Red tape worries keep builders away from cheap housing plan

    Most real estate developers have been focusing on building affordable houses after property prices slumped, but none of them has made use of a central government scheme that offers subsidy to developers of small-sized dwellings, citing red-tapism and lack of clarity in the scheme.
    
    Almost six months ago, the ministry of housing and urban poverty alleviation announced the scheme which allows state governments and private developers to build houses for the lower-income segment and avail of a central grant.This grant could be either Rs 50,000 per housing unit or 25% of the cost of all civic services proposed in a housing project. But projects must have a minimum of 200 houses, which could range in size from 300 sqft to 1,200 sqft of super built-up area.

    “Under the scheme, funds will be channelled to developers through state governments, which is what realty companies don’t want as they fear red-tapism. They want the central government to disburse funds directly,” said the official requesting anonymity. The government had introduced the scheme with the view that it would help developers, saddled with unused land in a realty slump, to build more homes at an affordable rate. But developers seem doubtful about the execution of projects under the scheme.

How to overcome this problem?