Importance of Home Security for the Low-Income Groups

When it comes to the development of an economy, housing takes center stage for reasons that include; the contribution of housing construction to the GDP of a country, employment generated, and the ripple effect it has on other sectors of the economy. The development of a country is marked by collective socio-economic wellbeing, not the wealth of a few.

In India, EWS and LIG form a significant proportion of our population and their untapped potential makes them a pillar of our economy’s growth. A report on the estimation of housing shortage by the Technical Group in 2012, found that the Economically Weaker Sections (EWS) and Low Income Group (LIG) accounted for 96% of the housing shortage in India. Recognizing the importance of affordable housing, the government has taken several initiatives to build homes for these groups including:

• Pradhan Mantri Awas Yojana (Urban)- A Mission launched by the government of India on 25th June 2015 which intends to provide housing for all in urban areas by the year 2022.
• Pradhan Mantri Gramin Awaas Yojana-This scheme focuses on building one crore permanent homes with basic amenities for the homeless by 2022.
• Rajiv Awas Yojna- An initiative that envisages an India free of slums. The scheme also delivers a financial provision of Rs 75,000 per EWS, for shelters that range between 20 and 40 sqm.

While these efforts have helped us inch closer to the goal, there are still several measures that need to be taken to ensure a more inclusive market:
• Credit Linked Subsidies- While this subsidy has benefited thousands of lives, it hasn’t improved the affordability of homes. Potential homeowners, unaware of the scheme often overlook this subsidy when deciding whether to buy a home. A few small steps can help CLSs make a bigger difference:
o A pre-approval process that guarantees the subsidy
o Extending the reach to semi-urban locations
o Doing away with the requirement for sanction plans for self-construction on small plots
o Reducing the supplementary expenses such as GST, stamp duty, mortgage fees, etc
• Extend access to credit to slums- In 2018, 14 million urban households lived in slums with poor infrastructure and difficult living conditions. Additionally, the opportunity to deliver home loans to this unaddressed market was estimated at ₹23,000 crores. Although there is a stipulated risk involved, it would benefit low-income households and the progress of the nation through a domino effect.
• Incentives for developers- Although affordable housing has a macro impact, it also needs to entail a micro impact for the parties directly involved – lenders and developers.

Buying a home requires access to capital which is a need that has been ignored for too long. Contrary to the past when people depended on their retirement savings to build a house, people today don’t wait as long to set the wheels of owning a home into motion.

Loans are no longer seen as a societal stigma that leaves you trapped in debt, but rather as an opportunity that triggers the cycle of progress for low-income families. Even people residing in Tier 2 and Tier 3 cities are seeing the benefits of loans when it comes to homeownership. HFCs and NBFCs like Capri Global Capital Limited, with specialized capabilities, require minimal documentation will have had a critical role to play in making the dream of housing for all, come true. Capri Global alone has disbursed 7855 + Housing loans towards the initiative so far.