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> Challenges towards Affordable Housing:-

The challenges towards affordable housing as stated in Affordable Housing (2010) conference are as under:

Land & Infrastructure

Financing

Taxation

Approvals

Marketing

Definition of PPP:-

The Ministry of Finance defined Public Private Partnership as an arrangement between a government / statutory entity / government owned entity on one side and a private sector entity on the other, for the provision of public assets and/or public services, through investments being made and/or management being undertaken by the private sector entity, for a specified period of time, where there is well defined allocation of risk between the private sector and the public entity and the private entity receives performance linked payments that conform (or are benchmarked) to specified and pre-determined performance standards, measurable by the public entity or its representative.

Some of the commonly adopted forms of PPPs include management contracts, build-operate-transfer (BOT) and its variants, build-lease-transfer (BLT), design-build-operate-transfer (DBFOT), operate-maintain-transfer (OMT), etc.

PPPs in the urban sector, still at a nascent stage and few in number because of insufficient political consensus at state and municipal levels, particularly regarding private sector participation and proper pricing of services

Fig. 4: Urban Infrastructure Investment Requirement

Source: Report on Indian Urban Infrastructure and Services – High Powered Expert Committee – Government of India; March 2011

From the figure it is clear that till 2031 almost 10% of total investment is required for Renewal & Redevelopment of Slums. Hence there arises a need for intervention of private party for such redevelopment. The PPP can help in following ways

Improved Service Delivery

Private sector funding

Lower tariffs

Improved Governance

Rationale for PPP in Affordable Housing [4] :-

The key stakeholders in an affordable housing project are concerned with issues that may be conflicting with each others as shown in figure

Fig. 5: Issues of Stakeholders

Source: International Finance Corporation Apr, 2012

As per KPMG report (2010), the implementation of an affordable housing project under a PPP framework helps address the above challenges by:

Land Availability & Cost

Effective use of available Government land

Land parcels currently in possession can be used for development, thereby reducing the cost of land

Government can enter into joint ventures with developers with land as equity

Land Banking

Purchase of large strips by State Governments / Agencies

Distribution of land to private developers through a transparent process

FSI

Relaxation of FSI norms to reduce per flat land cost

FSI is an effective tool to provide a cashless subsidy to builders

Cross Subsidization

Joint development of MIG, LIG and EWS flats – MIG to subsidize others

Built-up space covering LIG and EWS to be sold / rented by Government agency; deve