4. NEXT STEPS History has evidence that crisis brings reason and opportunity to change. The disruption due to the current pandemic is an opportunity to reinvent. The affordable housing sector has always faced affordability and liveability challenges and the COVID-19 pandemic has further exposed the gaps in the current strategies in mitigating these challenges. Fiscal strategy for the sector needs rebooting and ample rethinking. The current disruption due to the pandemic is an opportunity that that must not be lost. Need improved criteria for assessing affordability and establishing affordable housing price-to-income ratios in cities in the post COVID-19 scenario: Establish clear criteria for assessing affordability. The recent migrant labour crisis due to the pandemic-induced lockdown was more evident in the national capital and big metropolitan cities. Interestingly, the same cities have the widest housing affordability gaps. For instance, Mumbai has the highest priceto-income ratio among cities globally. The government needs to build data repositories to understand the nature and limits of housing affordability of the economically vulnerable population. At present, the vulnerable are hardly represented in databanks. Proper documentation of household incomes and expenditures, and market prices at the city level (across classes) is necessary. Need strategies to minimize cost of improving thermal comfort and new construction technologies to the beneficiaries: This will require collating data and conducting research on how past affordable housing schemes performed with regard to inclusivity, accessibility, thermal comfort (energy prudence), resource efficiency and environmental sustainability. The learning curve from this gap analysis must be internalized in the larger housing strategy, while focusing on performance and economic incentives. Our analysis shows that despite the availability of low-interest loans, the share of non-performing assets is high in the lower lending bracket. A fiscal strategy is needed to mitigate the incremental costs of new technologies and materials, and adoption of the thermal comfort approach for beneficiaries. Three parties are involved in the final sale and purchase of affordable housing: developers, beneficiary and lenders or banks. The developers bear the enhanced cost of construction due to new material and thermal comfort requirements. For the banks, there is a cost of funds and intermediation charges that are normally passed on to the borrowers. Developers and lenders need to recover costs. These lending costs are built into the construction cost of the developers, whether they have raised funds independently or from bank. Ultimately, the price charged to the beneficiaries includes all costs. It has been observed that under CLSS, the percentage of non-performing assets is high for loans upto Rs 2 lakh. This implies that lending to this segment is
Fiscal strategy for affordable housing
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