- Government’s grand plan
Food and shelter are the most inescapable basic human needs and owning a home is dream of every individual and family. The states with a welfare creed and agenda strive to ensure that all the people living within its territorial limits are provided with some kind of shelter called a home according to their needs and range of affordability. The issue of housing has economic, social and political dimensions both for the families owning the house and for the government pursuing this strategic goal. For the political parties vying with each other for political power by winning the franchise of the people housing invariably is an important issue and a great catalyst to their electoral victories. No wonder that Bhutto’s slogan of ‘Roti, Kapra aur Makan’ proved to be an infectious vision and his party almost annihilated all the big wigs of the political arena. It is however another matter that the party could not fulfill that pledge but the fact remains that Bhutto factor still plays a significant role in Pakistani politics.
PTI’s rise to power among other things probably owes to a great extent to its manifesto promising 10 million jobs and five million housing units for the lower and lower-middle income groups by playing a role of enabler and facilitator. Pakistan faces an overall backlog of 11.2 million housing units with a shortage of four million and 7-8 million in the urban and rural areas of the country. Building five million houses over the next five years which constitutes almost half of the total shortage of the housing units is surely a big ask. To accomplish this herculean undertaking the government would have to work with unruffled commitment with the support of all the stakeholders including banks, developers and allied industries by creating adequate incentives for them to participate in the effort which also involves enhancing the mortgage debt to GDP ratio through effective fiscal measures. It is also important to ensure that the mortgage installments to be paid by the prospective aspirants are financially feasible and affordable for them.
Owning a house for an individual and a family means an investment whose value keeps increasing which helps to create the buying and reinvestment power known as equity. Homeownership also stabilises other home-related expenses like utilities and gives the owner more control over his ability to make investments in his property which keep those expenses down; it helps to create sustainable future in many different ways and a long term plan significantly reduces living expenses as they move towards a retirement budget; staying in one’s own home instead of a rented accommodation allows financial and emotional investment in the owned living space and community. Staying put for longer periods of time also creates social benefits that range from friendships with neighbors to community involvement and consistent educational opportunities for children. In some societies it also means social recognition and prestige.
The PTI government, particularly the prime minister, has taken great interest in getting the scheme rolling and chaired at least ten meetings since coming to power to finalise its contours and other related issues. The scheme has already been formally launched by him and the public has shown tremendous interest in it. The number of people who have applied to avail the opportunity to own a house, reportedly runs into millions. The task force on five million housing units held its first meeting on last Monday and the chairman of the task force Zaigham Rizvi addressing a joint press conference along with Punjab’s housing minister Mehmood ur Rasheed, federal minister of state for housing Shabbir Qureshi and a member of the force MPA Firdous Shamim revealed that the total estimated financing requirements for building five million houses stood at around Rs16 trillion. Out of the total cost of Rs16 trillion 20 percent will be borne by the house owner while the remaining 80 per cent will be provided through bank borrowings. They said that the institutional framework will be in place in the next 90 days as bill for the establishment of Housing Authority will have to be passed by provincial assemblies of Punjab, KPK and Balochistan while Sindh planned to unveil its own housing scheme at provincial level.
PTI’s rise to power among other things probably owes to a great extent to its manifesto promising 10 million jobs and five million housing units for the lower and lower-middle income groups
The task force after its deliberations has also made certain recommendations for successful implementation of the scheme including: adoption of rent equalisation model; charging 10 percent mark-up on bank loans of two million payable over a period of 20 years with a monthly installment of Rs18,564; asking banks to increase limit for housing finance up to five percent of total loan portfolio and reduction of tax burden on banks on the portfolio allocated for housing finance and increase in capital adequacy ratio for banks. Chairman revealed that one million houses would be built in the first year and the government would ensure competitive bidding for selection of builders in a transparent manner.
It all seems very encouraging and indicates the seriousness and commitment of the PTI government to implement this flag-ship project. Only time will reveal what will be the final outcome but the beginning is quite auspicious. The successful implementation of the scheme as envisioned will unleash huge economic activity in the country which will not only reinforce the building industry but would also help in the emergence of down the stream industries besides creation of thousands of jobs. The multiplier effect of this huge investment will accrue infinite impetus to the economy as a whole. This will however depend on timely implementation of the scheme, ability of the government to raise required finances and the resolution of all the related issues including finding lands with clear entitlement to avoid unnecessary litigation.