The Standing Committee on Urban Development has rapped the Union Ministry of Housing and Poverty Alleviation for allowing foreign direct investment (FDI) through the automatic route in the construction and development sector without studying its impact on the urban poor.
In its latest report tabled in Parliament on Thursday, the committee said that though the construction and development sector secured cumulative investments of Rs. 10,74,92 crore from April 2000 to February 2014, which is 11 per cent of the net FDI flow of equity, it was “dismayed” to learn that no survey was undertaken by the Ministry to assess the impact of allowing FDI in the sector.
Pointing out that a majority of urban housing needs were in the economically weaker section and the lower income group segment, the committee said there was an “urgent need” to conduct such a survey so that the real impact of allowing FDI in the housing sector with reference to the urban poor could be assessed.
Allowing FDI through the automatic route was a welcome step, but must be closely monitored, the panel said. “... It needs very vigorous follow-up in the sense that unless the various loopholes in the laws relating to construction and housing sectors are adequately plugged and a conducive environment for investment in this sector is promoted, this FDI proposal would remain an initiative only on paper and would not benefit the common masses,” the committee said in its report.
