New housing start-up index to help measure economy’s health2 min read . Updated: 25 Mar 2013, 01:35 AM IST
The index will be a lead economic indicator because of the sector’s links with over 270 industries
New Delhi: The housing ministry will launch a pilot housing start-up index (HSUI) in collaboration with the Reserve Bank of India (RBI) to serve as a tool to reflect changes in the housing sector and related industries vis-a-vis the overall economy.
The index, which was to be launched in 2010, will reflect how many building permits got converted into actual start-ups.
“Housing and building construction activities have powerful multiplier effects on the economy," the National Building Organisation (NBO), which was involved in developing the index, said in a recent report. While a higher-than-expected increase in housing activity triggers economic growth and is considered inflationary, a decline slows the economy and can push it into a recession, it said.
The index will thus function as a lead economic indicator because of its linkages with more than 270 industries, said housing and urban poverty alleviation minister (HUPA) Ajay Maken during a conference on Sunday. “Only six countries are compiling data related to building permits and housing start-ups on a regular basis," he said.
A housing ministry official said that while there were permit-issuing authorities in India, like municipal corporations, town planning authorities and village councils, it took long for the ministry to launch the index as data wasn’t being collated in a systematic manner. “We had to first get that in order and then only could we start," said the official, requesting anonymity.
A final nod for HSUI was given at a meeting on 12 March that was attended by RBI and HUPA representatives, the official said.
Thirty cities collated data and a housing start-up survey was done in 27 cities using a mobile application, the official said.
The index is important primarily because India has no way to measure changes in the housing sector, said Chintan Patel, director (real estate and hospitality practice), Ernst and Young.
“All stakeholders including buyers, builders, government and lending institutions will benefit from this index... While it will benefit a buyer as he doesn’t have much market intelligence, it will also benefit governments as they will know in which area more housing is coming and can develop infrastructure" he said.
The housing ministry is formulating a single window system for clearance of realty projects after a panel set up on streamlining approval procedures for real estate projects submitted its report recently, Maken said.
“The system is expected to reduce average approval time from 196 days to 45-60 days," he said. The process involves developing a composite application form that entails seeking and getting approvals from municipal bodies and state and Union government agencies simultaneously, thereby streamlining the process.