India’s Finance Ministry wants housing to be made part of Infrastructure.

From the Economic Times :

The finance ministry has asked the Reserve Bank to consider giving infrastructure status to the housing sector, and relax provisioning norms for it so banks can extend attractive loans to buyers.
RBI has mandated that banks set aside from their profits an amount equal to 1% of total standard assets in commercial real estate, which also includes housing projects. This means if a bank lends 100 towards a commercial real estate project, it will have to keep aside 1 to offset any loan to the sector turning bad. The provisioning rises to 15% of net investment in case of secured sub-standard asset.
A finance ministry official confirmed the government has asked RBI to look at all possible options to provide an impetus to the housing sector.

Capital mind has a nice take on the issue. 

Real estate is not “infrastructure”. If it was, then we would be giving infra status to the auto industry, the furniture industry, the TV industry and even the toothpaste industry. Housing is not infrastructure. Infrastructure is something on top of which other things can be run – roads are, since it provides access and thus businesses can be built around it. Ports are because they facilitate transfer of goods and passengers over the sea. An Airport is. (An individual airplane is not). A house is not, and therefore the housing sector is not.

This is like putting the cart before the horse and rewarding the greed of property developers. One of my close family member has been a victim of the greed. 
The home prices are un-affordable due to the lethargy, greed and lack of financial discipline of real estate companies. I know people who bought a house, and then were approached by the developer to sellit, so that the developer can make more money on the same property. 
 Its not a policy issue. More carrots to the real estate developers will only make them lazier and greedier and of course richer.  There is a huge lobby out there asking for policy relaxations from Government.  
The solution is penalty stick to the real estate developers to finish the projects and clean up the mess created by them, and not carrot of another policy benefit. 
This blog item was published by Ritesh Sinha.