India has a housing problem which eventually will be fixed. Meanwhile, India is spending Rs 1,319 crore on a project for housing and resettling displaced people in Sri Lanka of Indian origin. Like all subsidy-driven projects, this one too has its share of problems.

The construction of these 49,000 houses for 'resettlement and rehabilitation of internally displaced persons in Sri Lanka' was part of an overall commitment announced by India's Prime Minister during a state visit of the Sri Lankan President to India in June 2010.

A pilot project for the construction of 1,000 houses in the Northern Province of Sri Lanka is already under implementation. The Lankan sojourn is not new. As we mentioned in an earlier IndiaSpend article, we spent Rs 69 crore in Sri Lanka in 2010 and had budgeted Rs 290 crore for 2011-12. Last year's Rs 290 crore budget had some interesting end-uses. The Ministry of External Affairs was buying some 10,000 'push' cycles, of which 7,000 were for men and 3,000 for women.

Exceeding Budget

Now this figure of Rs 1,319 crore obviously seems above the earlier budgeted items. The housing project is being executed by Hindustan Pre-Fab, an Indian Government arm but several private firms were in the fray as is evident from this report. The project should have been initiated earlier but local media reports suggest there is some confusion (not unfamiliar to anyone from India) about whether the beneficiaries were genuine, compounded by allegations that some of the lists were fixed.

Sri Lanka has a booming real estate market incidentally. Realtor Jones Lang LaSalle announced in September it was setting up an office there a few months ago. It said it saw immense commercial real estate business potential and also deployed some of its most experienced retail real estate talent to initiate its entry.