suffer from long delays and approvals from various government departments and civic bodies take years to come by. Along with the initiative, the Centre has also decided to streamline approvals for construction projects in urban areas to enable time-bound and hassle-free clearances for projects.
The decision for streamlining the process of approvals has been taken by Urban Development Minister M Venkaiah Naidu. According to developers and builders, more than 40 different permissions are needed for a housing project that could take one to two years and result in cost overruns and delays.
After the launch of the Housing for All (Urban) Mission in June this year, 15 States have signed a Memorandum of Agreement (MoA) with the Ministry of Housing & Urban Poverty Alleviation, committing themselves to implement six mandatory reforms essential for making a success of the housing mission in urban areas.
As many as 305 cities and towns also have been identified in nine of these states for beginning construction of houses for the urban poor. These include – Chhattisgarh (36 cities/towns), Gujarat (30), Jammu & Kashmir (19), Jharkhand (15), Kerala (15), Madhya Pradesh (74), Odisha (42), Rajasthan (40) and Telangana (34).
By signing the MoA, the States have taken up the responsibility of implementing the six reforms. The states include: Andhra Pradesh, Bihar, Chhattisgarh, Gujarat, Jammu & Kashmir, Jharkhand, Kerala, Madhya Pradesh, Manipur, Mizoram, Nagaland, Odisha, Rajasthan, Telangana and Uttarakhand.
The reforms include doing away with the requirement of separate Non Agricultural Permission (NAP) in case land falls in the residential zone earmarked in the Master Plan of city or town; preparing or amending Master Plans earmarking land for affordable housing; putting in place a single-window-time bound clearance system for layout approvals and building permissions; doing away with approvals below certain built up area/ plot size in respect of Economically Weaker Sections (EWS) and Low Income Groups (LIG).
Under this urban housing mission, the Central government will provide an assistance in the range of Rs 1 lakh to Rs 2.30 lakh per house under different components of the Scheme including In-situ redevelopment of slums using land as resource, Credit linked Subsidy Scheme, Affordable Housing in Partnership and Beneficiary led individual construction/improvement.
With the announcement of lists under Smart City Mission, AMRUT and Housing for All, there has been a convergence of implementation of the three schemes.
Welcoming this convergence, Minister of Urban Development and Housing & Urban Poverty Alleviation Venkaiah Naidu said: “This convergence of urban schemes helps in better utilization of resources resulting in visible improvement in urban areas. I am glad that state governments are resorting to convergence-based approach as intended by the Central government.”
The Housing For All project has the potential to push up the country’s economy by 3.5 per cent by 2022 with sectors supplying crucial inputs to the construction industry being the biggest beneficiaries, says India Ratings.
According to the report, sectors like cement, iron and steel, which supply crucial inputs to the construction industry, are expected to be the biggest beneficiaries of the HFA programme. The agency estimates the cost of constructing 20 million houses during 2016 to 2022 will be around Rs 2,14,286 crore per annum.
“This indicates an increase in the construction sector’s gross value added (GVA) by Rs 2,14,286 crore which will increase the size of the Indian economy by 3.5 per cent in FY16. The direct impact is estimated to be 1.52 per cent and indirect impact 1.98 per cent,” India Ratings’ Chief Economist and Head Public Finance Devendra Pant said.
“The construction sector has the highest employment multiplier, and Housing for All (HFA) has the potential to increase employment by 1.6 lakh man years annually. The impact will be felt across all states. However, Uttar Pradesh, Maharashtra and West Bengal are likely to be the major beneficiaries,” he said.
While the cement and steel sectors will get a boost from the project, these sectors may also act as a constraint in realising HFA by 2022, assuming there are no other impediments.
Pant, however, noted that there are other execution challenges. “While the programme has been announced, not much has happened on the ground. We expect time overruns in HFA programme to lead to cost overruns,” he said.
Besides, the project would also increase the demand for municipal services such as sewage, drinking water, sanitation, solid waste and city transport, among others.
“As such, urban civic infrastructure services are under stress. The burden added by HFA will accentuate the stress as municipal authorities are mostly cash strapped. The way out is to allow municipal authorities to tap the bond market as support from upper tier government in the form of grants will not be enough to bridge their revenue expenditure gap,” Pant added.
The annual income cap for eligibility for Housing for All has been raised to up to Rs 3 lakh (from Rs 1 lakh earlier) for EWS and Rs 3-6 lakh (from Rs 1-2 lakh earlier) for LIG and the minimum unit size for EWS housing has also been increased to 30 sq m from current 25-27 sq m. EWS and LIG account for 96 per cent of the housing shortage in urban India. Central assistance in the range of Rs 1 lakh- Rs 2.30 lakh per beneficiary would be provided under different components of the National Urban Housing Mission. The scheme will include all 4,041 statutary towns in the country, but first phase will target 100 cities over two-year period
According to a study by KPMG, some of the challenges ahead include absence of an effective policy framework for EWS and LIG housing, which is compounded with rising land cost, spiralling construction costs, and inadequate availability and reach of micro-finance measures, long gestation period of six to eight years, accentuated by multiple approvals to be obtained from multiple authorities in a two to three year time period, inadequate long-term funding across the project life cycle necessitating multiple rounds of funding for the same project, increasing the cost of capital and time.
India was facing a shortage of 18.78 million houses in its urban pockets in 2012, the Technical Group on the Estimation of Housing, constituted by the Union Ministry of Housing & Urban Poverty Alleviation has said. The estimated slum population in India was 94.98 million in 2012. As against this, the number of dwelling units sanctioned under JNNURM during a seven-year mission period was 1.6 million.
The report further said, by 2031, about 600 million Indians will reside in urban areas, an increase of over 200 million in just 20 years. This change in the socio-economic landscape will have a bearing on several things, housing being the foremost. With the industry facing continued pressure in terms of raising funds for investment, the research report suggests that India must have a Real Estate Investment Trust (REIT).
According to P S N Rao, who heads the Department of Housing in the School of Planning and Architecture, several issues and problems still present challenges in implementation of the “Housing for All’’ scheme.
The ramifications of the housing problem are manifold. At the same time, housing is the way forward to boost the economy; the backward and forward linkages which the housing sector has are with as many as 260 industries. Prof. Rao says that issues like land, infrastructure and connectivity, technology and institutional revamp need to be addressed to make affordable housing readily available to the people.
