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In a major push for affordable housing, the Government is set to raise both the subsidy given to developers, as well as the cost ceiling for affordable housing.
The Government plans to increase the subsidy (capital assistance) from the current Rs 50,000 to Rs 80,000 per dwelling unit. This subsidy will be given to developers building affordable housing meant for economically weaker sections (EWS).
Construction costs up
The cost ceiling is also proposed to be raised substantially. A senior Government official told Business Line , “The cost of construction has gone up. With Rs 1 lakh, one can no longer build a dwelling unit on 25 square meters meant for economically weaker sections. That is why the thinking is to raise the loan ceiling for subsidy to Rs 5 lakh from Rs 1 lakh for such dwelling units.”
The Government is also mulling a change in the interest subsidy payout. “The thinking is to give the subsidy as annuity over a period of 10 years,” said an official close to the developments.
Annuity payout is akin to equated monthly instalments (EMIs). This will reduce the overall burden of subsidy payout, the official added.
At present, the Interest Subsidy Scheme for Housing the Urban Poor (ISHUP) provides home loan with Central Government subsidy to EWS/LIG persons for acquisition and construction of houses.
The subsidy is 5 per cent per annum on interest charged on the admissible loan up to Rs 1 lakh, for construction or acquisition of a new house.
Similarly, the existing provision under Affordable Housing in Partnership Scheme says the Central assistance under the scheme will be limited to Rs 50,000 per rental/dwelling unit for all units meant for EWS, LIG (lower-income group) and MIG (middle-income group).
A Parliamentary committee has also suggested revising the schemes.
“The revision aims at encouraging not just the end-user but also the developers to go for more and more affordable housing projects, which will reduce the housing shortage in urban areas,” the official said.
The Ministry of Housing and Urban Poverty Alleviation (HUPA) is the nodal ministry for both the schemes.
Housing shortage
A technical group constituted by this Ministry had estimated urban housing shortage at the beginning of the Eleventh Plan (2007-08) at 24.71 million dwelling units, which it projected will increase to 26.53 million by the end of Eleventh Plan (2011-12).
The Ministry constituted a new technical group in September 2011 under the Chairmanship of Prof. Amitabh Kundu to estimate the housing shortage in urban areas for the Twelfth Five Year Plan (2012-17).
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