– by Santosh Sinha
Giving an extension to the Credit Linked Subsidy Scheme (CLSS) by the Finance Minister Nirmala Sitharaman by a year till March 31, 2021, is indeed welcome news for the real estate sector. It directly impacts the affordable housing segment. Developers expect this move will encourage demand for affordable housing which is, otherwise, lying low for quite some time.
“The extension of CLSS up to March 2021 and infusion of Rs. 70, 000 crores is an action-oriented reform for the revival of the affordable housing segment. This will ensure job creation and give a stimulus to demand affordable housing. Allied industries related to the construction sector will benefit from this as it will give a boost to the supply chain”, said CREDAI National spokesperson. CREDAI, the leading real estate industry body, however, raised concerns over the successful implementation of the announcements. CREDAI further said, “Successful implementation of this will be crucial in fulfilling the Honorable Prime Minister’s vision of “Housing for all by 2022”.
Ms. Sitharaman said that the CLSS extension is expected to inspire an investment of over Rs 70,000 crore in the housing sector and will create new jobs. She further said that move will benefit 2.5 lakh more middle-income families in FY 20 alone. She informed that a total of 3.3 lakh families have already been benefited from the scheme so far.
Anuj Puri, Chairman, ANAROCK Property Consultants also welcomed the move and said, “The government’s push for affordable housing has been unmistakable in the last six years. It’s Housing for All by 2022 project has already resulted in multiple sops and incentives. As a consequence, there has been a significant increase in activity in the affordable segment over the last few years”. As per ANAROCK research, there are currently 15.62 lakh under-construction units across the top 7 cities, of which nearly 39% are in the affordable segment priced <INR 40 lakh budget. Mr. Avneesh Sood, Director Eros Group, termed it as a “critically important move” and said, “it eliminates the uncertainty which surrounded the timelines for setting up the aim of constructing 50 million new housing units by 2022 through the PMAY, of which 30 million units are likely to be constructed in rural areas, and the rest in urban areas”.
Finance Minister also announced the launch of the Affordable Rental Housing Scheme for migrant laborers and urban poor. She said that the government will launch a scheme to convert government-funded housing in the cities into the Affordable Rental Housing Complexes (ARHC) under the PPP model.
The Rental Housing Association of India outrightly welcomed the move. Mr. Sriram Chitturi, Founding President- Rental Housing Association of India, said, “We welcome the Government’s step to launch a rental housing scheme as a part of PMAY. The rental housing industry has been demanding for this as this will really help the Government to achieve its goal, housing for all. The decision of converting government-funded housing in cities into Affordable Rental Housing Complexes (ARHC) under PPP mode through concessionaire came at the right time as the country was struggling to provide quality shelter for migrant workers and blue-collar workforce during the lockdown.
“The announcement on rural infrastructure and affordable rental accommodations for urban and migrant workers under PPP partnership will open newer avenues for the construction industry”, said Mr. Anshuman Magazine, Chairman & CEO – India, South East Asia, Middle East & Africa, CBRE. Mr. Bhairav Dalal, Partner, and Leader Real Estate Tax, PwC India also welcomed the move. He said, “Affordable rental housing under PPP model sounds great as a concept. The execution and implementation of the roadmap will be key to its success. This will definitely require a relook at the current Real Estate regulatory framework and the interplay between the state and central legislation.”
Dr. Niranjan Hiranandani, National President, NAREDCO termed it as a positive move. However, he said that the sector needs stimulus packages that will create a positive impact. He said, “Positive moves, from the migrant labor as also urban poor perspective; some business opportunities under PPP mode as also enhanced demand for construction material with the 2.5 lakh homes under CLSS, but real estate as an industry, awaits its turn to get stimulus package measures that will create a positive impact”.
The real estate sector has been reeling under tremendous pressure due to the slow demand in the market. The developers have not been able to clear their inventories; this has created added pressure on developers’ internal flow of funds. It is, therefore, that the developers demand direct benefits that could spur demand in the market. CREDAI aptly put forward the concerns by saying, “The need of the hour is to uplift the demand by providing more benefits to homebuyers by increasing the tax deduction limits for interest on home loans, thus help the realty sector bounce back”.
There are two more briefings scheduled for the Finance Minister to further outline the ‘Atmanirbhar Bharat’ economic package. Developers and the homebuyers believe that the government will announce direct benefits in the form of the home loan rate cut. The government knows that the real estate sector is one of the major employment generators and consumes a large chunk of unskilled laborers. If the government wants to ease out the load from the agriculture sector, it has to push real estate so that it may attain its lost glory and benefit all the stakeholders including developers, homebuyers, the laborers, and the government.