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Faster approvals will bring down housing costs

The Tribune

May 19, 2012

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The government has formed a committee to evolve a workable strategy for reducing the time taken in approval of real estate projects which could ultimately reduce the cost of houses by 25 to 40 per cent, Minister of Housing and Urban Poverty Alleviation Kumari Selja said recently.

The committee, under the chairmanship of Dhanendra Kumar, former chairman of the Competition Commission of India, will submit its report in four months, she said while addressing a conference on affordable housing organised by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

"It is estimated that the cost to ultimate consumer could be 25 to 40 per cent lesser if the time of granting approval is reduced to six to eight weeks, which is quite achievable in the present day and age," said Selja.

Leading real estate developers say about 70 approvals are required for a typical housing project which take nearly three years. The lack of coordination among multiple government agencies and delays result in higher costs which are passed on to the consumer.

Naveen Raheja, chairman of ASSOCHAM real estate committee, said the shortage of dwellings in urban India is estimated to be 25.5 million units. The poor form 90 per cent of this shortage.

"For affordable housing, partnerships may be forged among the Central Government, state governments, urban local bodies, people’s cooperatives and the private sector," he said adding the definition of affordable housing should be clear. Affordable housing is generally defined as a dwelling unit of 300 sq ft for economically weaker sections with annual income level of Rs 1.5 lakh and 300 to 600 sq ft for lower income group with annual income of Rs 1.5 lakh to Rs 3 lakh.

ASSOCHAM secretary general D.S. Rawat said, "Low-cost housing offers a world of opportunities to the real estate development business that can bring in much-needed resilience to the sector."

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