Housing left to stand on its own

Housing left to stand on its own
Business Standard, February 17, 2009, Page 4

Small hike in outlay for flagship housing scheme; nothing for urban housing

In spite of all the talk of helping the aam aadmi, the outlay under the Indira Aawas Yojana (IAY) for the rural poor in 2009-10 is more or less the same as in 2008-09 (revised estimate). While the central plan outlay in 2008-09 was Rs 7,919 crore, the amount budgeted for 2009-10 is Rs 7,920 crore.

Contrary to expectations, Finance Minister Pranab Mukherjee did not announce any sop for urban housing. The total outlay for rural housing in 2009-10 is estimated at Rs 8,800 crore, which includes Rs 880 crore for Sikkim and the North-East.

IYA is the flagship scheme of the central government and provides financial help for construction of dwelling units and upgrade of existing unserviceable houses for scheduled castes/scheduled tribes and non-scheduled castes/scheduled tribes rural families living below the poverty line.

The assistance provided under the scheme is Rs 35,000 per house in plain areas and Rs 38,500 in hilly or difficult areas. In addition, Rs 15,000 is provided for upgrades. Under the credit-cum-subsidy scheme, households with annual income of not more than Rs 32,000 are provided a subsidy of Rs 12,500.

After the two recent rounds of stimulus packages, real estate developers and bankers were expecting fresh measures to bolster demand. “It was a waste of opportunity for the government,” said Niranjan Hirandani, chairman of the Hirco group.

Fiscal incentives such as restoring Section 80(i) of the Income Tax Act for affordable housing that was withdrawn in 2007-08 would have helped create fresh demand and generated huge employment, he said, adding that nearly 1.5 million people in this sector had lost their jobs due to decline in demand. Real estate developers are facing a huge meltdown in demand for houses. The demand for commercial real estate has also fallen sharply.