Urbanisation and housing reveal a nation’s economic growth and social well being. India’s urban population is growing at an average 2.1% every year since 2015. It is likely to reach 60 crore by 2031 (up from 37.7 crore today). But the growth in housing has been unable to keep pace. Currently, the housing shortage in India is close to 1.9 crore units. The economically weaker sections (EWSs) and lower-income groups (LIGs) account for 96% of the urban shortage.
Government thrust on affordable housing
The Government of India has recognised the need to fill the gap in urban housing. Large-scale housing projects that are affordable are sure to help. So, the government announced an ambitious project. It seeks to provide ‘Housing for All by 2020’. It has taken many initiatives to make this a reality. For example, it facilitated a 4% interest rate rebate on housing loans of up to Rs 9 lakh. The rebate stands at 3% on loans up to Rs 12 lakh.
Besides, the government granted infrastructure status to affordable housing. Developers can enjoy cheaper sources of funding, including external commercial borrowings (ECBs). Affordable housing promoters will also get more time for project completion. The deadline will increase to five years, up from the current three years.
The spate of initiatives has given a shot in the arm to developers. The segment had been languishing on account of luxury and premium housing for the last few years. Demonetisation dealt a severe blow as well. But affordable housing has generated a new source of revenue. It also boosted the confidence and goodwill of real estate developers. Many private players are now undertaking affordable projects.