The Housing and Urban Development Corporation Limited (HUDCO), a public sector undertaking, is mandated with building affordable housing and promoting urban development. Of the 16.54 million houses sanctioned by HUDCO so far, over 95% have benefited the economically weaker section (EWS) and low income group (LIG). Speaking with Jasleen Kaur, HUDCO chairman and managing director Medithi Ravi Kanth, a former IAS officer, highlighted the need to resolve constraints relating to land, finance, governance and construction, to achieve the goal of housing for all by 2022. Edited excerpts:

Is affordable homes, particularly in metros, a distant dream?
Affordability is subject to paying capacity of a buyer. The prices of properties in metropolitan cities have started coming down. Due to this correction, housing units have become affordable. And now the home loan concept is also common where instead of paying the rent, you pay EMI and acquire the house. The new government has declared (the objective of) ‘houses for all’. And authorities like DDA, Noida and Greater Noida development authority are also coming up with affordable housing projects. There might be limitations in acquiring the home of your choice, though.

Why has EWS housing not taken off in India despite a huge demand? Is there any focus on financing projects for EWS?
This may not be a correct perception. So far, HUDCO’s experience of lending to EWS/LIG housing through state public agencies has been encouraging. Of the 16.54 million houses sanctioned by HUDCO, over 95% have benefited the EWS and LIG groups and HUDCO intends to follow the same approach more vigorously in the coming years. Despite major initiatives, the housing stock in this section has not improved significantly and there is a need to address the demand and supply-side constraints relating to land, finance, governance and construction. If the goal of affordable housing for all by 2022 is to be realised, these issues should be addressed comprehensively.

We have a target of sanctioning 4.23 lakh housing units this financial year. There are various special initiatives undertaken by HUDCO; for instance, we do not charge any application fee and do not levy any front-end fee for EWS housing projects. We charge very low interest rates for EWS housing projects and we permit a longer repayment period of up to 20 years for this category.

How is HUDCO promoting inclusive and sustainable development of human settlements?
The national mission on sustainable habitat approved by the prime minister fits in very well with HUDCO’s scope of activities. It has been our endeavour to promote and finance projects that make our cities sustainable through energy efficient buildings, promotion of public transport, and management of solid waste. We believe better urban planning will facilitate the growth of medium and small cities ensuring reduction of load on the already bursting urban areas.

To improve access to housing for all, especially the lower rungs of society, HUDCO has introduced two innovative schemes. First is Rent-to-Own, which is a rental-cum-ownership scheme for low-income employees of an organisation, and the second is HUDCO Nav Nagar Yojana (HuNNY), which offers a comprehensive solution to growing cities and towns from planning to financing sustainable habitat. An in-principle approval has been given for equity investment of '1.8 crore in the proposed new micro housing finance company to be set up by the self employed women’s association (SEWA). Through this, HUDCO would ensure financial inclusion of women members of SEWA, who have so far been denied the benefit of home loans through the formal lending mechanism.

A proposal for the subscription of '25 crore in Class-A units of India inclusive innovation fund (IIIF), an alternative investment fund called venture capital fund being established by the national innovation council has also been approved. The fund will provide risk capital to enterprises that create and deliver technologies and solutions in products and in services aimed at enhancing the quality of life of the people at the bottom of the socio-economic pyramid. The fund will invest in enterprises involved in housing and urban development sector, including start-ups as well as emerging and growing ventures that need support to scale-up potentially successful solutions and business models allowing them to maximise their social impact in the housing sector.

Housing shortage in urban areas is likely to touch 30 million by 2022. How is HUDCO planning to help meet this gap?
HUDCO sets its annual goals every year to reduce this gap. Apart from this, we have a target of sanctioning a million housing units under our ‘Mission Five Ones’. In the light of the significant deficit in housing and the need for massive effort to achieve the objective of affordable housing for all by 2022, HUDCO is fully geared to take up the challenge of providing affordable housing finance, especially for the EWS and LIG segments.

Our corporate plan 2020 envisages a major thrust on social housing in order to achieve the national goal of affordable shelter for all. To achieve these targets, we also need support from the government in the form of tax-free bonds, capital gains bonds, and equity, as done earlier.

The goal of affordable housing for all by 2022 may be achieved. But easy access to funding is essential to transform this dream into reality.

The PM has sought corporate contribution in building toilets in schools. What is HUDCO’s CSR plan?
HUDCO has extended support for construction of community/pay and use toilets in Kotputli, Kota in Rajasthan, Ayakudi in Dindigul district and Kongnapuram in Salem district in Tamil Nadu through local bodies. In addition to this, we have supported construction of toilets for girls and boys at 20 schools in Unakoti district of Tripura. We will continue our efforts as a mission under corporate social responsibility (CSR) activities as envisaged by the PM.

How is HUDCO performing this financial year?
For the current fiscal, HUDCO has a target of '16,100 crore for sanction and '7,300 crore for release. In the first quarter, we achieved sanction of '2,973 crore, which is 123% of the target (Rs 2,415 crore). In addition, we have released '1,271 crore, which is 116% of the target (Rs 1,095 crore). We are positive about continuing our efforts for a similar performance in the next quarter and for the year as well, towards achieving excellent rating from DPE (department of public enterprises) four years in a row.

How do you foresee HUDCO in the next five years?
I firmly believe HUDCO will continue to intensify its role as the largest facilitator of housing delivery with particular reference to weaker sections of society. With major programmes being conceived for housing for all and also development of smart cities across the country, HUDCO’s role would continue in the fields of project formulation, funding, project monitoring and evaluation studies, and also support to urban local bodies in conceiving city-specific business plans for self-sustainable development. HUDCO will emerge as the single largest institution and one-stop shop for everything in the field of housing and urban development for promoting cleaner, greener, healthy and smarter cities.

The column first appeared in Magazine Vol 05 Issue 15(01-15 Sept 2014)