A nation’s economic growth and social wellbeing are indicated by urbanisation and housing. India’s urban population is likely to reach 60 crore by 2031 up from 37.7 crore today (source: The Economic Times). However, the housing has not grown at the same pace. 96% of housing shortage is accounted for by the economically weaker sections (EWS) and lower income groups (LIGs).
To fill this growing gap, the government of India has announced an ambitious plan- ‘Housing for All by 2020’. A number of initiatives have been taken to make this a reality. A subsidised interest rate of 4% has been facilitated on housing loans up to INR 9 lakh and rebate stands at 3% on loans up to INR 12 lakh. Infrastructure status has been granted to affordable housing. The developers can avail more economical sources of funding, including external commercial borrowings. Developers will also get a year’s time to pay tax on notional rental income on completed but unsold projects. The tenure for long term capital gains has been reduced to two years from the current three years. The promoters will get an extended time period of up to five years as against the earlier three years for completion of projects.
In addition to this, the leading housing finance companied (HFCs) are now offering tailor-made affordable housing schemes at 8.5-9%. A higher loan-to-value ratio is being offered to borrowers. Up to 85% can be availed for housing units that are ready or nearing completion. Individuals such as professionals and businessmen find it difficult to get credit from traditional lenders and thus, the products offered by HFCs are more accessible and appealing.
All things considered, the target of housing for all be 2022 seems like an achievable target.