Housing sector likely to get infrastructure status
New Delhi- Housing sector is likely to gain infrastructure status with the upcoming Budget. This will boost the sector by providing easy access to funds and consequently increasing the availability of houses.
Infrastructure status for the housing is a long pending demand. In 2012, the Ministry of Housing and Urban Poverty Alleviation (MHUPA) pushed for such a status last year but it was not successful. However, this year it seems that the decision will be favourable.
In March 2012, the government had approved the harmonised list of infrastructure sector and it included five categories-
a. Transport
b. Energy
c. Water and sanitation
d. Communication
e. Social and commercial infrastructure
Under these categories, there are 28 sub-sectors. The Cabinet Committee on Infrastructure also set terms for inclusion of new sub-sectors.
According to that decision, new sub-sectors proposed by a particular agency could be included only when the six characteristics of infrastructure are applicable. The six categories are – natural monopoly, high sunk costs and asset specificity, non-tradability of output, lack of alternative choices in consumption, possibility of price exclusion, and presence of externalities.
Along with the six categories, the sub-sectors has to meet one or more of these three parameters which are-
1) Its importance to the scheme of economic development
2) Its ability to contribute to human capital and
3) The specific circumstances under which it has developed in India
National Real Estate Development Council (NAREDCO) said that, till 1999, housing was a part of infrastructure. The Council claimed that World Bank too treats housing as part of infrastructure.
Naredco added that developing colonies or township projects involve creation of physical and social infrastructure. These include laying roads, water and electricity network, sewage treatment and disposal, waste treatment and disposal, drainage, rain water harvesting, educational facilities, and many others are all a part of infrastructure.
According to a recent report of the technical group on ‘Urban Housing Shortage’, in 2012, there was a housing shortage of 18.78 million units and major shortfall of supply was in the Economically Weaker Section (10.55 million units), followed by Lower Income Group (7.41 million).
While the government cannot overcome the shortage of supply, private developers are not finding it viable due to high cost of land and high interest rates. Another reason is that the buyers from these sections lack purchasing power.
However, it is believed that infrastructure status for housing will increase the flow of funds to the sector and this would encourage developers to come up with more affordable housing projects in India, therefore creating a balance in the demand and supply for housing.
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Cabinet Committee on Infrastructure, Economically Weaker Section, housing projects in India, Housing sector, Infrastructure status, Lower income group, Ministry of Housing and Urban Poverty Alleviation, Naredco, National Real Estate Development Council, New Delhi, Townships, urban housing shortage
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