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« NRIs Investing in Residential Projects | Home | Delhi Based Prime Group Launches Low Cost Housing Project in Lucknow »

ASSOCHAM Suggests Govt and Realty Cos to go for Low Cost Housing in Rural Areas

While the government was able to achieve 99% of the physical target of construction of houses between FY2000-01 to FY2006-07, the achievement rate fell to 51% in FY2007-08. As the real estate sector struggles with depressed demand due to global recession and high cost of borrowing, the ASSOCHAM has suggested the government and realty players to jointly undertake low cost housing projects in the rural areas where the shortage of houses is estimated more than 47.43 mn upto 2012. An ASSOCHAM report on Rural India has shown that central government has spent Rs.189898.56 crore for constructing 171 lakh houses under the ‘Indira Awaas Yojana” implying the cost per house comes as Rs.1,11,000.

However, the desired results under the Scheme have not been fully achieved as there is a problem of land availability, clearances by forest department, delay in release of funds and lack of basic amenities in the houses constructed. Resultantly, most of the houses remain abandoned. Releasing the report, Sajjan Jindal, President ASSOCHAM said that there is a huge backlog of house requirement which needs to be fulfilled and recommended that the Indira Awaas Yojana Scheme under the umbrella of ‘Bharta Nirman’ programme should be renovated for more effectiveness. There is a strong case for private sector participation to bring in the right technology for low cost houses reach to the masses, and ensure fast tracking of the project, further said Mr. Jindal.

The Indira Awaas Yojana was launched in 1980 as a cash subsidy based programme, under which assistance is provided to rural BPL families for constructing dwelling units on their own using their own design and technology. Engagement of contractors is prohibited and no specific design has been stipulated for an IAY house. The ratio of funding between the centre and state governments is 75:25. About 60 per cent of the funds provided under IAY are meant for SC and ST beneficiaries and the subsidy is sanctioned in the name of female member of the household or jointly in the names of both spouses. The present per unit assistance is Rs.25000 in plain areas and Rs.27,500 in hilly and difficult areas. The Government has raised unit assistance limits for an IAY house in plain areas to Rs.35000 (from previous Rs.25000) and in hilly/difficult areas to Rs.38,500 (from Rs. 27, 500).

According to data provided by the Ministry of Rural Development, since the inception of the scheme, 171 lakh houses have been constructed with an expenditure of Rs1898.98bn. Thus, the cost per house comes out to be Rs.1,11,000. While the government was able to achieve 99% of the physical target of construction of houses between FY2000-01 to FY2006-07, the achievement rate fell to 51% in FY2007-08. Number of houses constructed under the scheme fell to 10.9 lakh in FY2007-08, from average 15 lakh in preceding three years.

While the scheme has been showing satisfactory results in terms of physical target achievements, the program has been flouting on many respects. There has been the problem of delay in release of funds. Most of the houses lack on the essential aspects like smokeless chulhas and toilets. The Indira Awaas Yojana Scheme suffers from many issues such as unavailability of land. Land should be available in adequate quantity, which is not there in most of these rural places. There is also problem to get approvals from Forest Department of the government. There are huge tracts of land which are no more under forests cover, yet fall under the same in the records. This also leads to blocking of land, which can be utilized for useful purposes.

One of the major problems faced in the scheme is the rural folks are not willing to live in the houses constructed by the government under the scheme due to various reasons. The housing structures remain abandoned, sanitation is the big problem. The practice of selecting the beneficiaries for the Scheme by gram panchayats is not done on fair basis and lack transparency at ground level. Among the states, Bihar (4.21 million), Assam (2.24 mn), Andhra Pradesh (1.35 mn) and Uttar Pradesh (1.32 mn) face the maximum shortage of houses in the rural areas.

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