New Bengal model for housing units

In a twin attempt to meet the huge shortage in housing stock in the state and deploy government funds more effectively, the state government is contemplating to adopt a new joint venture model where the management control will rest with the private partner in housing projects.

This is expected to reduce the burden on the government exchequer for developing real estate to a great extent.

It is also expected to attract more private sector companies but these investors would like to dictate terms reagrding nature of construction as well as pricing. The state government's share in these projects will be 11 per cent, the minimum needed to form a joint venture company.

"The government is working out the contours of the model and notification is likely to be placed by the end of this financial year. This assisted public-private-partnership (PPP) model will attract smaller promoters in projects," Dilip kumar Dutta, secretary, housing department, government of West Bengal, said.

The West Bengal Housing Board has already developed or in the process of building 10,500 dwelling units through its existing JVCs.

The private partners include leading Kolkata based developers like Ambuja, Belani Group, Peerless, Shrachi and Srei.

In case of the new model, other small companies would get a chance to participate, R Ray Choudhuri, vice-chairman of the West Bengal Housing Board, said. From a buyer's point of view, projects developed by these companies would have quality approval from the government.

On Tuesday, three more projects were announced by the Housing Board.

The Bengal United Credit Belani Housing Ltd, Bengal Park Chambers Housing Development Ltd and Bengal Shelter Housing Development Ltd, will together create 1,500 dwelling units in New Town Action Area-II. The total project cost is about Rs 205 crore and it would be completed about three years.

At present, West Bengal Housing Board (WBHB) has nine joint venture companies in which it is equal partner with the private investor.

The chairman of these JVs are nominated by the government and the companies have to comply with restrictive government rules that govern these bodies. For instance, half of the dwelling units in any projects has to be for the lower and middle income groups (LIG and MIG). The government also regulates the price of the flats.

Often the LIG units have to be sold at lower than the cost price as the deficit is recovered as cross-subsidy from apartments for the high income group (HIG). MIG flats are sold at cost price too. The state government claims this cross subsidy model has been developed uniquely in West Bengal. According to the census data of 2001, West Bengal accounts for 21 per cent of estimated shortfall in housing stock.

The shortage in the state is 7.1 million units. Nationally, the shortage is 33.1 million units.