Authored by Dr Niranjan Hirananadani, President – NAREDCO
MUMBAI/ NEW DELHI, 14 MAY 2020: The second tranche of India’s economic stimulus were announced today which majorly included relief announced for migrant workers, street vendors, and small farmers.
The key take away for real estate on Day 2 of the announcements regarding coronavirus relief package were manly Extension of the Credit-Linked Subsidy Scheme (CLSS) till March 2021 and introduction of rental housing scheme for urban poor and migrant labor in cities under PMAY.
The extension of CLSS should see demand for another 2.5 lakh affordable homes which in turn should create demand for construction material as also provides jobs. The rental housing scheme under PMAY offers a business opportunity to the private sector, to build more rental housing stock through the PPP mode, with a concessionaire arrangement.
The Finance Minister focused on moves that will improve working conditions, making life easier and more conducive for workers. Most of these were largely through changes in codes, rules and regulations; rather than direct liquidity, monetary or fiscal help.
The Credit Linked Subsidy Scheme (CLSS), which has benefited 3.3
lakh families till now, has been extended up to March, 2021. Other category of LIG/ EWS however will continues up to March 2022. Estimated to benefit another 2.5 lakh families, the scheme aims at providing benefits that will enable housing for the lowest strata of middle-income groups (MIG I and MIG II category income of up to 6-18 lakh/annum).
MIG I group people with income from Rs. 6 lakhs to Rs. 12 lakhs continues to get an interest subsidy of 4 percent and MIG II category with income slab of Rs 12 to Rs 18 lacs will get interest subvention of 3 percent. This interest subvention support extend will spur up the potential demand of housing units resulting to cumulative demand for construction services, building materials, finally translating into the job creation.
The Finance Minister mentioned a scheme that seeks to provide affordable rental housing for urban poor. The Indian Government will launch, under Prime Minister Awaas Yojana (PMAY), a rental housing scheme which will aim to provide affordable rental homes to urban poor and migrant labor in urban areas. The scheme includes incentivizing manufacturing units/ factories to build such rental homes on their private land/ within their compounds.
The scheme includes usage of empty government land to build more rental
housing stock through the PPP mode, with a concessionaire arrangement similar to toll being charged by organizations building highways. The other aspect is to convert government-funded housing in major cities to affordable rental housing.
The scheme is a positive move for the migrant labor as well as urban poor. There is a scope of some business opportunities under PP mode as also enhanced demand for construction material with the 2.5 lakh homes under CLSS. However, the real estate as an industry, awaits its turn to get
stimulus package measures that will create a positive impact.