Ahead of the Union Budget 2011-12, the Royal Institution of Chartered Surveyors (RICS) has, in its manifesto, proposed rationalisation of existing funding, incentives and taxation in favour of establishing better mechanisms to meet the funding as well as delivery needs of infrastructure and housing in the country.

Says Sachin Sandhir, MD and Country Head, RICS India, “Though inflationary pressures are challenging India's growth prospects, over the last financial year we have seen the country move into the ‘managing recovery' phase. Therefore, our recommendations for this budget are in favour of promoting inclusive growth and infrastructure development through better management.”

Summary of recommendations

Impetus for infrastructure development and affordable housing

* Under Section 80 IA, the definition of infrastructure should be broadened to include integrated townships (approximately 100 acres in size) which are self-contained residential clusters, with certain pre-requisites and ancillary facilities such as roads, schools, parks, hospitals, retail outlets, etc

* To encourage 30 per cent of planned investments to come from private capital, the Government should consider catalysing private investment and operations into all infrastructure sectors through the participation of long-term sources of capital such as insurance and pension funds which have investable surplus.

* A dedicated affordable housing fund, similar to infrastructure funds, is proposed, whereby the Government contributes partial funding through public issuance of bonds and the remaining component is raised through retail investments in lieu of tax benefits. These funds could be made available to developers/ NGOs/ private intermediates at low interest rates for construction of EWS/LIG housing.

* In addition to other sources, a ‘housing trust fund' funded from the state revenues from various tax sources/levies can be considered as a flexible source compared to Government grants. These funds can be disbursed to developers for low-cost housing projects.

* Under Section 80 IB (10), a two-year extension in tax holiday from 2012 to 2014, on projects less than 1000 sq. ft. per unit in Delhi and Mumbai and 1500 sq. ft per unit in other cities is propagated as an incentive for developers focussing on low-cost housing.

* To ensure judicious use of developed urban land, the state governments should evaluate formulating a policy for reclaiming land from developers, where projects have not been initiated for a long period. Alternatively, a vacant land tax could be considered to promote an efficient land use market while helping the Government balance revenues. The process of auctioning land should be replaced with reverse tendering process to limit the land cost for affordable housing.