Mumbai: As per the current estimates, India faces a shortage of over 20 million dwelling units. This backlog is growing day by day. Housing is one of the basic necessities of the common citizen apart from food, health and education where India is lagging behind as compared to many other countries in the developing world.

Most of our homeless people in India are living in urban slums. Indias urban population is the second largest in the world with the urban sector contributing to 60 per cent of the countrys gross domestic production.

It has been seen that urban development leads to improvement in the demand for housing. Therefore, construction of urban housing plays an important role in economic growth. India desperately needs a rapid creation of affordable basic dwelling units, both in urban and rural areas. The huge backlog of this activity requires the state to play a dominant role as facilitator, promoter and financier.

There is no dearth of land in this vast country to help construct these homes. All that the government needs to do is to help with enabling legislation in making the required extent of land available. We are also blessed with all the raw materials required for basic construction, such as steel, cement, tiles and timber.

In particular, cement and concrete can contribute significantly in facilitating construction of low-cost housing. Indias cement industry is widely scattered throughout the country. The industry can offer among the cheapest rates in the world with very high-quality levels meeting global standards.

The Indian cement industry has adequate unutilised capacity to help meet any upsurge in demand. Availability of adequate cement at economic rates is therefore not a constraint. The housing sector by a rough estimate can consume over 50 million tonnes of cement to help clear the backlog.

It is clear that any impetus in housing activity will serve as a powerful driver to boost the growth of the Indian cement industry. In addition, construction activity is in itself highly employment-oriented. Construction of housing will have a multiplier effect.

Does the lowering of interest rates for housing loans reflect in an increase in demand of cement? Says Cement Manufacturers Association (CMA) spokesman A K Jain: The demand for cement mainly comes from the housing sector and not so much from the infrastructure projects. With the lowering of housing loan interest and demand going up in both the rural and urban areas, we do expect cement consumption to go up too, especially in rural areas.

The biggest stumbling block in eliminating shortage of housing is clearly the availability of adequate funds. It is estimated that housing of this order will require funds anywhere between Rs 1,000 and Rs 2,000 billion. The housing finance sector has gone up appreciably and visibly in the last two years, with many banks and institutions targeting the middle class and lower income strata, especially in urban areas.

In the year 2000-01 the total disbursement from housing finance has been to the tune of Rs 26,300 crore a growth of 28 per cent in the year. This amount financed the construction of 28 lakh houses, and in the current fiscal year the expected growth is around 35 per cent.

Besides individual housing, space absorption by corporates is likely to grow by 50 per cent during the next few months. In Bangalore it is likely to touch 750,000 sq ft; in Gurgaon it is likely to touch 300,000 sq ft; in Mumbai it may expand to 400,000 sq ft. This growth is propelled by two factors. The government has allowed income tax exemption even for a second housing loan. Moreover there is no similar tax rebate available for individuals in high-income category, people prefer creating a second asset.

The central government has committed itself to the goal of Housing for All in rural areas by the end of the Tenth Plan period and has formulated a comprehensive action plan for rural housing. The Golden Jubilee Rural Housing Finance Scheme is proposed to be increased to cover 2.25 lakh units in 2002-03 up from the earlier target of 1.7 lakh.

One lakh units have already been financed in 2001. The allocation of the Indira Awas Yojana is being increased by 13 per cent to Rs 1,725 crore for 2002-03. All this coupled with the lowering of housing loans finance augur well for a greater demand for housing both in rural and urban areas.

Despite these efforts, demand is still constrained due to inadequate access to finance. There has been a steady decline in interest rates over the last couple of years, but the interest rates of housing loans have remained in the range of 11.0 per cent to 13.0 per cent.

For the burgeoning middle class citizens, this is still a high amount to repay. A still lower interest rate would make housing finance more affordable to a larger number of people and also reduce the potential number of defaulters.

Established in 1961 with 17 member companies, CMA is the apex body of cement manufacturers in India. It has been set up with the objective of promoting the growth of the cement industry. At present, CMA has over 50 cement companies as its members.