Affordable housing in India – The secret ingredient to development
What is affordable housing in India?
According to conventional beliefs, the term affordable housing refers to a section of residential projects that are reasonably priced for the section of the society which earns below the median income, i.e. lower middle class. However, a hot topic for the fast-increasing Indian real estate market, affordable housing is the new black.
With the basic definition remaining as is, this section of the residential market is something that the sellers and buyers are going gaga over, alike. Keeping it as a focus area, the government is also leaving no stones unturned to meet its Housing for all 2022 target.
The data collected by PropTiger DataLabs in the last five years indicates that affordable housing in India has been the biggest contributor to home sales. Be it metro cities like Delhi, Bangalore, Mumbai, or smaller cities like Indore, Bhopal, etc., the demand for compact, affordable homes has risen in the past few years.
Affordable Housing in India for All by 2022 or Pradhan Mantri Awas Yojana (PMAY)
An initiative by the government which aims at providing the urban poor with 20 million affordable homes by March 31, 2022, it is divided into two categories:
- Pradhan Mantri Awas Yojana (Urban) (PMAY-U) for the urban poor
- Pradhan Mantri Awaas Yojana (Gramin) (PMAY-G and also PMAY-R) for the rural poor
Other aspects of the scheme include ensuring each house has a toilet, Saubhagya Yojana electricity connection, Ujjwala Yojana LPG gas connection, access to drinking water, Jan Dhan banking facilities and more.
Importance of affordable housing in India
According to Economic Times, there is a shortage of nearly 4 crore houses in India. Also, with the population growth of 1.3 per cent per annum, the demand for housing is estimated to increase by 1 crore houses per year. The statistics are a clear highlight of how crucial a role affordable housing is playing.
Migration has made it even more essential to build new, affordable homes and cater to the needs of people. A 100 per cent tax redemption to developers on affordable housing projects has also given way to increased projects under this category, making way for more people to own their homes.
Challenges faced by affordable housing in India
While it has made a clear difference in the realty market, the transformation is not that easy. Affordable housing is a new section that is still finding its niche and growing alongside. A host of fundamental problems related to land and property lure in the background. Here are a few of them.
Lack of transparency
The announcement of a reduction in GST from 12 to 8 per cent for low-cost housing was made by the government in 2017. However, the statement lacked the definition of low-cost housing as per government standards. Properties under the infrastructure status are also set to fall under the category of lower GST, but the authority to do so is still unclear.
Irregular land release and division
Running a project successfully requires periodic efforts. To make sure that the affordable housing market runs smoothly, the government should regularly release developable land parcels.
Lack of infrastructure up-gradation
While releasing land parcels is one aspect, improving infrastructure facilities including better connectivity, social infrastructure and more, is also important. The facilities help create a viable environment for communities to prosper.
No alignment between state and Center policies
The existing policies are not aligned with each other. The government needs to make a separate gateway for approval of projects, removing ambiguities and streamlining the process.
Absence of advanced technologies
There is a need for developers to incorporate the latest technologies in constructing new projects. This will ensure faster delivery at prices cheaper than before. Portable modular housing and more are some of the techniques that can help in addressing the affordable housing plans.
One of the most discussed, pondered upon and important topics for the growing superpower, affordable housing holds the potential to revive the real estate sector. With a significant impact on the economy, it is a catalyst in the process of turning the economy profitable, if handled well.