scorecardresearch
Budget 2022: 7 ways govt can make affordable homes accessible for homebuyers

Budget 2022: 7 ways govt can make affordable homes accessible for homebuyers

By supporting the growth of affordable housing through flexible and progressive policy and targeted subsidies like higher interest subvention schemes, the government can both address the ambitious target of `housing for all' and the move towards a carbon zero economy.

Infrastructure status will undoubtedly unlock multiple tax benefits that will boost foreign and local investment while pushing up the overall demand for affordable homes. Infrastructure status will undoubtedly unlock multiple tax benefits that will boost foreign and local investment while pushing up the overall demand for affordable homes.

Shifting focus to EWS (Economically Weaker Section) will help meet the set target of 2.95 crore houses within the March 2024 timeline, thus making affordable homes available for everyone who needs one.

On December 8, 2021, the Union Cabinet approved the extension of the flagship 'Housing for All' project - Pradhan Mantri Awaas Yojana (PMAY) till March 2024.  

The press note accompanying the cabinet briefing said the two-year extension of the scheme "is to ensure the completion of the remaining 1.55 crore units against the overall target of 2.95 crore houses' originally planned. 

This is an acknowledgement of a delay in the project implementation schedule of the PMAY scheme necessitating the extension of the deadline by another two years from March 2022.

Also Read: Budget 2022: Govt needs to focus on infra creation, affordable housing 

For some context, the PMAY scheme was launched in 2015 by Prime Minister Narendra Modi with a target of constructing five crore new houses by March 2022, of which 3 crore units were to be built in the rural areas and 2 crore units in the urban areas. 

Subsequently, the government scaled down the near-term target to 2.14 crore units in rural areas and 1.12 crore houses in the urban landscape. 

However, according to the latest numbers available from the Ministry for Rural Development, a total of 2.15 crore houses were sanctioned of which 1.68 crore units were built as on December 2021, missing the target by almost 1.4 crore units.   

The funding gap and anomalies in the definition of affordable housing are some of the well-known reasons. This was an ambitious target to begin with. To have built 1.68 crore homes in a matter of seven years is a monumental achievement in itself. 

It speaks volumes of the effort put in by the government to ensure that low-income families find a decent shelter to call home. As a leader of housing non-profit, I can vouch for the positive impact of this welfare scheme on millions of families in the country.  
 
To ensure the efficacy of this invaluable scheme, there are a few steps the Finance Ministry can adopt in the upcoming budget. First, affordable housing should be given infrastructure status with tax breaks and other investment incentives since such a reset will attract investors chasing long-term returns to bet on the segment. 

Infrastructure status will undoubtedly unlock multiple tax benefits that will boost foreign and local investment while pushing up the overall demand for affordable homes. 

Also Read: Union Budget may provide 15-20% more for affordable housing

Second, the Finance Ministry should walk the Budget 2022 talk by extending the benefits of affordable housing to rental and shared living spaces. This will enhance the scope of the affordable housing market manifold and provide efficient housing solutions for migrant workers. 

Third, Budget 2022-23 should increase the ticket size of affordable houses depending on locations considering the rise in asset prices and input costs. 

Provisions can be made to incentivise early completion of houses for beneficiary-led constructions. This will help in reducing the number of unfinished houses.   

Fourth, The Finance Ministry may also consider the extension of the Credit Linked Subsidy Scheme (CLSS) under the PMAY for all sections of beneficiaries.   

Fifth, the Finance Ministry should relook the `one size fits all' approach to the affordable housing segment since different income groups have different sets of challenges that need different suits of solutions.  

For instance, there is a felt need to look at the bottom of the housing pyramid to find a lasting solution for the `housing for all' promise. This means a shift away from the Middle-Income Group (MIG) and the Lower Income Group (LIG) to the Economically Weaker Segment (EWS). 

The EWS category with an annual income of Rs 8 lakh accounts for more than 90% of the demand for housing. This will also shift the focus to the owner-driven construction model.   

Sixth, a lot of handholding is required in the EWS space including the need for Housing Support Services (HSS) to ensure that families not only start construction of their home but also finish their homes on time. 

Therefore, the Finance Ministry should announce a package that includes not only finance and technology but also plans for capacity building for the EWS category. 

In this bottom-of-the-pyramid model, families can increase their cash flow even during the lean season by participating in MGNREGA or other government-sponsored employment guarantee schemes. 

In other words, shifting the focus to the EWS segment will help the government meet the set target of 2.95 crore houses within the March 2024 timeline thus making affordable housing available for millions of families in need. 

Seventh, impetus should be given to scaling indigenous housing technologies and practices. The emphasis should be on encouraging 'made-in-India' initiatives which not only showcase 'atma-nirbharata' (self-reliance) as proclaimed by our Prime Minister but also help meet the demand for affordable homes by accelerating the construction process. 

Additional funds can be allocated to bridge some of the technology gaps we see in this scheme. Investment in technology that helps manage various data points of the construction journey - from funds utilisation by families to tracking the impact of various interlinking schemes among the beneficiaries - will be crucial. 

To conclude, it is my conviction that by supporting the growth of affordable housing through flexible and progressive policy and targeted subsidies like higher interest subvention schemes, the government can both address the ambitious target of `housing for all' and the move towards a carbon zero economy. 

The accompanying uptick in the activity level taking the nation closer to the cherished goal of a $5 trillion economy will come as an added bonus. 
 
(The author is Managing Director, Habitat for Humanity India.)