Proposal to raise threshold for affordable houses to Rs 75 lakh sent to finance ministry: Urban affairs ministry advisor Dinesh Kapila

Dinesh Kapila, economic advisor at the Ministry of Housing and Urban Affairs was speaking at the 12th Real Estate Conference and Excellence Awards programme, organised by the Associated Chambers of Commerce and Industry of India on November 3 in Delhi.

Classifying affordable housing as units up to Rs 45 lakh is unrealistic given the high price of land in cities, said Dinesh Kapila, economic advisor at the Ministry of Housing and Urban Affairs. He said the finance ministry has been sent a proposal to “improve the definition of affordable housing”, adding that he believes the price cap should be set at Rs 75 lakh.

Kapila was speaking at the 12th Real Estate Conference and Excellence Awards programme, organised by the Associated Chambers of Commerce and Industry of India on November 3 in Delhi.

“In response to the industry's call for improving the definition of affordable housing, a proposal has been forwarded to the Union finance ministry. We are particularly concerned about high land prices in metropolitan cities like Delhi and Mumbai, which make the current price range for affordable houses of less than Rs 45 lakh inadequate. We have requested the finance ministry to consider raising this threshold to at least Rs 75 lakh," Kapila said.

He said India is witnessing rapid urbanisation which can be used to create better infrastructure with the real estate sector playing a vital role. According to Kapila, the size of the Indian real estate sector is likely to be around $1 trillion by the end of 2030 and its contribution to the country’s GDP is likely to be around 13 percent by 2026.

“According to some estimates, between 2023 and 2030 approximately 700 to 900 million square metres of urban space will be required to be constructed every year, so the growth potential of the real estate sector is huge,” he said.

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Importance of RERA

Highlighting the importance of the Real Estate (Regulation and Development) Act, 2016, Kapila said that until the law came into being, the estate sector was largely unregulated, but things have since gotten a lot better.

“Since the implementation of RERA, nearly 86 percent of the projects have been delivered (across the country), which is a big achievement. RERA is a path-breaking legislation which is playing a crucial role in addressing and fixing issues in the real estate sector,” Kapila said.

Affordable housing

Speaking on the occasion, Dakshita Das, former managing director and CEO, National Housing Bank, and chairperson of the government’s Gender Budget Working Group, said that with rapid urbanisation there is a need to focus on the affordable housing sector and efforts are required to bolster it.

“Urbanisation is happening at a rapid pace where people from rural areas are coming and settling in urban spaces. With this pace of urbanisation, the demand for affordable housing will go up, so a special focus is needed to be given to this sector,” she said.

Ravi Aggarwal, co-founder and managing director of real estate company Signature Global, said that industry is poised to grow at a rapid pace. “The real estate sector is the second largest employer as it employs around 5.5 crore people across the country. So employment will also grow with the growth of the real estate sector,” Aggarwal said.