A city which is two steps ahead of its citizen’s needs is a smart city – Prime Minister Narendra Modi
With the growing population creating increased pressure on metropolitan centers in India, there is an urgent requirement for ‘smartly’ developed cities to meet the growing urban demand.
The Government’s 100 Smart City Mission, under the AMRUT (Atal Mission for Rejuvenation and Urban Transformation) Initiative, is likely to contribute significantly to revolutionize the urban landscape of India.
Housing for the urban poor is the single biggest challenge faced by any developing nation. The current urban shortage of housing for the Economically Weaker Segments (EWS) and the Lower Income Groups (LIGs) – families with a monthly income of up to Rs.16,000- in India is estimated to be ~20 million.
The identified housing shortage and the low quality of life of the urban poor, has made ‘Housing for All’ a key initiative of the Modi led government.
The identified housing gap has resulted in a surge in the number of affordable housing developments across urban centers over the last few years. While some efforts have been made to provide housing with basic infrastructure for the lower income segments in urban India. This has resulted in most affordable housing projects being located at a significant distance from the city, with the per unit selling price being high relative to the average income of people in this economic segment.
These 100 smart cities with their improved infrastructure, are slated to not just increase foreign direct investment in to India, but be self-contained units to the extent that they provide easily accessible housing for the middle income and lower income segments.
Additionally, there is an attempt by the government to provide financing options through the ‘Interest Subvention Scheme’ focused on small ticket housing loans to aid the purchase of affordable housing dwellings.
On June 17th 2015, the Cabinet Committee on Economic Affairs approved a proposal to increase the interest subvention rates for affordable housing to 6.5 percent for loans to the Economically Weaker Sections (EWS) and Lower Income Groups (LIGs) of up to Rs. 6 lakhs. As a result of this increment, beneficiaries will have to only bear 4 percent of the total interest rate of 10.5%, which is estimated to work out to Rs.2.3 lakhs of center assistance per beneficiary through the credit linked subsidy scheme.3 An increase in the financial assistance to the economically disadvantaged groups, together with a focus on launching affordable small ticket housing products aimed at this economic segment, is crticial to assist in achieving the ‘Housing for All’ mission.
We anticipate that the 100 Smart city initiative will provide a platform for increased investment opportunities to both the middle income segments and the lower income segments, thereby improving the overall standard of living of the average person. This will in turn bring the government one step closer to achieving its target of providing 25 million affordable homes and 40 million dwelling units by 2022.
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