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29 Jul, 2013

India Pledges More Policy Stimulus for Real Estate Sector


Ministry of Housing and Urban Poverty Alleviation, 27-July, 2013 – Dr Girija Vyas, Minister for Housing & Urban Poverty Alleviation has stated that the Government will continue to play a pioneering role in providing policy stimulus to real estate sector.

She was delivering a keynote address on theme of “Reality Favours the Brave – Surviving Against All Odds” at the 13th National Convention of of Confederation of Real Estate Developers’ Associations of India (CREDAI) at Moscow today.

Giving the growth story of the real estate sector in India, she said “The construction industry is the second largest industry of the country after agriculture accounting for 11 percent of India’s GDP. Indian construction industry employs 32 million people and its total market size is estimated at Rs. 2480 billion (USD 42 billion). The Indian Real Estate sector is a Rs 2659 billion (USD 45 billion) industry by revenue and the second largest employing sector linked to about 250 ancillary industries like cement, brick and steel through backward and forward linkages. Since 2001, the industry has graduated from a low to high growth phase and now reaching a consolidation phase where demand, supply and prices are moving up keeping pace with the economy.”

Exhorting the realty sector to come forward to supplement the Government’s efforts, she said “We solicit the reality sector to be brave as the topic suggests and come forward and participate through capital and technology for up-gradation and creation of affordable stock and helping the government build an inclusive India.”

Referring to the huge requirement of investment, Dr Vyas said “The Investment required for up-gradation and creation of new affordable housing stock as envisaged by the various schemes and programmes of my Ministry and Government of India would be huge.”

Highlighting the major initiatives of the Ministry of Housing & Urban Poverty Alleviation for providing affordable housing for urban poor, Dr Vyas said “The Jawaharlal Nehru National Urban Renewal Mission (JNNURM) is one of the flagship schemes, which was a fast track reform driven investment programme aimed at creating economically productive, efficient, equitable, responsive and inclusive cities. A third of Jawaharlal Nehru National Urban Renewal Mission (JNNURM) finances have been dedicated to provision of basic services and affordable housing for the urban poor through sub-missions like the Basic Services for the Urban Poor (BSUP) and Integrated Housing & Slum Development Programme (IHSDP). Since, its launch in 2005, 1.6 million housing units for the urban poor has been sanctioned throughout the country with expected approximate flow of Rs 420 billion to social housing, city infrastructure and basic services.”

Speaking about recently launched programme Rajiv Awas Yojana (RAY), the Minister said “it envisages a ‘Slum free India’ with inclusive, equitable cities and where every citizen has an access to basic social and civic services, stronger livelihood linkages and decent shelter.” This programme envisages Central Government support for slum development and creation of affordable housing. Under this Affordable Housing in Patrnership Scheme (AHP) and the Interest Subsidy Scheme for Housing the Urban Poor (ISHUP) now called Rajiv Rinn Yojana (RRY) dovetailed with RAY with a view to improve the supply side and demand side incentives for affordable housing for the urban poor.

Under RAY, RRY and AHP, Government will support establishment of 2.5 million housing units, Dr Vyas stated. She said the revised AHP is being launched to encourage State concessions and the creation of Affordable housing stock for construction of half a million houses for Economically Weaker Section / Lower Income Group segments. The Scheme offers several supply side as well as demand side incentives.

On regulatory issues, Dr Vyas stated that the Real Estate (Regulation & Development) Bill, 2013 has been approved by the Cabinet and is proposed to be introduced in the Parliament in the monsoon session. She further stated that this is pioneering legislation, which shall instill standardization and professionalism in the sector and hence catalyze domestic and foreign investments. She stated that during 2007 to 2012, housing shortfall has declined from 24.8 million to 18.7 million a 25% reduction.

The Minister hoped that during the deliberations in the convention, the experts from countries such as the UK, US, Middle East, Africa and Asia will share not only their experiences of dealing with market adversity, but also learning’s, best practices and advice on how to raise capital in challenging times and explore the alternative means of raising capital and funding methods. The best practices, processes and technologies shared by the experts will find inroads in the Indian market as well.