Narendra Modi government gives big boost to affordable housing, to use PSU land to build homes

By: and |
December 18, 2017 5:23 AM

The government plans to tweak the land use policy to ensure affordable housing is accorded top priority.

PSU, affordable housing, urban areas, low cost housingThe government plans to tweak the land use policy to ensure affordable housing is accorded top priority. (Image: PTI)

The government plans to tweak the land use policy to ensure affordable housing is accorded top priority. That will make available vast tracts of surplus land belonging to sick public sector undertakings (PSUs) for low-cost housing in urban areas. A back of the envelope calculation shows more than one lakh homes — of around 800 sq ft each — can be built on the land with just eight PSUs of around 2,500 acres. The “Housing for All by 2022 Mission” has targetted 12 million homes.  Officials indicated to FE, a Cabinet note would be floated in the next couple of weeks by the department of public enterprises. Moreover, the state-run NBCC is likely to be appointed the land management agency for ailing PSUs. NBCC will help sell the land the proceeds of which will be used to meet their outstanding liabilities and implement voluntary retirement schemes before the enterprises are closed or privatised.

Under extant guidelines for monetisation of land of sick PSUs, proposals from government organisations are invited on priority to purchase land. The unsold land, if any, could be auctioned by the government or be used for affordable housing and other government programmes.  Of the nearly two dozen PSUs identified and in the process of being shut down, eight PSUs have around 2,500 acres. These PSUs include HMT Bearings in Hyderabad, Hindustan Antibiotics in Pune, Heavy Engineering Corporation in Ranchi, Indian Drugs and Pharmaceuticals in Gurgaon and HMT Watches in Nainital. In September, the ministry of housing and urban affairs had announced that eight public-private partnership options, including six for promoting affordable housing using government lands have been evolved after extensive consultations with states, promoter bodies and other stakeholders.

Under the model, payments to buildings will be made by the public authority based on progress of project as per agreed upon milestones while buyers make their part of the housing cost to the government.  Launched on June 25, 2015, the aim of the Pradhan Mantri Awas Yojana — Urban (PMAY-U) — is to address the gap in housing demand and supply in urban areas with respect to economically weaker sections, low and middle-income groups. Of the sanctioned 30.76 lakhs houses, 15.65 lakh houses are being built while 4.13 lakh houses have been constructed since the launch of the mission. The government has set an ambitious target to construct as many as 12 lakh houses under the PMAY-U in 2017-18. In 2016-17, only 1.49 lakh houses were built under the scheme compared to the target of 32.6 lakh units. It plans to construct 26 lakh houses in 2018-19, 26 lakh in 2019-20, 30 lakh in 2020-21 and 29.80 lakh in 2021-22.

“One of the big focus of the government is to achieve as much as possible before general elections in early 2019,” an official said.  Under PMAY-U, urban dwellers with an annual income up to Rs 18 lakh get interest subsidy of up to 4% on housing loans of up to Rs 12 lakh. Under the scheme, the Centre also gives up to Rs 1.5 lakh per EWS (economically weaker section) house and a 6.5% interest subsidy on home loans up to Rs 6 lakh.

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