Govt Scheme for Middle-Class Housing: Details & Impact

New Delhi, Feb 2 (PTI) The government is "working on a scheme" to help middle-class people purchase or construct their own houses, Housing and Urban Affairs Secretary Manoj Joshi on Friday said, as he stressed that real estate has a critical role in the country becoming USD 30 trillion economy by 2047.

Inaugurating the real estate association NAREDCO's National Convention, he said real estate is the most critical factor in India becoming a developed nation and reaching a USD 30 trillion economy.

Joshi stressed that building urban infrastructure and urban housing would be key to economic growth.

The government has been focusing a lot on urban planning in the last few years, he said, adding that states are being given incentives to make reforms in urban planning.

A lot of states have undertaken reforms, the secretary said, and highlighted good work done in Gujarat in this area.

Referring to the budget announcement that the government will launch a scheme to help the middle class in acquiring homes, Joshi said, "We are working on that scheme".

On Thursday, Finance Minister Nirmala Sitharaman said in her interim budget speech, "Our government will launch a scheme to help deserving sections of the middle class 'living in rented houses, or slums, or chawls and unauthorized colonies' to buy or build their own houses."

Joshi said there is a need to promote affordable housing and said, "We need different ways to cross-subsidise affordable housing".

However, he said it should come from the urban planning side and not tax incentives from the urban planning system.

The secretary sought suggestions on how to encourage states for urban planning reforms to promote affordable housing.

He also emphasised a proper transport system, incorporating a much better and large bus network along with metro connectivity.

Joshi said the government is focusing a lot on urban infrastructure, which is water, sewage, road network and transport system.

"Our target is that we should provide tap connection to everyone in the city. This will require a lot of investment".

The secretary said ideally, property taxes should be able to fund the development of urban infrastructure projects.

"Unfortunately in India, our property tax levels are very very low. It would take a long time for states to increase," he said, adding that the Centre would keep nudging states to improve urban planning.

The secretary informed that the 15th Finance Commission has put a condition that "increase in property tax collection in the city should be above the states' GSDP growth rate".

"So this year, we have put that condition on getting a finance commission grant to the cities and states. About 60-70 of them have qualified," Joshi said, adding that the condition will remain in the 15th Finance Commission and the 16th Commission would build on that.

According to a statement by NAREDCO, Kaushal Kishore, Minister of State for Housing & Urban Affairs, said builders tend to quote around 15 per cent less than the actual amount during the tender process. As completion nears, prices increase, leading to subcontracting issues affecting builders and beneficiaries.

He urged NAREDCO and its senior functionaries to put an end to the practice of quoting lower prices, ensuring that housing projects, especially affordable ones, are completed without delays.

Kishore called upon the real estate industry to ensure that the surroundings of housing and affordable housing projects are made completely "dust, smoke, and intoxication" free.

In his welcome address, Naredco President G Hari Babu apprised the government of the initiatives taken by the association to build affordable houses, particularly in partnership spirit.