As India walks one step closer to the futuristic concept of 100 smart cities project, the nation is seeing it as a growth driver in coming few years.
At this stage, when the figures are more of an estimates, it is likely that the lives of most of the countrymen will be positively impacted and will lead to a better growth story running onto atleast a decade from hereon.
Massive Numbers Conservatively speaking, even if 2 crores of the houses were to be spread all over the country, the cost of an average holding of about 800 sq feet would be somewhere near 20 lakhs each. It might take a while for anyone to figure out as to how many zeros would add upto the projected sum of 40 lakh crores over next 7 years at an average of 5.71 lakh crores per annum.
If one goes as per the estimated market size of housing is about 4 lakh crore rupees with an annualized growth rate of 7-8 %. As a result of latest policy infusion the annualized CAGR may now go upto 11-13%. The expected number is expected to rise phenomenally if one adds a similar amount of investment in allied infrastructure development. Combined together they create a magnanimous image of progress, which may go on for atleast a decade.
The Multiplier Effect: The theory as propounded by John Maynard Keynes a penny spent is a penny earned has the highest coefficient for the housing sector. Due to the number of ancillaries dependent on the construction like cement, steel, timbre, brick etc, here a rupee spent is benefiting people 4.71 times over. This factor alone means, that 1.7 lakh crores would multiply and circulate in the economy to the tune of about five times the amount and benefiting people at multiple levels. This amount is still more than the planned outlay of 4,65,277 crores as budgeted in the annual budget of 2015-16. In simple words the booster dose to the housing sector would result in faster circulation of money and enriching sectors, which are directly and indirectly linked with the sector.
Stimulus for Employment Generation:If 350 is the average number of direct employees hired for a 1000 unit new project then 70 lakh is the magic figure for manpower requirement in till the said projects go on. Real Estate sector by the virtue of its structure also has an indirect employment ratio of 1:8 evenly distributed over in over 300 ancillary units providing products like cement, steel, bricks, tiles etc and services like transportation, advertising & promotion and so on. It essentially means incomes for more than 6 crore households in next few years.
Enriching Urban Lives: By virtue of its definition the Smart Cities are the ones that enrich lives of those who live in. Such cities will be complete in day-to-day functioning. World class work centres, schools, colleges, transportation, hospitals, malls, entertainment solutions and other civic amenities will be available to each and every citizen in these new age clusters. This essentially means that the standard of living goes up drastically. As rightly said by the Prime Minister Narendra Modi, “Every person dreams of having his or her own home. It is not merely about a roof and four walls; it is beyond that.”
Spreading out Development:With 98 smart cities declared 2 more to come one thing is clear that even the remote corners of the country have been targeted. It means that India will now witness development across its length and the breath.
The Indian Economy as of now is the seventh-largest in the world and is the second fastest in terms of growth. In last 2 decades it progressed around 7% on annual basis. Thanks to the pro-growth stance taken by the present government, the reforms push will further launch it in the orbit of 8% plus.
The long-term growth prospective of the country also remains positive due to its young population and corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy. And with all the right noises India even has a potential to become world’s 3rd-largest Economy by the time housing for all becomes a reality.
Avdhesh Goel FCA, ACS, AICWA