Centre, Plan panel differ over Rajiv Awas Yojana funding
The Financial Express, December 17, 2009, Page 20
Kakoly Chatterjee, New Delhi
The housing ministry has worked out the cost of its flagship programme to make India slumfree—Rajiv Awas Yojana (RAY)—at Rs 9,00,000 crore over a period of 10 years. However, the Centre and the Planning Commission currently differ over the funding that the Centre should provide.
While the ministry wants the Centre to contribute Rs 1,50,000 crore, the Planning Commission wants the amount to be lower. The Planning Commission wants states and private parties’ contribution to increase further and reduce the Centre’s contribution.
The housing ministry, however, feels that the Centre would need to make substantial contribution to spur investment from the states and private partners for RAY. “If there is not enough funding from the Centre then neither the private sector nor the state will be motivated to invest in the project,” an official from the housing ministry explained.
In metros and tier I cities it is easier to attract investments from private developers as real estate is a rare and expensive commodity. After providing for dwelling units to the slum dwellers at nominal costs the private developers in the bigger cities can develop residential and commercial complexes where they can earn profits.
But in case of smaller towns cross subsidisation may not work because it may not be as profitable to develop commercial and residential spaces. In smaller cities where developing real estate is not such a profitable proposition for private developers, they will not show any interest unless the government makes it attractive for them by pumping in a considerable amount.
The state governments are also contributing majorly for this slum clearing project as they are giving property rights to the slum dwellers because land is a state subject. In the absence of major incentive from the Centre, the housing ministry fears that this project may not take off.
In order to make the slum free India scheme successful the states will also relax floor space index wherever possible. The Centre will not only give capital subsidy but also interest subsidy for RAY projects.
In order to make RAY more workable the Centre would provide viability gap funding of up to 40%. While in most cases it is expected to be in situ development if the private developer comes with the parcel of land the centre will develop the infrastructure.
The Centre wants the states to release more land for affordable housing and modify town plan layout so that it caters to the need of the weaker section as well.
The Financial Express, December 17, 2009, Page 20
Kakoly Chatterjee, New Delhi
The housing ministry has worked out the cost of its flagship programme to make India slumfree—Rajiv Awas Yojana (RAY)—at Rs 9,00,000 crore over a period of 10 years. However, the Centre and the Planning Commission currently differ over the funding that the Centre should provide.
While the ministry wants the Centre to contribute Rs 1,50,000 crore, the Planning Commission wants the amount to be lower. The Planning Commission wants states and private parties’ contribution to increase further and reduce the Centre’s contribution.
The housing ministry, however, feels that the Centre would need to make substantial contribution to spur investment from the states and private partners for RAY. “If there is not enough funding from the Centre then neither the private sector nor the state will be motivated to invest in the project,” an official from the housing ministry explained.
In metros and tier I cities it is easier to attract investments from private developers as real estate is a rare and expensive commodity. After providing for dwelling units to the slum dwellers at nominal costs the private developers in the bigger cities can develop residential and commercial complexes where they can earn profits.
But in case of smaller towns cross subsidisation may not work because it may not be as profitable to develop commercial and residential spaces. In smaller cities where developing real estate is not such a profitable proposition for private developers, they will not show any interest unless the government makes it attractive for them by pumping in a considerable amount.
The state governments are also contributing majorly for this slum clearing project as they are giving property rights to the slum dwellers because land is a state subject. In the absence of major incentive from the Centre, the housing ministry fears that this project may not take off.
In order to make the slum free India scheme successful the states will also relax floor space index wherever possible. The Centre will not only give capital subsidy but also interest subsidy for RAY projects.
In order to make RAY more workable the Centre would provide viability gap funding of up to 40%. While in most cases it is expected to be in situ development if the private developer comes with the parcel of land the centre will develop the infrastructure.
The Centre wants the states to release more land for affordable housing and modify town plan layout so that it caters to the need of the weaker section as well.
Posts
No comments:
Post a Comment