With various taxes, both Central and State, accounting for nearly 36 per cent of overall property acquisition cost, builders' associations and national body Confederation of Real Estate Developers Associations of India have made out a case to reduce costs, to address the demand in the affordable housing segment.
“If taxes are reduced and reasonable support provided by State Governments in the form of concessions, it would be possible to offer affordable houses, at approximately Rs 1200 to Rs 1300 per square foot,” Mr C. Sekhar Reddy, Chairman and Managing Director of CSR Estates Ltd., and vice-president of CREDAI, said.
At a meet on Urban Infrastructure, Building Sustainable Cities for Tomorrow's India, Mr Reddy suggested some cap on overall tax imposts for the real estate sector, as there was duplication of some taxes. Thus, a rationalised taxation approach would augur well to encourage the growth of the affordable housing segment.
There is a great, unmet demand for this segment and a relaxation on Floor Space Index (FSI) norms would encourage developers. Most big builders are now looking to address the segment, earlier neglected because the focus was on catering to middle and high-income groups, he felt.
Referring to the Land Acquisition Bill and its provisions relating to mandatorily earmarking approximately 20 per cent of the townships for housing for those displaced, he felt the idea was good but implementation was difficult. This would be the single biggest hurdle for its implementation.
With the Greater Hyderabad Municipal Corporation (GHMC) firming up a Master Plan factoring in long-term development, a policy guideline for integrated townships would encourage developers to take up affordable housing projects along with some other similar ventures. He felt that a green channel approach to project clearances would be mutually beneficial and reduce clearance time.
PPP ISSUES
While the public-private partnership (PPP) model is good to take up various developmental projects in urban areas, there is relatively less transparency in the way these are taken up. Therefore, the builders' community is of the view that it needs to be fine-tuned, so as to attract investments from private sector players.
Managing Director of NCC Urban, Mr Narayana Raju Alluri, felt there was a need for an enabling environment for private financing of infrastructure projects — be it roads, waste management or some other area which requires funding.
“Since consumers are often unexposed to superior quality services, they are unwilling to absorb the pricing implications of superior service delivery. Infrastructure projects requiring long-term finances are generally not in line with the tenures available from lenders due to asset-liability mismatches,” Mr Alluri felt.
“Pension funds and some other such long-term financiers would be relevant in the Indian context. The Government's intention to establish a new category of finance companies — Infrastructure Finance Non-Banking Finance Companies, with a specific focus on financing the infrastructure sector — would help boost funding,” he felt.
Mr Busi Bob, Principal Secretary, Municipal Administration and Urban Development, Government of Andhra Pradesh, said a major challenge for Hyderabad in its expansion is the rapid growth of the city, whose boundaries have expanded significantly and the urban areas are getting overcrowded.
MASTER PLANS
He felt the master plans for cities must be made more transparent to address the issues confronting all the stakeholders. The HMDA (Hyderabad Metropolitan Development Authority) Master Plan covers five districts and seeks changes in the way people interact with Government agencies — be it for clearances or for information. The accent is on simplification of procedures and access to information.
Through public display, it seeks to encourage people to make the best use of its provisions. A highlight of the process is to bring transparency to help citizens buy the right property and ensure it was not an unauthorised construction.
A challenge for the Government is providing services with scarce resources. Mr Bob, expressing the Government perspective, felt municipalities must enhance their resources and cannot depend only on property tax, which, in most cases, was either unassessed or under-assessed. There are approximately 150 municipalities in the State and a strategy must be adopted to ensure the collection of property taxes in a systematic manner.
The government is contemplating a single-window clearance for infrastructure projects in urban areas.