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Housing: Still a dream for millions!

Jul 12, 2001

The Constitution of India includes the right to live and have a livelihood as a fundamental right and the directive principal of the state policy makes it an obligation on the state to facilitate housing. However, more than half of the Indian population is without a house of its own. The unfulfilled housing demand in India is currently about 40 million units and i.e. expected to increase to over 50 million by the end of year 2001.

Planning commission has realised the importance of housing towards the contribution of economic development and we have seen a more focused government initiative over the last couple of years. This has been in the form of various tax sops to the sector, but there still remains a lot to be done in this direction. These sops are mainly targeted at the end user (consumers) and if government gives some sops to the supplier (builders), it will further boost the feel good sentiment of the sector.

Housing demand is a universal problem. It is one of the three prime necessities of life - food, clothing and shelter (roti kapada aur makaan). Food and clothing requirements have been satisfied to some extent, because the cost is relatively low. But housing demand still remains unfulfilled. This is mainly because of shortage of funds and inadequacy of financial institutions, coupled with an increase in material, labour and real estate costs.

In order to address this fundamental problem ailing the housing sector, there is a need to crate more awareness about housing-linked saving schemes among investors. This will help the sector to meet their fund requirement. There is also need for an efficient legal framework for foreclosure of loans, securitisation of mortgage debts secondary mortgages markets, variable rate mortgages and such innovative housing credit schemes.

Realising the fact that housing has maximum propensity to generate income and demand for materials, equipment and services, the Reserve Bank of India has put housing finance on priority core sector lending.

A positive development over the last couple of years has been housing finance companies taking increasing interest in the business. Private sector, semi-government and nationalised banks are vying with each other for a larger pie of the housing finance sector. Housing finance companies are trying their best to innovate by introducing attractive schemes. With interest rates also at lower levels, housing finance companies are able to offer loans at low rates, which is good thing for consumers as well. Now could be the chance for many to fulfill their housing dream.

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