The State government, which plans to construct one lakh houses for the poor in Bengaluru, has decided to drop the revenue-sharing model involving private developer and instead take up the project with internal funding.
- One lakh multistorey housing flats for economically weaker sections of Bengaluru city
- Dwellings will be in ground+three storeys
- Each unit will be a two BHK in 30 sq. m
- About 1,200 acres of government land identified
- Rajiv Gandhi Rural Housing Corporation Ltd. to be the nodal agency
- Land to be transferred from the Revenue Department to the corporation for free
- Beneficiaries to be identified through lottery
- The last date for applying online is January 5
The change of plan for funding, a senior official in the government said, came after the Chief Minister’s office developed cold feet over involving private developers to construct houses, which could put the project on a sticky wicket if deadlines are not met. However, instead of going back to the Cabinet to modify the proposal, it is going ahead with the ₹5,500-crore to ₹6,000-crore project without the involvement of private developers, sources said.
The online application process for the houses started last week. The project is being subsidised through three existing housing schemes — Pradhan Mantri Awas Yojana of the Union government, and Ambedkar and Vajapayee schemes of State government — that would cover more than 50% of the house cost for SC/ST applicants and more than 25% of the cost for general category applicants. While a small portion of the cost would be borne by the beneficiary, the revenue-sharing model was meant to bridge the funding gap.
As per the plan, the government was to auction 40% of the land to raise money to fund the revenue gap if construction is taken up by the Rajiv Gandhi Rural Housing Corporation. In case where development of houses is taken up by a private developer under the PPP model, 40% of the land could be used by the developer.
‘Kept in abeyance’
This funding pattern has been “kept in abeyance”, as an official put it, and the project will be restricted to construction of apartments only. The project involves construction of two BHK units in 30 sq. m area that would cost the government between ₹5.5 lakh and ₹6 lakh. About 1,200 acres of land in several locations across the city has been earmarked for construction.
Sources said the with dropping of the revenue-sharing model, increased cost to the exchequer is expected to be ₹1,500 crore.
“The revenue-sharing model that we had proposed is part of the Union government’s model policy to implement urban affordable housing scheme. However, having received much opposition to the revenue-sharing model, we decided to drop it for now,” a Housing Department official said.
“The government will fund the project and we have worked out the funding part. We have funds,” he added.
Sources in the government told The Hindu that not involving private developers in the project was a “good move” since there were more likely chances of delay in project execution by the private partner. “Initial plan for the project was to develop plots and auction them on the lines of the BDA. Average cost realisation of the plots had been worked to be around ₹2,000 per sq. ft, which would bring adequate funds and the land would remain with the government.”
On the PPP model, sources said, “We already have some important chunks of land in Bengaluru locked up in PPP model without making any progress. If the developer does not develop the land and construct houses, it could lead to unending delay and a possible scam. The government may neither have houses to distribute nor land for any future development.” Without a private player involved, even if the project is not completed, the land parcel will remain with the government, sources argued.
When asked if developers would be interested to participate in the project, especially in an election year, a Housing Department official said, “We see no problem. Contractors will come forward for construction of houses since the government will be paying them.” Meanwhile, the official said the government had approved ₹500 crore as working capital to start the project, and the amount would come through as loan from financial institutions through a government guarantee.
Tenders likely to be floated next week
The floating of tenders for selection of contractor, an official in the Housing Department said, was expected to commence from next week as design and technical evaluation of locations have been completed.
The official said the selection and award of work order would be issued in five to six weeks. Though the design of the apartments is ready, sources said the tender would be technology neutral. “We do not want to fix the technology in the tender process. We will evaluate what contractors have to offer.”
How does the calculation work?
The government estimates that the overall financial gap is about ₹3.1 lakh for each SC/ST beneficiary and about ₹4.9 lakh for general category beneficiary.
According to calculations, the financial gap for construction of EWS houses of 30 sq. m ranges from about ₹1.8 lakh to about ₹2.7 lakh for SC/ST beneficiaries while the financial gap for non-SC/ST beneficiaries is about ₹3.5 lakh to ₹4.5 lakh. Apart from this, additional cost of about ₹40 lakh has to be incurred per acre for development of basic infrastructure, including common roads, drains, and external electrification. Government’s calculation is that in the ground-plus-three-floors model, about 100 dwelling units could be constructed on an acre and overhead infrastructure cost per dwelling would work out to about ₹40,000.
The government planned to generate cross-subsidisation fund from auction of house/plots or multistorey plot (to be developed in 40% land) of about ₹1.6 lakh for SC/ST beneficiary and about ₹1.5 lakh for non-SC/ST beneficiary.