For a long time now, the real estate industry has been pitching for an industry status for the sector. According to Ajay Maken, the Union Minister for Housing and Poverty Alleviation, this will improve the access to funding and help in creating more affordable housing stock in the country.
Anuj Puri, Chairman & Country Head, Jones Lang LaSalle
India: "By granting infrastructure status to affordable housing, the Government officially acknowledges its importance as an industry and as a vital driver of the economy. Infrastructure status ensures that the sector becomes entitled to various Government incentives, subsidies and tax benefits. It also opens the sector up for institutional funding. All this will translate into more supply of affordable housing, which will help keep the rates in check. It can also mean that the Government releases land specifically for affordable housing in central locations."
Striking a comparison with the global counterparts, Puri feels that this initiative will go a long way to bridge the widening gap. He explains, "In the developed countries, the right for adequate housing is not in question at all. In fact, this right is entwined into the constitutional rights of citizens of countries like Germany. In some cases like in the US, there is today a surplus of housing with few takers. While this is by no means a positive development, it is in fact a result of the fact that the US and its banking system had a very open viewpoint towards housing. In India, nothing that has so far been attempted has managed to meet the massive housing deficit. This is why extraordinary measures such as according housing the status of infrastructure are the need of the hour."
The incentives will also fuel the enthusiasm of the developers to take up more affordable housing projects. Poonam Mahtani, National Director - Residential Services, India says, "Recently, CREDAI is pushing very hard for infrastructure status for affordable housing segment. This would give a much needed boost to the sector. Currently, developers are not developing much of the affordable housing projects despite a burgeoning demand for the same; this is primarily due to lower margins associated with the affordable housing segment. The infrastructure status would provide them the income tax
Not only the developer, but even the buyer would benefit by cheaper loan availability because with this move, affordable housing will become priority lending sector for banks, which means the funding will become much easier and at a lower cost."
Developers, who have been waiting for the sector to get industry status, believe that this move will provide the muchneeded boost to the real estate sector in India.