By Pavan Gupta
Affordable housing is a buzzword that is easily associated with any discussion pertaining to urban migration and housing. Rightly so, since decent and affordable housing is one of the basic needs of any citizen. With the second largest population in the world, India has been urbanising and developing at a rapid pace. The key challenge associated with this rapid urbanisation is the pressure on limited resources to meet the increasing housing demands. The Government of India estimated a shortage of close to 20 million housing units in the country in 2012, out of which 95% were in the EWS (economically weaker sections) and LIG (Low Income Group) segments. Moreover, India’s total urban housing shortage is expected to be about 30 million by the year 2022. This ever-increasing gap has resulted in an increasing number of citizens living in slums and makeshift accommodations. As such, it is clear that if this issue is not dealt with immediate attention and effectives measures, it can have adverse consequences for the economic growth of the country and for the living conditions of the people.
The government of India has set an ambitious goal of ensuring ‘Housing for All’ by 2022. This impetus by the government has led to many developers now associating themselves with affordable housing, a segment that many of them used to overlook due to more returns on MIG (middle-income group) and HIG (high-income group) projects. NBFCs (non-banking financial companies) in India have been a key partaker in the government’s initiative as the unbanked set of customers who need affordable housing tend to be their target audience. From checking the legality of the property, to chalking out the best EMI scheme that would suit the borrower to imparting knowledge about interest rates, tenure, tax benefits, subsidies and insurance, NBFCs have played an imperative role in this project. As such, their role is important in ensuring that the common man has a roof above his head.
To make the government’s vision of ‘Housing for All’ a reality, it is crucial that all the stakeholders such as the central government, state governments, and private sector work in a cohesive and cooperative manner to ensure that affordable housing is available to everyone. Affordable housing, being a state subject, is generally prone to complications such as delay in approvals, increasing costs of raw materials, low profit margins etc. which in turn makes this venture less attractive to developers and private players. Hence the government needs to operate as a catalyst and streamline the procedures to ensure delivery by all those who are in the value chain.
Banks and housing finance NBFCs too have a major role to ensure that the assistance reaches to the beneficiaries, be it through housing finance options, customer education or creating tailor made solutions for the EWS customers. Although housing finance companies (HFCs) have been impacted the most following the liquidity crisis, there is dire need to revive the sector as this could hurt consumption and the economy in the long term. HFCs with a strong parentage and a good performance history are better placed to weather through the crisis and deliver in the long run. Their role is critical in achieving the ambitious goal of ‘Housing for All’ by 2022 as developers and end-customers both rely on them for the construction of a property.
A key area which is important and often overlooked is the upkeep of these housing units once they are transferred to the beneficiaries. It is pertinent that the sustainability of this project is maintained, and these houses don’t eventually transform into urban slums. For this reason, the public and the private sector need to join hands to ensure development and upkeep of sustainable and comfortable living environment now that aspirations have a new wing and a home for sure is no longer a necessity but a rightful ambition.
The author is CEO, Muthoot Housing Finance Company Ltd. (MHFCL). The views expressed are the author’s own.
