The recent stirrings in India have created an air of unease. This year, several countries across advanced and emerging market economies have witnessed mass demonstrations. The reasons for such protests differ from country to country, though the triggers inevitably are mass perceptions of unfavourable social, political or economic conditions. Yet, an underlying commonality of such demonstrations is the collective voice of the common man who feels aggrieved and disillusioned about the future of his or her everyday life.
As the world’s largest democracy raises its voice and spills on to the streets, the message is clear – India’s democratic values are sacrosanct and its civil liberties must be upheld. World scrutiny on India has intensified. One hopes that the powers that be will be able to gently assuage concerns of the aam admi.
2019 has been particularly challenging for the Indian economy. While various measures have been taken to arrest the slowdown, there are still many hurdles. It is easy to get caught up in a vortex of gloom and be armchair critics. Alternatively, a more consultative and collaborative approach between policy makers and India Inc can go a long way. Sceptics may ask – does this actually work? With tangible results now in hand, one can confidently say that this approach has worked well in endeavours towards affordable housing. Clearly, there are silver linings which deserve to be highlighted.
The merits of building a property owning democracy are well known. As India increasingly urbanises, affordable housing becomes the bridge to create inclusive cities. For any household, home ownership is the path towards empowerment, better livelihoods and social security. India is amongst the few countries where fiscal incentives are given for both, the principal and interest component of a home loan.
‘Housing for All’ has rightly remained a key focus area of the government. To the credit of the ministry of housing and urban affairs, this programme has been approached with a missionary zeal. The Pradhan Mantri Awas Yojana (Urban) was launched in June 2015 with the objective of providing pucca housing to eligible beneficiaries in urban areas. By December 2019, a cumulative 1.03 crore homes have been sanctioned under the PMAY(U). Of the homes sanctioned, 60 lakh units are grounded and 32 lakh are completed. This is indeed a laudable achievement.
The PMAY comprises four components: in-situ slum redevelopment; credit linked subsidy scheme; affordable housing in partnership; and beneficiaryled individual house construction. The funding is a combination of beneficiary contributions and central and state assistance.
The credit linked subsidy scheme (CLSS) stands out because of its wide coverage, which not only focusses on the economically weaker section and low income group, but also seeks to fulfil the aspirations of homeownership of the middle income groups with household incomes ranging between Rs 6 lakh to Rs 18 lakh per annum. Under CLSS, eligible first-time homebuyers are provided an interest subsidy on the home loan which is paid upfront to the beneficiary, thereby reducing the amount of the equated monthly instalment. In effect, CLSS offers homebuyers a helping hand at the beginning of the home loan, thereby enabling a person to become a homeowner earlier in life.
The success of CLSS is evident from the fact that there are over 300 primary lending institutions (PLIs) promoting this mission. The true test of a well-functioning subsidy scheme is its design, implementation and most importantly, the checks and balances to ensure that the funds reach the intended beneficiaries. The CLSS has been a collective effort of the housing ministry, National Housing Bank and PLIs. Home loans of Rs 1.2 lakh crore to 8.2 lakh CLSS beneficiaries have been disbursed, with a cumulative subsidy of Rs 18,500 crore.
To ensure a smooth, integrated mechanism of all the stakeholders under the CLSS, the housing ministry has launched a web based real time monitoring system called Credit Linked Awas Portal (CLAP). This IT platform enables the processing of an individual’s application, verification and release of the subsidy. The portal brings in transparency, provides timely information on the status of the subsidy and consequently reduces customer grievances.
CLSS is a standout example of a subsidy scheme that has since inception been open to feedback from lending institutions and customers, whilst the government has willingly made amendments so as to increase the scheme’s reach and effectiveness.
One critical aspect that now must be prioritised is putting in place an online, single window clearance mechanism for building approvals – at least for affordable housing. This will cut down timelines and costs during the construction phase and eliminate payment of speed money, which unfortunately is still a reality. Integrating requisite approvals will also ensure elimination of unnecessary ones.
For instance, despite the Urban Land (Ceiling and Regulation) Act being repealed in Maharashtra in 2007, for some absurd reason, there still exists an urban land ceiling department at the Brihanmumbai Municipal Corporation which grants no-objection certificates! It is true that adoption of technology is a great leveller and a decisive move towards an online single window clearance for building approvals will be a game changer.
India’s future can be best harnessed if corporate India and the government work more closely together. We need to showcase examples of collaborative successes, rather than just bemoan the state of the economy. India has many silver linings and perhaps what we need now is collective grit and gumption for the dark clouds to pass by.
The writer is chairperson of Housing Development Finance Corporation (HDFC)