MUMBAI: The Housing for All (HFA) project will give the Indian economy a much needed boost. However, its success will depend on the ramping up of the existing urban infrastructure, fast tracking of approval processes and also targeting the actual beneficiary, says India Ratings and Research (Ind-Ra).
The direct benefit of HFA to the economy is estimated to be Rs 15 trillion in a seven-year timeframe (FY16-FY22). "Funding of the investment of Rs 15 trillion through public-private partnerships and ramping up the supply of raw materials for construction namely steel and cement are big challenges for the execution of the HFA scheme," it said.
Municipal services such as supplying piped water, sewerage, sanitation and municipal solid waste management are also far from being equipped to take on a project of this magnitude in the next seven years.
"Apart from providing impetus to the construction sector, the scheme will increase employment opportunities and help grow the services sector. Sectors supplying crucial inputs to the construction sector, such as cement, iron and steel, will also grow. The growth of other sectors will depend on the strength of the forward and backward linkages of the construction sector with the rest of the economy," said Ind-Ra.
As the output of sectors supplying inputs to the construction sector increases, it will increase the demand for goods and services in the economy due to higher income generation. The economic impact of the scheme will also be felt at the state level. The biggest beneficiary of this will be Uttar Pradesh, followed by Maharashtra and West Bengal. These are the top three states in terms of housing shortages and increased construction activities will help these states' economies to grow.
The scheme to provide 20 million houses in three phases over FY16-FY22 has a central grant component (Rs 100,000 per slum household) going to the state government, and central assistance (Rs 150,000 other households) is likely to go directly to households. Also, the central government will provide interest subvention to households at 6.5% for loans up to a 15-year tenor through two nodal agencies - Housing and Urban Development Corporation Limited and National Housing Bank.