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BUDGET Push for Affordable Housing

BUDGET Push for Affordable Housing

Genuine beneficiaries and end users are now getting their dwelling units under the government’s programme ‘Housing for all by 2022’.
If excess government held land is freed up for this purpose and the private sector is involved in the government’s agenda through incentives, success is assured —Ankit Sharma

In her recent Union Budget 2019-20 speech, finance minister, Nirmala Sitharaman, said as part of its efforts to achieve ‘Housing for all by 2022’, the government has proposed to provide an additional 1.95 crore houses to beneficiaries under the second phase of the Pradhan Mantri Awas Yojna (PMAY) between 2020 and 2022.

The Modi 1 government has already provided 1.54 crore houses to beneficiaries under the first phase of the PMAY.

Under PMAY (Urban), the government has given financial assistance worth more than Rs 4.83 lakh crore for the construction of 81 lakh houses. Of these, over 24 lakh houses have already been allotted to beneficiaries. Due to upgraded technology, construction of houses is now taking just 114 days against 314 days earlier, Sitharaman said.

The government’s PMAY (Urban) launched in 2015 aims at delivering a crore housing in urban areas by 2022 enabling ‘Housing for all’ through insitu slum redevelopment, credit-linked subsidy schemes, public-private partnerships, and beneficiary subsidization.

While the government is already pushing for increasing the supply of affordable housing in the country, private sector continues to shy away from being a part of the effort that aims to reduce the housing shortage in the country.

As per recent data from Anarock Property Consultants, of the total 1,39,490 units launched across the Top 7 cities in the first half of 2019, only 39,840 units fall within the government-defined affordable category criteria (60 square metres carpet areas and priced below Rs 45 lakh). This is only 29% of the total housing supply in the first six months of the year, the data said.


Hence, there is a stronger need for the private sector to align their efforts with the housing supply goals of the government.

“The government’s recent Budget ‘bonanza’ of an additional Rs 1.5 lakh tax deduction on interest repayment of home loans availed till March 2020 will benefit very few people in urban India,” Anuj Puri, chairman of Anarock Property Consultants, said.


The government, until now, has kept affordable housing high on its reforms agenda. Carrying forward from the previous term, it has announced and implemented various policies and programmes to build the much-needed supply momentum in the country.

Factors such as setting up of an Affordable Housing Fund announced in Union Budget 2018-19, tax incentives including the one offered to first-time homebuyers, 100% tax exemption under the Section 80IB to developers building affordable housing projects, and GST rationalization for affordable housing projects, have bolstered sentiments across the market.

To help buyers in the affordable and mid-housing segments, an additional exemption of Rs 1.5 lakh on interest paid on housing loan, over and above the existing Rs 2 lakh, has been provided for properties up to Rs 45 lakh.

“Considering that a majority of homebuyers fall in the lower and mid-income segments, this tax benefit will boost demand substantially. This will significantly benefit first-time homebuyers who will enjoy the benefits of interest subvention under the CLSS scheme and the announced tax benefits. With effective interest rate coming down, it will increase the eligibility for the mid-income housing segments,” Ramesh Nair, CEO and Country Head of JLL India, said.

“The government’s idea to provide affordable housing will be a possibility and is highly successful in almost all the cities except Mumbai, where there is paucity of land. I believe that the additional incentive of Rs 1.5 lakh on interest on loans borrowed under the affordable housing would give a boost to the real estate sector,” Niranjan Hiranandani, president of Naredco and MD of Hiranandani Group, said.


One of the biggest worries of the sector, experts say, is the non-availability of land. Because of the scarcity of land at affordable rates, developers are unable to enter such projects and shy away from taking them up.

In a bid to improve supply, Budget 2019 proposed to open up land parcels of government and PSUs to be utilised for affordable housing and public infrastructure. “This measure, if implemented, would support builders to enter the segment and earn profit too,” Nair said.

“The infusion of low-cost land will also help curtail property prices,” Puri says.

There is also a disconnect between what developers are building and what is required. This is owing to a lack of clarity on the definition of the affordable housing. “Multiple definitions and schemes of affordable housing are being operated by central and state governments and the provisions or definitions under such schemes are not consistent, causing confusion… which is not providing the necessary boost to affordable housing,” Satish Magar, president of Credai said in his Union Budget expectations.