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Infrastructure Today Magazine | Finance Minister Sitharaman Announces Measures to Boost Housing Sector
Finance Minister Sitharaman Announces Measures to Boost Housing Sector
May 15, 2020
The finance minister announces affordable rental accommodation for migrant workers and urban poor and extends subsidy under the prime minister’s housing programme.
The Union Minister of Finance & Corporate Affairs, Nirmala Sitharaman announced a scheme for affordable rental housing complexes for migrant workers and urban poor as well as a Rs 700 billion boost to housing for those falling in the middle-income group through the extension of Credit Linked Subsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana (PMAY-Urban).
The country’s first full-time woman finance minister proclaimed while unveiling the second tranche of short and long-term measures for supporting migrant labourers, street vendors, migrant urban poor, small traders, self-employed people, small farmers and the housing sector on Thursday. Sitharaman has been holding daily briefings after Prime Minister Narendra Modi announced a
Rs 20 trillion stimulus
on May 12 to revive growth in the world’s fifth-largest economy.
Sitharaman stated that migrant workers need affordable and convenient rental housing in urban areas in addition to social security.
The scheme for affordable rental housing complexes for migrant workers and urban poor will be launched to provide ease of living at affordable rentals. Establishment of affordable housing complexes will serve to provide social security and quality life to vulnerable groups like migrant labourers, urban poor and students. This would be done by converting government-funded houses in the cities into Affordable Rental Housing Complexes (ARHC) under the public-private partnership (PPP) model through concessionaires who can derive the rental like toll roads.
“We will be incentivising manufacturing units, industries, institutions and associations to develop affordable rental housing complexes on their private land. And we are also converting a lot of government-funded housing in major cities that remain vacant into affordable housing accommodation,” Sitharaman informed.
“We will be incentivising the state governments to also do the same. Central government organisations will also undertake this along similar lines, she added.
The Ministry of Housing and Urban Affairs (MoHUA) will be issuing detailed guidelines in this regard shortly.
The CLSS under the PMAY (Urban) for the middle-income group in the income bracket Rs 600,000-1.8 million will be extended up to March 2021. This will likely benefit 250,000 middle-income families during 2020-21 and will lead to an investment of over Rs 700 billion in the housing sector.
Asserting that the move will have a swift impact on the demand side, Sitharaman said, “By doing this we think we will be immediately able to spur job creation. The demand for steel, cement and also heavy-duty transportation will all improve.”
According to official estimates, 330,000 families had already benefited from the scheme till March this year.
But Construction Sector Seeks More Incentives
Stakeholders in the construction sector welcomed the finance minister’s address. A visibly enthused Anuj Puri, Chairman of the real estate consultancy ANAROCK Property Consultants observed, “The government’s push for affordable housing has been unmistakable in the last six years. Its ‘Housing for All by 2022’ project has already resulted in multiple sops and incentives. As a consequence, there has been a significant increase in activity in the affordable segment over the last few years. As per ANAROCK research, there are currently 1.56 million under construction units across the top seven cities, of which nearly 39 per cent are in the affordable segment priced at less than Rs 4 million budget.”
Manju Yagnik, Vice Chairperson, Nahar Group said that the announcements on labour law reforms, affordable housing and affordable rental housing would certainly boost sentiments of the housing sector.
“The housing sector is directly and indirectly linked to over 200 allied sectors, credit-linked subsidy scheme and affordable rental housing scheme will boost the demand for steel, cement, and industries linked to the supply of raw materials,” averred Yagnik.
Choosing to appear a bit cautious, Kamal Khetan, Chairman & Managing Director, Sunteck Realty Ltd, remarked, “The allocation planned for providing basic rental accommodation under the PPP model is certainly a better way to improve the quality of living for urban migrants and poor in our big cities. Although details are not available, we believe these projects can boost construction activities and investments in real estate assets across India’s cities.”
Giving a thumbs up to the announcements, Dr. Sangita Reddy President of the industry chamber Federation of Indian Chambers of Commerce & Industry (FICCI) emphasised the need for proper identification of beneficiaries.
“While we welcome these announcements, the real challenge as we foresee lies in the implementation of the same. On several occasions, we have seen that identification of the beneficiaries is a major challenge and we hope that under the programmes, the delivery of intended benefits is not limited by the implementation capacity of the state machinery. This would be the key. FICCI would, therefore, advocate that even as the government takes more such measures it should try and leverage the benefits of the excellent JAM (Jan Dhan-Aadhar-Mobile) trinity that has been created,” opined Dr. Reddy.
For his part, Chandrajit Banerjee, Director General of the industry chamber, Confederation of Indian Industry (CII) declared, “For the migrant workers the availability of free food grains, concessional rental housing complexes, among other measures are expected to alleviate their stress by providing them some succour in the current challenging scenario. The measure to extend CLSS for the middle-income group is expected to give a boost to the all-important housing sector which has a significant multiplier impact on the rest of the economy.”
Bhairav Dalal, Partner & Leader Real Estate Tax, PwC India advised greater synergy between the central and state governments to ensure successful implementation. “Affordable rental housing under the PPP model sounds great as a concept. The execution and implementation of the roadmap will be key to its success. This will require a relook at the current real estate regulatory framework and the interplay between the state and central legislation,” he noted in a mailed statement.
Dr. Niranjan Hiranandani, President of the self-regulatory body, National Real Estate Development Council (NAREDCO) said, “Industry is pegging a big hope on much-awaited fiscal relief to be granted to the second-largest employment generating sector. Liquidity infusion will be imperative to turn around the depressing scenario in the sector.”
- MANISH PANT
Ministry Of Finance And Corporate Affairs
Credit Linked Subsidy Scheme
Pradhan Mantri Awas Yojana
Ministry Of Housing Urban Affairs
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