Policies to boost affordable housing being firmed up

Written by Rajat Arora | Timsy Jaipuria | Updated: Dec 24 2012, 09:08am hrs
Successive Central, state and local governments have failed to address the administrative problems being faced by Indian cities. Even as new cities are being created to unclog the old ones, dealing with urban poverty remains a key challenge for governments and policymakers alike. Ajay Maken, who was recently elevated as Cabinet minister for housing and urban poverty alleviation, discusses these issues with Timsy Jaipuria and Rajat Arora. Excerpts:

What are your immediate priorities after taking charge

I have been discussing and evaluating the various missions and schemes that are under the supervision of my ministry. My idea is to evaluate the projects and reinvent if they have lost their relevance. Among the extant schemes, the basic objective of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) Phase-I is to deliver basic services to the urban poor and undertake integrated housing and slum development programmes. The Shehri Rozgar Yojana is meant to improve the employment rate and create skills needed for employment. JNNURM started in 2005 and Shehri Rozgar Yojana in 1997. These two are being critically evaluated with a view to plugging the loopholes and making the same schemes more effective.

Some of the issues pertaining to affordable housing are long pending. How and how soon will these be addressed

Of course, there are issues related to (schemes for) affordable housing. We are redefining the whole concept while there will be a standard definition of the term affordable housing, a distinction will be made between affordable house and an affordable housing scheme. This will reflect in the policies to be firmed up.

A Real Estate Regulatory Bill is being drawn up. This is being touted as a game-changer...

We are preparing the final draft of the Bill, which will propose to make it mandatory for the real estate developers to utilise at least 70% of the funds raised in the name of a project, exclusively for the same project. The developer can use 30% of the funds for other purposes like creating land banks, etc. Right now, funds are largely being utilised for buying more lands and only a small fraction is being spent on the construction of the project for which they have been raised from the consumers. This is one of the reasons why housing projects get delayed. There are several other issues that are sought to be addressed through the Bill. My idea is to come out with the Bill within two months.

What is the status of the affordable-housing-in-partnership scheme, which involves government subsidy

This scheme has not performed well, the reason being it offered a very small amount of monetary assistance to consumers. Instead of this, a credit risk guarantee fund was recently been launched, with an initial corpus of R1,200 crore.

The urban affordable-housing deficit is estimated at about 26 million. The total housing loan outstanding in the country is pegged at about R3.06 lakh crore of which only about 24% is towards loans up to R5 lakh, which are mostly taken by economically weaker sections and low-income groups. The establishment of such a government-supported Credit Risk Guarantee Fund will facilitate credit enablement of the urban poor and the flow of institutional finance for affordable housing.

What is the status of the national urban housing policy

This policy will ensure that 35% of housing construction (in terms of the land) by private builders is earmarked for projects meant for economically weaker section under the Rajiv Awas Yojana. This is expected to bridge the huge shortfall in new projects for LIG and EWS sections, while builders focus on high- and middle-income group projects.

A committee headed by Amitabh Kundu said there is a shortage of 18.78 million houses in the country, 96% of which are in the EWS and LIG categories. We must realise that it is affordable housing where we have a huge opportunity to cater to. Private developers under this policy will also have to maintain the quality for construction. Construction standards would be laid down and these the builders will have to abide by.