To give boost to the affordable housing, the Union Ministry of Housing has decided to ask the Finance Ministry to give infrastructure status to the segment in the upcoming Budget.
"In order to create more affordable housing stock, we have decided to ask the Finance Ministry to give infrastructure status to affordable housing segment in this Budget," Union Minister for Housing and Poverty Alleviation Ajay Maken said on the sidelines of a Confederation of Indian Industry (CII) event.
"The infrastructure status will help banks get access to bank loans easily," Maken said. "The Finance Ministry has sent the proposal to the Reserve Bank of India (RBI) for consideration."
Currently, since housing falls in the ambit of commercial real estate, if a project fails to be operational within two years after the commercial operation date, banks have to classify the project as non-performing.
"Since these projects have to be declared NPAs, banks do not come forward to lend to developers. If infrastructure status cannot be provided to the entire housing sector, we expect at least the affordable segment to be declared infra status. This will enable developers to easily get access to loans," he said.
There was also a need to relax population density and FSI norms for creating housing stock , he added.
"Urbanisation is inevitable and people are going to come to urban areas for jobs. If they are not provided with housing, illegal settlement will also be inevitable. Therefore it is necessary to relax these norms," he said.
This will also help in meeting the 18.78 million housing shortage for LIG and the EWS segments.
"Today there is a situation where 11 per cent of housing for HIG and MIG segments is lying vacant. But at the same time, there is a shortage of 18.78 million affordable housing stock. If relaxation of these norms is implemented, we will be able to reduce the shortage. Also, if there is shortage of land, going vertical is inevitable," he said.
However, relaxation of such norms was a state subject and that the central government cannot give any directions for its implementation, he said.