The Modi government has promised housing for all Indians by 2022; the ambitious plan is estimated to cost a whopping Rs 4 lakh crore, which is nearly thrice the country’s annual planned expenditure.
However, analysts say the government has so far taken baby steps in this direction. Over the last nine months, it has offered tax sops on home loans, eased foreign investment norms in construction sector and allowed more means for the real estate sector to raise funds.
The upcoming Budget is an opportunity for Finance Minister Arun Jaitley to take “serious” action, says Irfan Razack, CMD of Prestige Group.
The government should earmark special zones in far-flung areas for affordable housing projects and these zones should be connected through metros, better roads etc., Mr Razack said. In the middle of the town, you can’t build affordable housing projects because land rates are very high, he added.
Developers should also be given incentives to attract them to participate in the low margin affordable housing projects, analysts say.
“If certain numbers of low-income or mid-income housing units are built, then they (developers) should also be allowed to develop other type of housing projects,” Mr Razack said.
He also stressed on the need for reduction in ownership cost for people. Interest subsidy should be given purchase of low-cost housing units and there is also a need to bring down charges like stamp duty, service tax etc, he added.
For more participation from private developers in low-cost projects, the chief of Prestige Group, also sought taxation relief on Real Estate Investment Trusts (REITs), which was first announced in the previous Budget. This will help developers to raise funds and take up more affordable housing projects, he added.
A real estate investment trust (REIT) is an entity listed on stocks markets that owns rental-yielding real estate assets such as leased office and shopping malls. REITs distribute most of their income to shareholders as dividends.