The government’s mission to achieve “Housing for All by 2022” was welcomed across the country following its launch in 2015. The slogan marked a significant shift in the government’s approach to housing policy; finally, those in power were acknowledging that the country was in the midst of an acute housing shortage which could no longer be ignored.
So far, however, reality has failed to live up to the rhetoric; Under the Pradhan Mantri Awas Yojana (PMAY) that was launched on June 25, 2015, for example, only 19,255 houses were built across all states in the first year. If the government is serious about its commitment to increasing supply of affordable homes, it needs to match rhetoric with resources.
A quick overview of the statistics reveals the scale of the challenge we face. 10 million of us are choosing to move to cities every year. There is currently a shortage of 20 million homes. By 2030, 590 million Indians will live in cities, necessitating a further $2.1 trillion of capital investment in infrastructure. The challenge to house the future population is urban in scope and unprecedented in scale.
So far, the government has focused on the demand side of the issue. Demonetisation, RERA and GST have all been introduced to increase transparency and accountability in the sector, and reassure homeowners that they can trust real estate developers. At the same time, PMAY- which provides a credit linked subsidy of Rs. 2.43 lacs to homebuyers purchasing residences below 60 sq. meters. - has significantly reduced the costs of buying a house and expanded the possibilities of homeownership to a greater number of individuals and families.
Homeowners cannot realise their dreams of homeownership, however, if there are no homes to buy. Addressing India’s housing shortage must first and foremost address the issue of supply, for which collaboration with the private sector is a necessity. While the government’s decision to award infrastructure status to the long-neglected sector of affordable housing earlier this year was a step in the right direction, much more needs to be done.
One way in which the government can stimulate supply is through helping tackle the issue of land acquisition. This issue remains a major challenge for developers, as the shortage of buildable land across Indian cities has steadily pushed up land prices. In the short-term, the government can help alleviate these costs by easing building density restrictions. In the long-term, the government can help ease this land squeeze by investing in infrastructure that makes suburbs more accessible.
A lack of affordable housing is an issue that, if left unaddressed, could have a paralysing effect on social cohesion and economic growth. Collaboration between the public and private sector will be a key driver in determining whether the government can keep its promises.
By: Mr. Rahul Nahar, Founder, Xrbia Developers Ltd.