Mains Paper 1: Social issues | Urbanization , their problems & remedies
From UPSC perspective, the following things are important:
Prelims level: PMAY, Floor Space Index, PMAY
Mains level: Measures for increasing affordability of Housing for all initiative
Carpet (floor) Area has been increased by 33% to qualify for Pradhan Mantri Awas Yojana (Urban) Subsidies
- The initiative, ‘Housing for All by 2022’ is the central pivot around which the government’s efforts are concentrated. This, in turn, covers different aspects like rental and affordable housing.
- Roping in the private sector under the Public-Private Partnership (PPP) model is the key solution.
What more is needed to increase affordability?
Among other initiatives, the government needs:
- to grant infrastructure status to the entire real estate industry making long-term financing easy for the industry
- fix GST rate for all types of housing at 6%
- revise carpet area to 60 sq. mt including in metro cities (to qualify for subsidy)
- make land available at subsidized rates in metros and tier 1 cities so that the projects can be viable
- reduce premium on additional FSI (floor space index) to encourage affordable housing within metro cities and
- also reduce time taken and cost of permissions and clearances.
Permitting higher Floor Space Index
- Land in metros forms a significant proportion of the project cost and renders such projects unviable for the affordable segment.
- Policies should be formulated wherein land can be provided at rates that make the affordable projects viable.
- Land can be provided to develop composite projects where one segment, say, LIG (lower income group) is cross-subsidised by the revenues earned from the other segment, say HIG (higher income group).
- If such corridors allow for high density development, a higher FSI can be permitted, with an incremental benefit of FSI being applied towards affordable housing.
- The government should provide incentives to private players who use technology to deliver quality product.
- Such standardisation may further improve efficiency and make construction of homes like a manufacturing set-up.
Rewarding developers for last mile connect
- Availability of land in cities at affordable pricing is one of the major challenges.
- The government could facilitate the development of affordable housing by making surplus land held by PSUs (Public Sector Undertakings) available for affordable housing projects.
- Land is a state subject and that adds another layer of complexity.
- The central government should guide the states on programmes to allocate and incentivise the usage of land for affordable housing, while also incentivising state governments to facilitate engagement and implementation.
- It is also recommended to incentivise developers for infrastructure and last mile connectivity development in semi-urban centres.
Allotting land parcels at subsidized costs
- The recent move to raise the carpet area and the RBI’s revision of housing loan limits for priority sector lending (PSL) eligibility will help bring most of the under-construction dwelling units in urban India under the purview of the CLSS.
- This will not only bolster homebuyer sentiments, but also further propel construction activity in the affordable housing sector. However, the next steps for the government should be:
- Look at the benefits for developers. Elements like reduction in construction inputs should now be a priority.
- To make optimum use of the initiative from a consumer’s standpoint, the land allotment should be at better locations and subsidized costs.
- Focus should be on building a holistic environment that incorporates infrastructure and social facilities. Access to holistic livelihood facilities will be key in determining the success of the initiative