In a scathing critique of the Union budget 2017-18, India’s foremost urban development and housing expert Prof Amitabh Kundu has said that failure of the focus on affordable housing “worries him”. Pointing out that Arun Jaitley in his speech said this is “a major area of concern”, Kundu said, there is a failure to understand that “there are not many takers for loans” for affordable housing.
In an email alert to Counterview, Kundu said, “The poor are not coming forward to take the loan of Rs 3 lakh which the government has announced. They revised it from Rs 1 lakh to Rs 3 lakh generally and for the low income groups from Rs 2 lakh to Rs 6 lakh, but still not many people from those sections are coming in.”
The poor, he said, “cannot repay even monthly installments for the Rs 3 lakh loan; even though they pay only 2% interest and the government pays 5% of the amount, the installment still comes to Rs 1,800 to Rs 2,000 per month. The poor, who have a monthly income of Rs 6,000 per household, can't pay Rs 2,000 for a housing loan.”
Hinting that the aim appears to appease the middle classes, Kundu further said, “Modi has announced housing loans up to Rs 9 lakh will get a subsidy of 4% now, and loans up to Rs 12 lakh will get a subsidy of 3%. So, now that you have hiked the loan to Rs 12 lakh, you find the middle class grabbing this opportunity.”
Pointing out that this suggests, whole logic appears to be “absurd” and the Government of India’s “focus has changed”, Kundu said, it has “shifted from the poor to the housing sector. A lot of houses that are lying vacant, the middle class will go and buy those.”
“They will get Rs 1 lakh subsidy for it”, underlined Kundu, adding, “The poor can't even pay the installments for Rs 3 lakh loan. So, all these announcements – no tax for builders until the project is completed, capital gains tax exemption – it is all for the middle class and the upper middle class…The thrust in the PMAY on the poor is now diluted.”
Kundu further said, an option now opened up for a person from the middle class is to build a house for Rs 30 lakh after taking a Rs 12 lakh loan, on which he will get this subsidy, as he is “not barred from getting this subsidy.” He added, “You are helping the middle class buy those houses. It is totally the housing sector lobby that has prevailed.”
Pointing towards the shortage in housing for poor, as of today, is 20 million, Kundu – who headed the Technical Advisory Committee on Housing Start up Index at the RBI and the Committee to Estimate Shortage of Affordable Housing and as the Committee to Estimate Shortage of Affordable Housing, Government of India – said, as chairman of the housing committee, he knew, as many as 11 million houses were lying vacant.
“So more than 50% of the shortage is already available”, he said, adding, “All you have to do is to make sure that the vacant houses are brought to the market. Instead of doing that, you are facilitating the building of more vacant houses.”
Pointing out that the Housing Shortage Committee had estimated a shortage of 95% houses for the economically weaker sections and low income groups, Kundu said, “You can't have only 5% of the total housing expenditure coming from the public sector and 95% from the private sector if the target is low income groups and economically weaker sections.”