There are those pundits who say, not without justification, that affordable housing are two contradictory terms.
The economics of housing is such that it can never be affordable. That is a point to ponder. Someone, for instance, forgot to read the fine print in the Union Budget 2019, when it came to the affordable housing sector. The sector that received a big leg up in the Budget in the form of personal tax exemption, did a double take. Reason? The Budget has made it mandatory for developers to ensure that each flat sold in their projects marked for affordable housing would fall within a range of less than Rs 45 lakh.
One flat sold above this threshold and the developer would lose the 35% income-tax benefit they enjoy on the project! This fine print in the Budget has put builders in a fix over whether to develop affordable projects under the Pradhan Mantri Awas Yojana (PMAY) or not.
They say it may not be feasible for them to comply with the stipulation when the project is nearing completion. There are too many loose ends. The rub lies in not having a set definition of lost-cost housing. For instance, the definition can be about compact homes with minimum amenities built on low-cost land, or small configuration homes in larger townships, where homebuyers have the luxury to reap the benefits of bigger socio-civic amenities on offer.
Interestingly, before this Budget, the definition of affordable housing set by the central government was 30 sq m dwelling in the four metropolises and 60 sq m across the rest of the country. That has changed. While it is true the Modi government has taken significant steps for making housing available to as many people as possible, inflation linked to rising cost of raw material makes affordable housing a daunting proposition, at least for the sellers.