By: Ravi Sinha
Track2Realty: The real estate sector has welcomed the Union Housing Minister Ajay Maken’s move to accord infrastructure status to affordable housing on expected lines. The industry body CREDAI has nevertheless called for extending similar treatment to the entire housing sector again on expected lines. However, the market dynamics defy any dreams of mass housing or cheap housing even for the economically weaker sections.
On the eve of Union Budget 2013-14 the only thing that has changed is the sentiment since the sector and the government seems to be heading to the same path though pace and approach is slightly different. As against the repeated demands of an industry status, that could have paved way for easy financing and respectability to the sector, the collective consciousness of the developer community have realised that industry status is a journey and not a destination.
No wonder, there are widespread applause for Minister Ajay Maken who has led the sector to the desired journey. And infra status is the first step in that direction which will pave the way for easy financing, one of the fundamental needs of the sector. The government sources maintain that once the experiment is successful in affordable housing, the same can be extended to the entire housing segment.
The respective industry bodies seem to have realised it and hence CREDAI expressed happiness that the Centre has come half way through on the developers and customers’ demand for according infrastructure status to the housing sector to facilitate easy financing and other benefits. CREDAI National President Lalit Kumar Jain expressed hope that the Centre will follow-up with Maken’s welcome move and announce some pragmatic and practical measures to give boost to the housing sector.
“We thank the minister for coming half-way through on the developers’ and customers’ demands on this issue which can facilitate easy financing and other benefits to boost. We hope he will move further in a positive direction. CREDAI has been relentlessly campaigning for infrastructure status for housing sector, declaring it as an industry and creation of special housing zones with tax reliefs on the line of SEZs,” Jain says.
Echoing similar sentiments realty major DLF also welcomed the speech of Ajay Maken in Mumbai at an international conference. DLF spokesperson Sanjey Roy says the statement is encouraging but falls short of what is actually desirable to meet housing shortage in the country.
“It no doubt encourages the developers who are relentlessly working towards meeting the housing shortage in the country. However, I have a caveat here—had this infra status being considered to the entire housing sector, the move would have gone a long way in meeting the housing shortage in the country. Additionally, we would also like to see exemption of interest on housing loan limit to be raised to Rs. 3 Lakh as against Rs. 1.5 lakh,” says Roy.
The sector might be welcoming it as a step in the right direction, but privately many admit market dynamics will not change much unless and until infra status is granted to the entire housing sector. Many assert affordable housing is a complete misnomer in India and the way developers by and large could not take advantage of ECB in affordable housing, this infra status could similarly mean symbolic relief to the developers. The fluctuating rupee-dollar dynamics is also the reason why developers prefer to avoid funding from overseas for low cost housing.
No wonder, there are others who are still insisting for industry status in the budget 2013-14. Nikhil Jain, CEO – Ramprastha Group says the Indian budget has always held high expectations and the annual event is eagerly awaited by a cross section of India’s populace and so it is by the real estate industry and its entire ecosystem. For the real estate sector, our hope is that the government would bestow Real Estate with Industry status. This will facilitate easier funding for the sector, including lower interest rate on loans, simplified approval process and increased transparency.
“Special residential zone for affordable housing, promotion of rental housing schemes, widening of ECB for low cost housing and reservation of priority loans for affordable housing would go a long way in fast tracking infrastructure in the country. The sector requires serious intervention and revision to merit its status level as an important contributor to the country’s economic wheel in terms of growth and employment generation,” says Jain.
Vikas Sharma, Whole Time Director, Supreme Infrastructure has a different take when he demands holistic infrastructure solution by giving special emphasis towards the development of the industry. He asserts over the years infrastructure in India has faced tremendous pressure due to the ever-growing population. Development of infrastructure is essential to the nation’s progress; and government has been always been spending on infrastructure development to a great extent every year.
“We are still not at the pace we should be developing it and hence the Finance Minister must increase the spending on the infrastructure development in the upcoming Union Budget 2013. Deduction under Section 80 CCF towards subscription to long-term infrastructure bonds should be reintroduced in case of individual/HUF assesses. This will not only promote savings but will also make available funds for the sector, which has been hit by liquidity and high interest costs,” says Sharma.
