Home >opinion >online-views >Pilot study for housing start-up index may be done by March

Economists have long complained about the lack of reliable and accurate data on housing in the country, a critical gap that restricts their ability to make economic forecasts. That could change with the launch of a housing start-up index—a measure of housing construction activity in the country.

Totting up: A file photo of a flats coming up in Gurgaon. With 2003-04 as base year, the start-up index will provide a measure of housing construction activity in the country.

The pilot study for the housing start-up index could be completed as early as March.

This comes on the back of a decision by the National Housing Bank (NHB) to expand an index of residential real estate rates from the five cities it currently covers to 36 cities. The index, called the NHB Residex, covers Bangalore, Bhopal, Delhi, Kolkata and Mumbai.

Together, the two sets of data could help economists, though information on real estate rates will likely be of more use to customers.

“Housing is one of those sectors that has maximum forward or backward linkages," said Pronab Sen, chief statistician of India and an adviser to the Planning Commission. “The sector has linkages to several other industries such as cement, bricks, steel. That is why it’s such an important indicator," Sen added.

The pilot study will collect data on the number of building permits issued across six cities and then compare it with the issual of electricity or water connections to gauge how many building permits have actually translated to construction activity.

Using this, the National Buildings Organisation (NBO) will create the housing start-up index. The base year will be 2003-04, said a ministry of housing and urban poverty alleviation official, who did not wish to be identified.

NBO is part of the ministry of housing and urban poverty alleviation and oversees technology transfer, experimentation, development and dissemination of housing statistics.

It has commissioned a software system called Briks (Building Related Information and Knowledge System) with the ministry, making allocations to states for installing the software and the necessary hardware across the country, the official said.

“We have made an allocation of roughly Rs45 crore and are trying to upscale it," the official said.

The software system is expected to go online by April.

Until then, the ministry will collect information through forms on paper, the official added. He said states were initially reluctant to collect the data and the ministry had told them informally that it could consider linking their compliance with JNNURM, a reference to the Jawaharlal Nehru National Urban Renewal Mission, a scheme with a corpus of Rs50,000 crore.

The Centre has used grants from these scheme as an effective way to get states to reform local bodies and carry out necessary legislative reforms.

The official said the pilot study will collect data related to 20% of building permits issued and use it to extrapolate data for the entire city.

He did not reveal the number or names of cities covered by the pilot study.

Statistics such as the ones that will be released by the study are needed, said N.R. Bhanumurthy, an associate professor with the Institute for Economic Growth.

“Currently, policymakers don’t know anything about what is really happening in the housing market, even though construction has strong backward linkages to demand," added Prof. Bhanumurthy.

“What they are doing is a little like what they (the government) do for the wholesale price index, where sometimes price data for just two vegetables are used for (extrapolating) vegetable prices. So in that way, the index will be a very good thing. The credit market and policy people have a need for this," Prof. Bhanumurthy said.

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