(GIST OF YOJANA) Ensuring a Roof over the Head [JULY-2018]

(GIST OF YOJANA) Ensuring a Roof over the Head


Ensuring a Roof over the Head

Housing has been a concern for individuals, families, groups and government since the dawn of urban civilization. The let century is called the urban century because for the first time, since dawn of civilization, more people are residing in urban India than in rural areas. The phenomenon of urbanization in today’s fast-paced world is inevitable, especially in emerging economies. The most important problem in all cities has been housing due to sudden and large scale influx of migrants from rural areas to urban areas especially the metropolises and state capitals. Because of the housing shortage in every city, almost fifty percent of the population lives in slums.

As we have witnessed over the last few decades, due to massive urbanization, increasing income levels and changing demographics, there has been increasing pressure on transportation, housing, land, and other urban services to accommodate the future population. Whilst the overall population growth has declined over the last decade, urban population growth continues to be almost twice the annual national population growth rate.

Urban population in India may reach 600 million by 2031 (over 50 per cent of the total population), from 377 million in 2011 and the total number of cities is expected to rise to 87 (from 50 in 2011). Further, the urban share of the GDP is proj ected to increase to 75 per cent in 2031 from an estimated 62-63 per cent in 2009-2010. (The High Powered Expert Committee (HPEC), 2011) Consequently, there is a dire need to improve the quality of life in our cities and to address the current and anticipated future shortage of housing along with other infrastructure deficit issues prevalent in our urban centers.

Realizing this problem, affordable housing has taken a centre stage in the National Agenda of the Government. The Government’s commitment to have housing for all by 2022 is the vision which presents dramatically different opportunities and requirements in front of the stakeholders and realizing this dream can be a step towards building a brighter India. This Transformational Scheme of “Housing for All by 2022" was launched by Government of India on 17th June 2015 under Pradhan Mantri Awaas Yojana with an aim to provide affordable housing to urban poor.

PMAY Housing for All 2022

While efforts to provide low-cost housing have been made for many years, the PMAY launched in 2015 provides a fresh impetus. The PMAY Urban (PMAY-U) subsumes all the previous urban housing schemes and aims at ‘Housing for All’ to be achieved by the year 2022. Housing shortage f 20 million is envisaged to be addressed through the PMAY-U.

The mission has four components:

A-In-situ slum redevelopment (ISSR): This uses land as I resource. The scheme aims to provide houses to eligible slum dwellers by redeveloping the existing slums on public/ private land. A grant of INR 1 Inc per house is provided by the central government to the planning and implementing authorities of the states/UTs under this scheme.

B-Affordable housing in partnership (AHP): This aims to provide financial assistance to private developers to boost private participation in affordable housing projects; central assistance is provided at the rate of INR 1.5 lac per EWS house in private projects where at least 35 per cent of the house are constructed for the EWS category.

C-Credit-Iinked subsidy scheme (CLSS): This scheme facilitates easy institutional credit to EWS, LIG and MIG households for the purchase of homes with interest subsidy credited upfront to the borrower’s account routed through primary lending institutions (PLIs). This effectively reduces housing loan and equated monthly installments (EMI).

D-Beneficiary-Ied construction or enhancement (BLC): This scheme involves central assistance of INR 1.5 lakh per family for new construction or extension of existing houses for the EWS/ LIG The Government envisages building affordable pucca houses with water facility, sanitation and electricity supply round-the-clock. Under PMAY, it is proposed to build 2 crore houses for urban poor including Economically Weaker Sections and Low Income Groups in urban areas by the year 2022 through financial assistance of 2 trillion (US$31 billion) from central government. This scheme is converged with other schemes to ensure houses have a toilet, Saubhagya Yojana electricity connection. Ujjwala Yojana LPG gas connection, access to drinking water and Jan Dhan banking facilities, etc.

The scheme is aimed for urban areas with following components/ options to States/Union Territories and cities:

  • Slum rehabilitation of Slum Dwellers with participation of private developers using land as a resource;

  • Promotion of affordable housing for weaker sections through credit linked subsidy;

  • Affordable housing in partnership with Public and Private Sectors and

  • Subsidy for beneficiary-led individual house construction or enhancement.

