My government will establish a dedicated Affordable Housing Fund (AHF) in the National Housing Bank, funded from priority sector lending shortfall and fully serviced bonds authorised by the government of India- Finance Minister Arun Jaitley while presenting the Union Budget for 2018-19.
The Prime Minister’s ambitious vision of Housing for All by 2022 became clear as Finance Minister Arun Jaitley tabled the Union Budget 2018-19 on February 1. The government announced a dedicated affordable housing fund under the National Housing Bank (NHB) for priority sector lending. Further, 1 Crore houses will be built under the Pradhan Mantri Awas Yojana (PMAY) this year in rural areas.
Hailing the announcement, Khushru Jijina, Managing Director, Piramal Finance & Piramal Housing Finance says, “The government’s endeavour to provide housing to every poor citizen by 2020 through the establishment of a dedicated affordable housing fund in the NHB, along with priority sector status is a commendable one.”
“The government assuming ownership of NHB from the Reserve Bank of India may shift the focus of NHB from regulation to development,” opines Mayur Shah, Managing Director, Marathon Group and President CREDAI MCHI.
Earlier, about 1.2 crore houses were planned under PMAY (Rural). Out of which, 51 Lakh homes have been constructed in 2017-18, and the remaining homes will be constructed in the current fiscal.
While there was no rate cut in the goods and services tax (GST) in the budget, the government had already slashed the rate to 8% from the previous 12% for affordable housing.
The concessional GST rate is applicable for houses constructed under the credit-linked subsidy scheme (CLSS) for the economically weaker section, lower-income group, middle-income group-1, and middle-income group-2 under the Housing for All (Urban) Mission.
Commenting on the same, Khushru explains, “The reduction in the GST rate from 12% to 8% on affordable and low-cost housing units was a welcome reform. Building 31 Lakh homes in 2018-19 in urban areas and a further 51 lakh in rural areas will go a long way in addressing primary housing demand.”
With the budget now done and dusted, there are still certain issues that need to be addressed. These include further revisions in GST and stamp duty rates, and opening up vacant land parcels for affordable housing.
While GST has already been reduced for affordable housing, some relaxation for the entire sector would significantly boost market sentiment!