2-BHK housing scheme faces fund shortage

HYDERABAD: Lack of funds and interest among contractors are set to become hurdles to the realisation of chief minister K Chandrasekhar Rao's dream scheme of providing free two-bedroom flats to the poor.
While the government has promised to build 2.6 lakh two-bedroom houses in the financial year starting April 1, 2016, the funds required for the scheme is Rs 17,200 crore.Finance minister Etela Rajender, in his budget speech for 2016-17, said the government had already given administrative sanction for 60,000 houses at an estimated cost of Rs 3,300 crore. He said the government had also proposed to build 2 lakh more houses at the cost of Rs 13, 900 crore.
What has made the scheme impractical is that the budget allocation is much less than the actual requirement. When the scheme needs Rs 17,200 crore, budget allocation is a measly Rs 529 crore.
"The budgetary allocation for the two-bedroom house is less because we are looking to mobilise funds from outside the budget. This means the government is proposing to borrow mainly from HUDCO (Housing and Urban Development Corporation)," said Etela Rajender.
The catch, however, is that the HUDCO cannot lend so much of money since the total loan allocation by the corporation for the entire country in an year does not cross Rs 22,000 crore.
In addition to Rs 17,200 crore for two-bedroom houses, the state government is also seeking a loan of another Rs 36,976 crore for Mission Bhagiratha, the scheme to provide piped drinking water to all households.
Experts said the government had not taken ground realities into consideration before embarking on ambitious fund mobilization for its schemes.
"It is impractical to expect the TRS government to fulfil its promises given the real financial conditions. When the total lending capacity of HUDCO is not more than Rs 22,000 crore for the entire country, how can Telangana alone expect this amount of money from the corporation?" asked BDA Satya Babu Bose, director of Budget Centre and Governance Accountability.
Congress MP Gutta Sukender Reddy has written to HUDCO and Prime Minister Narendra Modi asking them to scrutinize Telangana's loan request before deciding on the loan amount.
"It is found that the estimations have been inflated. When material prices including steel have fallen 35 per cent, the cost estimation has not taken note of this. Instead, they have projected the cost 45 per cent higher. I have brought this to the notice of both HUDCO and Prime Minister," said Sukender Reddy.
Former housing minister and Telangana Congress president N Uttam Kumar Reddy said the state government could not borrow so much of money as the Fiscal Responsibility and Budget Management (FRBM) norm caps the amount of debt. While the total borrowing of state cannot go beyond three per cent of its gross state domestic product (GSDP), Telangana is not allowed to borrow more than Rs 14,500 crore.
"Going by the reality, the government is unlikely to build the many houses they have promised," said Uttam Kumar Reddy.
Out of 60,000 houses the government promised in 2015-16, the government could build only 377 houses which were given to the beneficiaries in IDH Colony in Secunderabad.
Adding to the problem, contractors have declined to take up the works of two-bedroom houses saying it is unviable for them. While the government has fixed construction cost at Rs 900 a square feet, they are demanding Rs 1,400 per square feet, which the government has declined.
Housing minister A Indrakaran Reddy, however, exuded confidence saying HUDCO has agreed to lend Rs 13, 000 crore and from other sources.