Housing for All scheme gets govt nod: All you need to know

The Cabinet has given approval to Prime Minister Narendra Modi's flagship project 'Housing for All by 2022', paving way for affordable homes for the urban poor and slum dwellers at low interest rates.

Finance Minister Arun Jaitley had, while presenting Budget 2014-15, announced the setting up of a Mission on low-cost affordable housing to be anchored by the National Housing Bank (NHB).

The Housing for All by 2022 scheme was broadly cleared by the Cabinet in February but Wednesday's approval makes it possible for the Modi government to launch the scheme formally on June 25.

SALIENT FEATURES:

 

• Increase in income cap: Beneficiaries include Economically weaker section (EWS) and low-income groups (LIGs). The annual income cap has been raised to up to Rs 3 lakh (from Rs 1 lakh earlier) for EWS and Rs 3-6 lakh (from Rs 1-2 lakh earlier) for LIG.
• Minimum unit size for EWS housing: Increased to 30 sq m from current 25-27 sq m.
• Interest subvention increased to 6.50 per cent on loans to beneficiaries. Under the earlier proposals, EWS beneficiaries were to get interest subsidy of 4.98 per cent (Rs 1,80,000 each) on housing loans while LIG category was to get a subsidy of 3.33 per cent (Rs 1,20,000) each on net present value basis.
• Two crore new houses would be built to meet shortage in next seven years. EWS and LIG account for 96 per cent of the housing shortage in urban India.
• The monthly EMI will come down to Rs 4,050 per month from Rs 6,632 per month for over 15-year loan.
• Central assistance in the range of Rs 1 lakh- Rs 2.30 lakh per beneficiary would be provided under different components of the National Urban Housing Mission
• Scheme to benefit the urban poor by nearly Rs 2.30 lakh, each
• The scheme will include all 4,041 statuary towns in the country, but first phase to target 100 cities over two-year period

Challenges Ahead*:

• Absence of an effective policy framework for EWS and LIG housing, which is compounded with rising land cost, spiralling construction costs, and inadequate availability and reach of micro-finance measures
• Long gestation period of six to eight years, accentuated by multiple approvals to be obtained from multiple authorities in a two to three year time period.
• Inadequate long-term funding across the project life cycle necessitating multiple rounds of funding for the same project, increasing the cost of capital and time. Further, the funding is not available for acquiring of land from banking sources.
• High urbanisation rate, coupled with high rate of migration from rural areas. Sub-optimal usage of urban land (low FAR/FSI) has resulted in raising the cost per unit of built-up area.

(*Inputs from KPMG report 'Decoding housing  for all by 2022' )