AFFORDABLE HOUSING has got its much sought after ‘infrastructure’ tag, a long-standing demand by real-estate developers who can now enjoy the benefit of lower borrowing rates, tax concessions and increased flow of foreign and private capital into their projects.

The infrastructure status is a natural corollary to the Real Estate Real Estate (Regulation and Development) Bill, 2016. The Institutional Mechanism under the Ministry of Finance had made the passage of the Bill, to regulate the realty sector, a pre-condition to including affordable housing in the master list of 32 infrastructure sub-sectors, which includes urban public transport, water supply pipelines, electricity distribution and capital stock in education and healthcare.

The infrastructure tag would mean that the real-estate builders, who currently have to take loans from the market at a high rate of interest of 18 to 24 per cent, can now get it at say 12 per cent. This brings down their overall cost of construction, a benefit which they will presumably pass on to the home-buyers.

The Budget also confers certain sops on real-estate investors. Investors can now exit properties at a faster rate as the holding period for immovable property (land and building) has been reduced from 3 years to 2 years for long-term capital gains tax.

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Amitabh Kundu, former economics professor from Jawaharlal Nehru University, however, said many of the measures announced in the Budget would help the middle and upper middle classes instead of promoting construction of houses for the Economically Weaker Sections and Low Income Group families. EWS and LIG account for 96 per cent of the estimated urban housing shortage of 18.78 million units.

“Providing incentives to the housing sector is likely to have a multiplier effect on the economy and employment situation. However, the essential focus on the poor, is now missing. Even though there is an income limit for the interest subsidy scheme, the fact that it will be granted based on self-certification of income will mean that the cap will only be notional. Also, increase in the built up area and the subsidised loan amount up to Rs 12 lakh will open the doors for the middle and upper middle classes. This would only immediately help real-estate developers, who will now be able to sell the 11 million vacant houses that are lying unsold due to high prices,” he said.