<div>While much is been talked about the projected GDP growth rate of India, the focus on real estate and its ancillaries as a component of GDP are not stressed upon as much.<br /><br />The sector not only consists of residential housing, but also commercial spaces, trading units etc. This means the enormous business opportunities that arise out of this sector are significant and incomparable to any other.<br /><br />Though it is tough to pinpoint to the exact figure of this sector’s contribution to the GDP, the fact remains that about 250 or more ancillary industries directly depend on the development of the real estate sector.<br /><br />The financial crisis put the spotlight on the real estate sector across all cities in India. What started as a housing mortgage derivative product domino game, ironically led to the collapse of housing markets not just in the world’s most developed economies, but also in an emerging one like ours.<br /><br />What resulted was the initiative to ensure that the housing and real estate industry gradually come out of the crisis and continue to have stable growth like they did before.<br /><br />The need-of-the-hour was to look for a solution that will help both demand, and supply. An approach that will help boost construction of affordable housing, of integrated urban townships where lakhs could live a hassle-free life.<br /><br />The solution came in the form of Public-Private-Partnerships.<br /><br />The Jawaharlal Nehru National Urban Renewal Mission aims to increase the use of PPP in all kinds of infrastructure projects, from roads, ports, airports, railways, housing, telecommunication etc.<br /><br />Policy experts suggest that for successful infrastructure development for an emerging economy, PPP is the way to go.<br /><br />A mutually beneficial and symbiotic relationship like the PPP ensures that both sides can take advantage of the strengths of the other and work on their own weaknesses in partnership with the other.<br /><br />The infrastructure sector as a whole suffers from numerous problems, starting from land acquisition, approvals, clearance, funding.<br /><br />Given that public financing is not easy (lack of retail investor base and absence of a healthy market), the private sector takes charge of funding to some extent. <br />The public sector can take advantage of private sector skills, on-site development, easy finance, greater transparency and accountability that comes from the latter.<br /><br />The working culture of private sector also ensures that projects are delivered on time, there is greater focus to stick to deadlines, regular maintenance and upgradation of machinery is carried out, thereby decreasing the costs and time-taken to hand-over the deliverables.<br /><br />Special Purpose Vehicles (SPVs) created by the public enterprise ensures the development, building, maintenance and everyday operations done by the private company(s) during the contracted period is per the contract.<br /><br />The public enterprise involved typically gets a higher percentage share of the project, apart from safeguarding the project by giving it its backing. Although the inherent risk of the project lies with the private parties involved (because they are at a position to take the risk), the government entity essentially underwrites the risk by forging the bond.<br /><br />Land acquisition, which is by far the biggest hurdle in the development of infrastructure, is taken care of by the public enterprise involved, thereby cutting short a lot of time, which would otherwise have been spent in getting approvals.<br /><br />Global consultancy firm KPMG, in a report on affordable housing said land is the foundation on which a PPP is formed. <br /><br />Consider this: the government, in possession of large land parcels can distribute/sell them through a transparent process, thereby reducing the land cost; it can relax FSI norms; it can provide subsidy to builders; relax ECB norms for housing companies; increase current limits on interest subsidies<br /><br />With land as the biggest equity, a PPP model ensures that both the management of the project and the risks involved are equally distributed between the public and the private sector.<br /><br />Off-late, a number of successful infrastructure projects have been the result of a well-planned and well-executed PPP.<br /><br />A large number of waste management, road construction, and airport construction (Navi Mumbai) projects are the fruition of successful PPPs.<br /><br />As per Census 2011, 31 per cent of our population is classified as urban. This translates into an estimated 380 million people. Moreover, out of every 100 households, only 3 are built out of concrete, while 48 are made out of burnt brick and 24 out of mud. For the 11th five-year plan, the Planning Commission pegged the total shortage of dwelling units in urban India at 26.53 million. <br />Urban townships provide an answer to this housing shortage with integration of a variety of elements such as Schools, Residences, Recreation areas, Hospital and Retail which aims to provide a healthy lifestyle along with all amenities. This enables in achieving a community vision for the township. <br /><br />Given these numbers, and given the scope that PPPs have, it goes without saying that the housing sector, both rural and urban, needs to address their problems by forging long-run partnerships with either state or central governments to ensure housing needs of millions of these people are met without further delay.<br /><br />(<em>The author of this article is Brotin Banerjee, MD & CEO, Tata Housing)</em> <br /> </div>