The report also suggests that the government in India should work towards streamlining the approval mechanism, which currently takes about two to three years."
Mumbai, Aug 20 - Over Rs.16 trillion ($260 billion) will be needed as investment every year if the central government's goal of 'housing for all by 2022' is to be achieved, a report by the KPMG-National Real Estate Development Council says.
According to the report, launched here Wednesday, around Rs.9.5 trillion ($150 billion) is now being invested annually in the real estate sector of which around 80 percent or Rs.7.5 trillion is deployed in the housing sector.
The government's vision of 'housing for all by 2022', requires more than $2 trillion to be spent in the next eight years to build nine crore houses. The investment in the sector, which has grown at less than two percent per annum in recent years, needs to grow at about 12 to 13 percent per annum (unadjusted for inflation), Neeraj Bansal, partner and head - Real Estate and Construction, KPMG India was quoted as saying in a statement issued by the firm.
According to him, reforms targeting higher flow of funds from lending institutions, households, private savings and foreign capital are needed.
He said these could be achieved by developing long-term financial instruments for the real estate sector, opening up external commercial borrowings, incentivising housing investment, developing public-private-partnership (PPP) mechanism, streamlining approval mechanism, and reforming the Rent Control Act.
The report also states that banking and the financial system in India are expected to play a vital role in providing housing to all by 2022 and the Reserve Bank of India (RBI) has to carry out required reforms.
The real estate sector, one of the largest employer in India, has received less than 4 percent of total advances.
The report indicates new mechanisms such as External Commercial Borrowings (ECBs), which currently the RBI has allowed for $1 billion annually (only for affordable housing development), needs to be raised to $10 billion.
The report also suggests that the government in India should work towards streamlining the approval mechanism, which currently takes about two to three years.
According to the World Bank, on an average, it takes about 34 procedures over a period of 196 days for obtaining construction permits in India.