The apex body of realty developers, CREDAI, has expressed strong resentment to the Union Government’s proposal for compulsory reservation of 35 per cent of dwelling units built for the economically weaker sections (EWS).

“Such a directive, without any incentives to the developer community, would only burden the open market buyers, mainly the middle income group, which will be forced to cross-subsidise the LIG or EWS” said a CREDAI memorandum to Union Minister for Housing and Poverty Alleviation, Ajay Maken.

CREDAI, with over 8,800 members across India and the largest representative body of the developer community, has sought time with Maken to discuss the various issues concerning the housing industry.

CREDAI National President Lalit Kumar Jain said the government should model the housing policy to suit the poor in such a way to encourage developers to rush for it, rather than taking compulsory steps which ultimately might be counterproductive as they could lead to a fall in the housing stock.

Thedemand-supply mismatch is one of the reasons for the market price movement and any further fall in the housing stock will only contribute to rise in prices, CREDAI argued.

Central guidelines must have a systematic and rational approach on incentives, cross-subsidisation and be aimed at solving problems in a practical manner. For instance, reservation for EWS / LIG is not possible in every project across the board as maintenance will be a major issue.

High rise buildings with lifts and other amenities push up not just the cost of the project, but also the subsequent maintenance. Most LIG or EWS families might not be able to bear the high maintenance cost, which would mean that the MIG and others might have to bear the brunt. The EWS and LIG categories will have to be given walk-up apartments which will not be more than four-storey high and this in turn could have an impact on FSI.

HUPA (Ministry of Housing and Urban Poverty Alleviation) should take up the issue of reduction of cost of funding with the Finance Ministry so that developers would be incentivised to construct houses for the lower income segment. The centre should also ask the state governments to exempt EWS & LIG from registration fee and stamp duty.

Right kind of policies will encourage developers to create the required EWS & LIG housing stock, lessen the burden on precious government resources and ultimately lead to improvement in quality of life for the lower strata with proper water supply and sanitation.

CREDAI called for creating special housing zones with tax exemptions on the lines of SEZ. These zones should have tenements to the extent of 75% for below 80 sq m. The area required for special housing zones could be ten acres with a minimum FSI/FAR of 4 to allow large scale construction to meet the rising demand.

The housing for all policy would also require solid back up with all round reforms, quick clearances and minimal interference from other government departments like environment, CREDAI said, and suggested mass rapid transit system for improving public transport.