Subsidy Scheme for housing for lower income groups should have been continued: HDFC’s Parekh

Deepak Parekh, Chairman, HDFC, said the Credit Linked Subsidy Scheme (CLSS) for the lower income groups should have been continued for a few more years in view of the shortage of housing in the country.

“The government has been supporting housing, especially through its Pradhan Manti Awas Yojana Scheme and the Credit Linked Subsidy Scheme, or the CLSS, which came to an end last year, was a game changer, especially for the economically weaker sections and low income groups. 

“…While one recognises that fiscal support cannot be without hard timelines, given the shortage of housing in the country…the CLSS component, at least for the lower income groups, should have continued for a few more years,” Parekh said at a Real Estate Conclave organised by a media group.

Concessional duty

The HDFC Chairman noted that even the concessional stamp duty rates that were offered by a few States during the pandemic had given a strong boost to the housing sector. This shows that a few concessions go a long way in helping improve home affordability, he added.

“Perhaps the withdrawal of the CLSS and concessional stamp duties in certain States, coinciding with the uncertainty on the interest rate trajectory, had some dampening impact on housing, especially for the low income segments.

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“I also believe the definitions of economically weaker sections and low income groups or even the loan and property amounts used to qualify for priority sector housing loans need to be periodically revised to reflect changing market realities,” he said.

Parekh underscored that the Indian real estate market needs a lot more of affordable and mid-income housing stock. “In the recent period, there has been a larger proportion of the incremental stock of housing towards the upper and luxury segments. Time and time again, many developers tend to build without correctly assessing where the real demand is. 

“The demand for affordable housing is immense. Affordable housing projects at the right location and right price points may have lower margins, but the velocity of sales and cashflows are much faster,” he said..

With the government’s focus on making India a global manufacturing hub and with the development of industrial corridors, Parekh emphasised that the opportunities for real estate development have increased manifold.

There is growing demand for new real estate assets such as warehousing, fulfilment centres, data centres, hospitality, lab offices, amongst others expanding into the tier-II and tier-III cities and beyond, he added.