The Hindu : Business : 4 million new jobs projected in housing sector: Assocham

Online edition of India's National Newspaper
Tuesday, May 24, 2005

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Business

4 million new jobs projected in housing sector: Assocham

Special Correspondent

Chamber suggests conferment of infrastructure status on the sector

BUILDING ON GROWTH: A residential apartment complex coming up on the Velachery-Old Mahabalipuram bypass road in Chennai. — Photo: N. Sridharan

NEW DELHI: Project Bharat Nirman has laid the foundation for strong growth of infrastructure, particularly housing and real estate development. It is expected to generate over four million new jobs by 2015 with demand for dwelling units likely to rise to 80 million for lower middle and low income groups, involving an estimated investment of $670 billion, according to the Associated Chambers of Commerce and Industry of India (Assocham).

The chamber says the annual growth rate of the Indian economy by 2015 will touch a double digit level of over 10 per cent in which the housing and real estate will have a potential to grow at 14 per cent per annum to double its contribution to the gross domestic product (GDP) from the current level of less than one per cent.

Huge shortage

The Assocham paper says that the demand for dwelling units will further grow to 90 million by 2020, which would require a minimum investment of $890 billion. As per official estimates, the Indian housing sector at present faces a shortage of 20 million dwelling units for its lower middle and low income groups which will witness a spurt of about 22.5 million dwelling units by the end of the Tenth Plan period.

Mahendra K. Sanghi, Assocham chief, said investment required for meeting the demand for dwelling units and related infrastructure during the projected period would be to the tune of $670 billion and $890 billion, respectively.

This would mean about an investment of $34 billion to $45 billion per annum.

Even now this sector is considered one of the major engines of economic growth, with its current size of roughly $14 to $15 billion.

The housing and real estate sector is the largest employer after the agriculture and textile sectors, said Mr. Sanghi adding that easy financing and growth of multinationals and Indian companies in IT, ITeS, BPO and FMCG sectors would fuel demand for housing.

The chamber has suggested conferment of infrastructure status on the housing sector to enable it to have easy access to low cost institutional funds and to tap long-term funds. Setting up of real estate mutual funds should be encouraged with certain tax incentives.

At present, the real estate developers are subjected to obtain as many as 33 clearances before putting up a township.

A single window system should be created. Central urban regulations and rent control laws should be amended and the Urban Land Ceiling Acts of all the states scrapped to encourage foreign direct investment, Mr. Sanghi said.

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