Shelter Fund for Affordable Housing in Urban India

India needs a dedicated shelter fund to achieve its goal of providing affordable housing to all in urban areas, a task force has noted.

The report of the task force on providing ‘Affordable Housing for All’, led by HDFC Chairman Deepak Parekh, has recommended a 0.5 per cent cess on all central Government taxes, to be credited to the dedicated shelter fund. The proposed fund will be managed by the National Housing Bank with an equivalent budgetary support so as to make a long-term impact in terms of affordable housing.

The report, which was submitted to the Housing Minister Kumari Shelja today, also recommended that ‘affordable housing’ be brought under the definition of infrastructure. Apart from the NHB, the report has suggested the formation of a housing finance company, focusing on housing micro-finance loans.

Providing affordable housing to all in urban India could raise the rate of growth of GDP by at least 1-1.5 per cent, leading to a significant positive impact on employment and poverty reduction, said the report.

The state housing boards need revamping and they should be encouraged to form public-private partnerships to provide affordable housing. A dedicated proportion of funds raised through land sales by these boards should be redeployed for meeting housing needs alone.

The housing finance institutions should be permitted to access long-term external commercial borrowing market. “Housing finance companies require long-term funding sources at the lowest cost possible to pass on to the ultimate borrowers,” said the report.

The realty sector should be regulated through a regulator, the report said. Topmost consideration should be given to the setting up of an ombudsman at the state level to monitor housing projects under the Jawaharlal Nehru National Urban Renewal Mission and address consumer grievances.

It has also asked for fiscal relaxations for developers and housing finance companies engaged in affordable housing. “Modify the Income Tax Act for developers and HFCs. Reduce stamp duty rates and registration fee for this housing segment to 2 per cent ad valorem in all states. Levy a flat charge of Rs 1,000 on registration of equitable mortgages,” the report said.

Original article here.