CII suggests steps to prop up mass housing

Written by Economy Bureau | chennai | Updated: Dec 30 2008, 06:06am hrs
The prevailing high interest rate has dampened the overall demand and severely affected the affordability, making housing a distant dream for a common man. In order to overcome the current crisis and to bring in more players under the affordable housing scheme across the country, the Confederation of Indian Industry has asked the government to come out with a slew of supplementary measures, including creating more land at affordable price, increasing the limits of municipalities, etc.

While welcoming the 5% subsidy approved by the Cabinet for Economically Weaker Section (EWS) and Lower Income Group (LIG), CII said the move in the right direction will serve the twin objective of providing much-needed relief to general masses and at the same time boosting demand in the economy. It said the cost & availability of the land is a major bottleneck in making housing affordable. Land is limited in cities and cost of land is growing exponentially. There is, therefore, an urgent need to increase the supply of land at affordable prices.

The government will have to look at some of the important measures, including increasing the municipal limits of the existing cities, simplifying the process of conversion of land from agricultural to residental/commercial, providing infrastructure status to integrated township development, relaxing floor space index (FSI) policy further and allocating specific land in the Master Plan for economically weaker section of the community.

Listing out in details, the Confederation said the city centres in India are already saturated in terms of space and capacity of infrastructure. The land that is available in the necessary magnitude is in the periphery of the cities. For increasing the supply of land, one of the most effective solutions is to increase the municipal limits of the existing cities. However, this needs to be followed with a very committed, time-bound programme to upgrade the infrastructure of the expanded areas, particularly the accessibility through public transport.

Similarly, the land that is available in periphery of cities most of the time is agriculture land. For development of a residential project in such areas would require the conversion of land from agricultural to residential/commercial. This process represents a major procedural bottleneck and needs simplification. Another measure would be to encourage development of tier II and III cities and construction of integrated satellite townships.

The supply of well developed and commercially viable supply of land would bring down the prices in the current markets. A major recommendation in this respect is to provide infrastructure status to Integrated Township Development. CII also asked the government to relax Floor Space Index (FSI) policy with a thrust to develop existing infrastructure. The FSI policy if liberal could open up a supply of land in the existing city centers,.

According to it, by allocating specific land in the Master Plan for economically weaker section of the community which would be made available at a reasonable rate to developers to build affordable housing meant for economically weaker section of the society.

In addition to the above, CII has also suggested the government should consider either waiving off or substantially reducing the stamp duty for EWS and also promotion of appropriate low cost housing technologies. With the phenomenal increase in population and urbanisation, the shortage of housing is expected to increase from 24.7 million dwelling units in 2007 to 26.5 dwelling units by 2011. Nearly 90% of the shortage of housing is in this segment. Any fillip to this segment of housing will spur economic activities, stimulate demand and generate employment, it added.