“We are working on this and we hope one of these projects will be
developed in the next six months,” he said. If the estimated housing
deficit in India is 25 million units, then such a large requirement
cannot be tackled completely from a real estate point of view,
according to Mr Martelli. IFC can help the Indian sector with advice on
how affordable housing has been tackled in other countries such as
Mexico where “literally, they are building cities at a time, 15,000 to
20,000 homes, costing between $7,000 to $15,000”. (The Corporation is
also in talks with home builder Homex in Mexico for such projects here
in India.)
But both the real estate and financial sectors here must understand the underlying concept – that such projects will not entail speculating on land. “I mean if you had to sell 15,000 houses, you cannot speculate on the price of land,” said Mr. Martelli. With respect to the financial sector, one “cannot look at affordable housing with the same concept as mortgage,” he said. “I try to help build institutions that can finance or build, say five million homes. We are trying to show the market what has been done in other countries. We are talking with private players here. Low income housing has a multiplier effect – as low as four times and as high as seven-eight times. It can have tremendous impact on the growth of the country,” said Mr. Martelli.
In India, IFC continues to go by its mandate: its three-pillar strategy of inclusive growth, climate change and regional integration, said Mr Martelli. With respect to micro-finance, Mr Martelli pointed out that 75 per cent of the industry in India is still in the four southern states. IFC is increasingly trying to focus on the low income States, said Mr Martelli. A special point of interest for IFC is the non-banking financial sector.
“We have basically tried to support the transformation of NGOs into development institutions and to help them scale their operations, and to operate in these other low income parts of India.” In India, climate change, trade finance, creation of wind, solar and other types of renewable energy, micro finance, micro-insurance, development of infrastructure such as power, cold chains and the likes have been IFC’s areas of interest.
For both FY-09 and FY-10 (fiscal year ending June 30), IFC’s highest exposure has been in India. Out of the $3.5 billion that IFC has committed in India, $2.5-2.6 billion have been disbursed. IFC will continue to invest roughly $1 billion in India every year for the next two or three years, said Mr Martelli.
