Affordable urban housing

Investments in real estate have a multiplier effect on income and employment. A HUDCO-IIM Ahmedabad study estimates that every rupee invested in this sector adds 78 paisa to the state's GDE.

The study estimates that for every direct job created in the housing industry, eight jobs are created indirectly as Indian real estate sector is on a high growth trajectory. And according to global consultancy firm, Merrill Lynch, the sector will grow from $12 billion in 2005 to $90 billion by 2015.

Much of the growth will come from the housing market. Despite the good news that the average home ownership age has come down from 45 years in the 1980s to 32 years now, India's realty sector is still dominated by the unorganised and fly-by-night players. Very few corporates and large players have a national presence.

It is well known that rising middle class salaries, easy access to finance and affordable interest rates have given a boost to the industry but restrictive legislations and non-transparent transactions have nullified some of these gains India's real estate sector is governed by over 100 and mostly archaic laws, some even dating back to the 19th century.

These barriers extract an exorbitant cost: a McKinsey study calculates that removing land market barriers can contribute an addi- tional one per cent to India's GDP growth rate. Confirming the trend, a World Bank study estimates that an average housing project in India takes anything up to six years to complete as against 15-18 months in China. India also charges one of the highest levels of stamp duty in the world.

In most states, it ranges from 10 to 15 per cent, though Delhi has brought it down to a low 6 per cent recently for certain categories of home buyer High stamp duties have lead to unregistered - and all cash-property transactions and transfers through the Power of Attorney, entailing considerable financial loss to the exchequer. The National Housing and Habitat Policy of 1998 recommended a stamp duty rate of 2-3 per cent across the country but it is nowhere near implementation. The Urban Land (Ceiling & Regulation) Act 1976 hinders availability of land for housing projects.

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