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New Housing Scheme Hits SEZ HurdleBy Mrs Gupta, Section Real Estate
The new urban housing policy envisaging public-private partnership (PPP), promotion of FDI in real estate and providing fiscal incentives to the housing sector finds itself caught in the Special Economic Zone (SEZ) imbroglio.
The government has decided to put the PPP policy on hold for now. Reason: The SEZ issue is yet to be sorted out by the empowered Group of Ministers (GoM), appointed by the Prime Minister's Office. According to government officials, the decision was taken as the new Urban Housing and Habitat policy recommends acquiring agriculture land around major cities to meet the growing demand of housing sector in the country. The land would then be developed under the PPP model as sub-townships with certain number of flats to be reserved for economically deprived section. The new policy, which was recently cleared by the Urban Development (UD) Ministry, speaks of acquiring land for building homes under the SEZ policy. The UD ministry went by the SEZ policy, as acquiring land was easy and at affordable prices, a senior government official explained. The ministry's policy also suggests repealing the Urban Land Ceiling Act and revamping the Land Acquisition Act.
But, the talk of acquiring land at market prices and providing rehabilitation package to the farmers can have adverse impact on the policy "It can jack up the price of houses for the poor The policy is aimed at providing relief to that section of the society," the official said, adding that they will wait for the GoM report on SEZ.
The government is under severe pressure over its SEZ policy from Left parties, civil society and even UPA chairperson Sonia Gandhi to some extent. The UD ministry has proposed fiscal and regulatory framework for banks and other participants to actively engage in Residential Mortgage Securitisation (RMBS) transactions with relaxation on stamp duty on instruments of RMBS. The ministry wants the government to consider allowing NRIs to invest in RMBS. In order to bridge the gap between demand and supply, the policy recommends fiscal concessions for firms involved in providing loans for taking home on rentals. Also, channelisation of funds from provident fund and insurance funds for home loans is a way suggested to fill in the gap. Source- HT, Dated, March-06,2007
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