The government is planning to create a dedicated fund for affordable housing which may take care of demand side funding. This is good news for the realtors who have taken a plunge into affordable housing sector to take advantage of the profit-linked exemption provided in the previous Finance Act. Also, infrastructure status given to affordable housing has made the sector more attractive as the funding of the project has become much easier.
The Finance Minister, Arun Jaitley, in his budget speech said ” My Government will also establish a dedicated Affordable Housing Fund (AHF) in National Housing Bank, funded from priority sector lending shortfall and fully serviced bonds authorized by the Government of India”. The fund will be created in collaboration with the National Housing Bank which is likely to provide much-needed demand push for low-cost houses in the country. In addition to this, the government has given much needed impetus to growth and income generation in rural areas and tier 3 & 4 cities in the country which is also likely to add to the total demand for the affordable houses in the country.
However, the Finance Minister has reduced the allocation under PMAY (Rural) from Rs 23,000 crore to Rs 21,000 crore saying that it will be sufficient to achieve its target in rural housing sector. On the other hand, the government has increased the allocation under PMAY (Urban) from Rs 6,042 crore to Rs 6,505 crore, which is good news for the sector.