Difficulty in getting timely permissions and lack of incentives are the key reasons why affordable housing is not taking off in the country, according to Vijay Wadhwa, chairman of Mumbai-based The Wadhwa Group.
The company with about 47 years of experience in real estate is developing about 15 million square feet presently in the commercial and residential space in the city. The company is also planning to launch an affordable housing project in Panvel, Navi Mumbai, in which it investment is estiamtes to be around Rs 700 crore.
Wadhwa in a interview to Firstpost said that getting permissions continue to be a big hurdle despite the government expressing its intention to ease up processes.
"Our Panvel project has been there for the last eight years. We are waiting in the line for permissions. We got the consent from the chief minister four years back. It should be under priority sector. After working, we got water connection, water line permission, electric permission. Because permission from Cidco has not come, all those permissions are lapsing. Now, again we have to start again from zero," he said.
Meanwhile, the interest amount on the debt, taken at high rates ranging from 14-18 percent from various sources, is rising, he said explaining the difficulties the builder is facing in completing the project.
According to him, half of his office is running from pillar to post to get approvals from various government departments. He laments that he doesn't get time to concentrate on his core competence - innovating and planning.
"My expertise of planning, innovating, thinking something new has stopped. I am only monitoring whether we got the permission today or not," he laments.
He, however, doesn't blame the government entirely for the mess. "The government wants to ease up the processes. But down the line, it is not percolating. The officials think that they are obliging us by giving us the approvals," he said.
Secondly, he also points to the lack of incentives for entering segment.
"There is no incentive for allotment of land for affordable housing. Unless land is available cheap, unless cost of construction is within the budget, premiums are practical, how can we deliver affordable housing? The only thing is that we are compelled to go on cutting the size of the houses," he says.
He offers solutions also for the problems the sector faces. For one, the government should give permissions on tatkal basis.
"Don't give us land, give us permissions on tatkal basis," he says.
He also feels the developers and architects should be allowed to certify their own projects.
"If the income tax department, who owns the exchequer of our country, is allowing us to certify out own returns, why can't the architects and the developers not certify their own plans? Let them certify their own plans that they are as per the law and then start the work. If the government feels there is some problem, they can tell us in the due process of time. And if any builder does anything wrong he should be penalised," he argues.
He says the builders are not looking for big margins in such projects, "but at least we should be able to make our two ends meet."
"I think the government should start giving faster approval, not land. The more approval they give, the more supply in the market. This will bring down the prices automatically."
Secondly, he wants SEZ status for affordable housing. "In SEZ, the units get tax benefits. If you get tax benefit, you can pass it on to the purchaser. In afforbale, my building material is same price, cement is same price. We can reduce the size and then we can say we are making affordable," he says.
Watch the entire interview above.
(The article has been updated with corrections.)
Published Date: Sep 16, 2016 08:09 am | Updated Date: Sep 16, 2016 05:09 pm