Credit Risk Guarantee Fund for LIGs to Boost Realty Sector

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“Massive urbanisation has led to an acute shortage of land causing it to become one of the biggest constraints in urban India,” the Housing & Urban Poverty Alleviation and Culture Minister, Kumari Selja said in a Conference organised by Assocham on Affordable Housing – Issues and Challenges on May 11.
Admitting that the economically weaker section (EWS) and low-income groups (LIGs) were the most affected groups, she insisted that the lower-middle class also cannot completely escape from this situation. She said that due to unavailability of affordable land and lack of access to finance, LIGs are forced to resort to unorganised settlements.
The government is looking at a combination of solutions to tackle the issues of availability, accessibility and affordability, the Minister added. Further measures such as proposed reservation of land for LIGs and establishment of a Credit Risk Guarantee Fund Trust to provide loans for low-income housing are expected to boost the sector.
A proposal was made to implement 5% interest subsidy for loans up to Rs 1 lakh. After proposing the same to financial institutions, suggestions were made to increase this loan amount to at least Rs 5 lakh. “We are in the process of revising the loan coverage in this scheme,” she added.
Addressing the developers, Kumari Selja said the government was looking at single-window clearances instead of multiple clearances which are in practice currently for housing projects. “This will hopefully reduce the time consumed for approvals to 6-8 weeks, which could ultimately reduce the cost of houses by 25-40%,” she said.
Eminent policymakers Susheel Kumar, Joint Secretary and Arun Kumar Misra, Secretary for Ministry of Housing and Urban Poverty Alleviation also participated in the Discussion. They highlighted issues like rental housing and need for private sector participation in providing affordable housing. “Government alone will not be able to deal with the issue of housing and private sector involvement is extremely important,” Arun Kumar Misra added.
The consensus was that rental housing is in need of private sector participation and would also boost affordable housing if measures such as reforms in the State Rent Control Act, standardization and regulation are implemented.
Distinguished speakers who were present on the dais spoke about how only 3-4% of the total land area of the country will be required to house the entire population of India. “Limited developable urban zones lead to hike in prices and this is a result of extreme control and lack of proper regulatory policies,” said P S Rana, Ex CMD, HUDCO and CMD Panthera Developers. He also highlighted the fact that affordable housing cannot be considered in isolation. “Housing needs opportunity of employment next to it if it is to be made affordable,” he said.
Setting up of a Certifying and Performance Guarantee Company (CPGCo.) was proposed by Arun Mohan, Senior Advocate. This body would provide certificates of authentication to the developers for their projects. This would, in turn instill a sense of trust in the minds of the customer towards the builder and also increase his credibility. Lack of housing is not the problem we face. We may lack oil, but not housing. What we lack is sufficient framework for housing.
A public-private partnership (PPP) model for affordable housing was discussed at length. According to Cherian Thomas, the Group Head Capacity Building, IDFC Foundation, one important element about PPPs are that services which need to be provided by the government are now being provided with the help of private players. As far as housing is concerned the government does not lack funds, what they lack is a ‘proper delivery mechanism,’ added Cherian Thomas.
Prithvi Nath, Senior Advisor, DLF Group said, “We need developers and not builders if we need to secure the future of our country.” He said that the government needs to facilitate more PPPs and provide the private sector an equivalent role in the partnership.


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