  • Besides this, Government of India has been taking several initiatives through the budget to provide housing for all. Provisions in the Union Budget 2017-18 were a game changer for the real estate sector but also particularly for achieving the goal of Housing for All by 2022.

The Union Budget 2017-18 announced a number of measures to boost affordable housing Key highlights of the Budget 2017 to boost Housing Sector are as follows:

  • Affordable Housing has been given Infrastructure status

  • One crore rural houses Will be created by 2019

  • National Housing Bank to refinance Rs 20,000 crore loans

  • Pradhan Mantri Awas Yojana to get Rs 23,000 crore

  • Real estate developers to get tax relief on unsold stock as liability to pay capital gains will arise only in the year a project is completed

  • Instead of Built up area of 30 and 60 sq meters. The carpet area of 30 and 60 sq meters will be applicable for affordable housing

  • Holding period for capital gains tax for immovable property reduced from 3 years to 2 years

  • Tax break of 1 year post receipt of the completion certificate, for the unsold stock

  • Indra Awaas Yojana will be extended to 600 districts

  • Indexation for capital gains shifted from 01-04-81 to 01-04-2001

  • These transformation steps for the housing sector are ng discussed in detail as under.

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Capital Gains: Tax Liability Changed

The budget has changed the prevalent practice for capital gains tax liability and has clarified that the landowner entering into a joint development agreement for development of the property, shall be subject to capital gains tax upon completion of the project. This is a significant change, which is much needed, to bring clarity on the aspect and avoid litigation with the department, which invariably a norm was given the current ambiguity. That means that if a Joint Development Agreement is signed for the development of property, then the capital gains tax will only be paid in the year of completion of the project. Apart from several other measures to reduce capital gains tax, this step will provide tax relief not only to the landowner but also the builder/promoter, thereby decreasing their liability. This is also likely to help improve land transactions and bring in more supply of land into the property market that has been reeling under pressure for the last three years.

Land-pooling Mechanism

The budget announced that the new state capital of Andhra Pradesh is being constructed by an innovative land-pooling mechanism without the use of the Land Acquisition Act. It is a significant step in the light of the Land Acquisition Bill. Land acquisition remained a much-debated issue and a major hurdle with respect to large-scale developments and it was also affecting the affordable housing segment. The new land pooling mechanism may significantly reduce land related disputes and increase the speed of development. The exemption of capital gains tax will uplift the confidence of landowners whose land is being pooled for the creation of the capital city under the government scheme. However, the exemption is only limited to those who were the owners of such land as of June 2, 2014, the date on which the state of Andhra Pradesh was reorganized.

Finally, with all these initiatives of Government of India to give shelter to all by 2022, it is hoped there will be tremendous boost to GDP as the housing sector growth is directly related to around 265 other ancillary industries. India today has a huge demographic advantage in terms of the young population and it is of paramount importance that appropriate steps are taken to ensure that job creation keeps pace. Housing is a labor-intensive industry, with a long backward linkages tail, generating a large multiplier of economic activity in sectors while significantly aiding in job creation. This also plays very favorably with aspirations of India’s youth, and will help in the realization of the demographic dividend of this segment.

These measures encourage developers through several incentives, subsidies, tax benefits and most importantly, institutional funding and are thus likely to spur growth in the affordable housing segment in India. Affordable housing reflected a growth of 27 per cent between Januarys to September, 2017 (y-o-y) compared to an overall residential housing contraction of 33 per cent. That is possibly a result of the mission-mode implementation of the PMAY-HFA; affordable housing’s new found infrastructure status; as well as the much improved inflow of formal credit (NBFCs and banks) to the segment. Affordable housing finance is estimated to be a 6 lakh crore business opportunity by 2022, by when the Government seeks to achieve housing for all citizens. The Government has launched a number of initiatives to boost affordable housing across the country. Statistics show a sharp increase in loan disbursements and launching of new projects in the segment in 2016-17. The Credit linked subsidy scheme-proved to be quite effective in improving the affordability factor among the Economically Weaker Section.

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