Budget 2014: ‘Housing for all by 2022’ gets fresh emphasis

Presenting the Union Budget for the fiscal 2014-15 in Parliament, the Finance Minister Arun Jaitley emphasised on the government’s vision to provide housing for all citizens by 2022. Various measures were proposed to suggest that the government is committed to see this vision being converted into a reality. One of the major measures proposed towards attaining this objective is the announcement regarding setting up a Mission on Low Cost Affordable Housing that would be anchored by the National Housing Bank (NHB). Besides, the government is also in favour of bringing in further incentives in fulfilling this objective like enhancing the flow of FDI into the sector.

Tax incentive on Home Loans    

Additional tax incentives on home loans were announced to encourage different sections of people, particularly the youth of the country to purchase a house of their own. In this regard, the government raised the housing loan rebate from Rs 1.5 lakh to Rs 2 lakh. Further, it also proposed to increase the investment limit under Section 80C from Rs 1 lakh to Rs 1.5 lakh. Moreover, the tax exemption limit for the small and marginal taxpayer was changed from Rs 2 lakh to Rs 2.5 lakh. These factors will result in more disposable income in the hands of low income groups, particularly the youth, interested in investing in affordable housing.

Allocation of funds to NHB

Besides, an allocation of Rs 4,000 crore was proposed during the current fiscal for NHB. This move was intended to increase the amount of cheaper credit that would be available for the urban poor, the Economically Weaker Sections (EWS) as well as the Low Income Groups (LIG) towards construction of affordable housing.

 Slum development 

Considering that development of slums has often been disregarded to the point of being neglected by previous governments, it was felt that felt that the development of slums should be taken up by including it in the list of Corporate Social Responsibility (CSR) activities. This will encourage the private sector and large corporates to play a major role in the upliftment of this marginalised section of society and contribute responsibly towards this social activity.

Rural Housing  

The Finance minster announced that the Rural Housing Scheme has benefited large section of the rural population who have availed credit for constructing houses through the Rural Housing Fund (RHF) option. Due to the favourable response evinced towards this scheme, the government decided to increase allocations by about Rs 8,000 crore to the NHB for the fiscal 2014-15 so as to extend support towards Rural housing in the country.

Challenges

The objective of ‘Housing for all‘ even though strongly emphaisised in the Budget comes with its fair share of challenges. This is due to the fact that the Housing minister has been allocated only Rs 35,000 crore in the 12th Five Year Plan to provide affordable housing as well as for Slum development. This was in stark contrast to the about Rs. 22.5 lakh crore that was actually required for this purpose.

Besides, developers had expressed their concerns with regards to obtaining approvals and clearances from 40 different government authorities as a result of which investments to the tune of about five lakh crore is already stuck up. Some of the other concerns that were expressed by developers are with regards to bringing about simplification of procedures, land reforms, administrative reforms and lending reforms.  They also pressed for providing infrastructure status to the construction sector. According to the estimates made in 2012, there was a shortage of about 18.78 million in housing, of which about 95 per cent is in the low-income category.

Previous Assurances  

With regards to providing affordable housing, the housing ministry had assured that it would take measures to bring about Public-Private Partnership (PPP) in the sector. Besides, it was felt that there was a need for large corporates and private sector firms to exercise their social responsibility by engaging in CSR activities so as to contribute effectively towards providing housing especially to the poor and down-trodden sections of society. The housing minister had also assured on June 2nd, 2014 that all issues related to developers obtaining various clearances and approvals would be taken up in the next 100 days and the concerns of all stakeholders would be suitably addressed.