Affordable housing scheme put on fast track

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New Delhi: Two days of unveiling its second stimulus package to retain economic growth, the Centre has begun working in earnest to implement its promise of encouraging state governments to release land for low income and middle income housing schemes. The UPA government has called a meeting with states on January 20 to discuss the proposal.

“The economic slowdown has brought to the fore issues related to affordable housing. Private developers have focused only on high-end housing, whereas demand has been more in economically weaker sections, lower income and even middle-income group housing,” minister of state for housing and urban poverty alleviation Kumari Selja said on Monday.

A task force for affordable housing had been created by the ministry in January 2008, headed by HDFC chairman Deepak Parekh. In its report presented late December, the Parekh panel came up with some significant new ideas, many of which require reforms at the state level.

Calling for affordable housing to be put at the centre of public policy, the panel has asked that it be granted ‘infrastructure’ status. While it admits that defining affordable housing in a country as diverse as India is ‘counter-productive,’ it has suggested some indicative parameters about the size, cost and equated monthly installment that could constitute ‘affordable’. (see chart)

Some of the key recommendations that require the states to show some initiative include upward revision of floor space index (FSI) and pushing in-situ housing development by bringing additional land into urban usage regularly. The panel has also suggested that an environment conducive to make investments in rental housing projects for economically weaker and lower income groups, a viable option.

Calling for a complete revamp of State Housing Boards, the Parekh panel has sought that they play a more active role in affordable housing projects, including through the Public Private Partnership route. Interestingly, it has also been mooted that all income earned by these boards through sale of land be ‘ring fenced’ so that a fixed proportion of it is redeployed only for affordable housing. A housing finance company focused only on micro-finance loans has also been suggested.