18/07/2020
Naya Pakistan Housing Scheme (NPHS) is all over the news, with big numbers like 100,000 new houses and Rs. 30 billion subsidy. Let us talk about what this scheme provides.
The government has announced the following:
➡️ Housing to start from around Rs.20 lacs for a 5 marla unit.
➡️ Government would subsidize Rs.3 lacs, bringing the payable amount to around Rs.17 lacs per house.
➡️ The 5 marla units will be financed at an interest rate of 5% by the banks, which is even lower than the current Kibor rate.
➡️ Availability of Shari’ah financing which would help in removing the religious limitations of borrowing.
➡️ Banks have been instructed to keep 5% of their capital to invest in construction industry.
This would stimulate the economy as there are many other small and big industries linked to construction activities, which include cement, steel, stone, brick industries etc. The new policy has also given amnesty and allowed investors to dump their black money in this sector and get away with whitening it.
But will this actually benefit the poor?
Although these measures will stimulate the economy and might produce more jobs, it seems it will miss the bigger picture of making housing affordable for the poor.
1. With median income around Rs.36,000 per month (of labor force), it would be difficult for the poor or lower-middle class to meet monthly installments which would be many times their income.
2. There is no criterion of who will be given an opportunity to buy the house in the new scheme, and beneficiaries will be chosen through a lucky draw.
3. Chances are speculators might buy houses on a subsidized rate and then speculate it to sell on a higher market price later, like Ashiana Housing scheme. Which means the subsidy might go to the rich and not the poor.
4. 35,000 houses have already been allotted to LDA employees, with no check on their financial backgrounds.
5. Location of the housing scheme is also equally important. A scheme far away from the city would need a well-connected public transport system. This is not the first housing scheme; many like Mr. Junejo’s 7 marla scheme in Haripur have been planned and built before but remain vacant due to inappropriate choice of location.
With one-window operation, low-interest rates and stimulating the construction industry, this housing project can uplift the economy in these difficult times. However, to target its deserving beneficiaries and not making it a mere profitable opportunity for the builders, people in the office must learn from mistakes done in the past.
