The Centre, the Tamil Nadu government and the World Bank signed two agreements for affordable housing projects in Tamil Nadu, on Tuesday, involving a total outlay of $250 million.
The two projects include $200-million First Tamil Nadu Housing Sector Strengthening Programme and the $50-million Tamil Nadu Housing and Habitat Development Project, according to an official statement.
The loans of $200 million and $50 million taken from the International Bank for Reconstruction and Development (IBRD) have a maturity of 20 years including a grace period of 3.5 years.
The $200 million programme is aimed at supporting the government’s ongoing efforts to increase the availability of affordable housing by gradually shifting the role of the State from being the main provider to an enabler. It will also aim to unlock regulatory barriers and incentivise private sector participation in affordable housing for low-income families.
With the allocation provided under the Pradhan Mantri Awas Yojana (Urban) and the two projects from the World Bank, a large number of the urban poor in Tamil Nadu are expected to get access to better housing and, in the process, improve their living conditions,” said Sameer Kumar Khare, Additional Secretary, Department of Economic Affairs, Ministry of Finance.
Nearly half of Tamil Nadu’s population is urban, and this is expected to increase to 63 per cent by 2030. An estimated 6 million people are currently living in slums (representing 16.6 per cent of the State’s urban population).
The $50-million Tamil Nadu Housing and Habitat Development project will support innovations in housing finance and strengthen housing sector institutions in the State. It will finance the newly-created Tamil Nadu Shelter Fund (TNSF) – an innovation in housing finance in India – by providing an equity contribution of $35 million.
This initial support to TNSF will enable cross-subsidisation opportunities where higher returns from commercial and high-income developments will compensate for lower returns from affordable housing.
This will make affordable housing commercially-viable for potential investors. The project will also strengthen the capacity of key housing institutions including the Tamil Nadu Slum Clearance Board, the State’s main provider of affordable housing; Chennai Metropolitan Development Authority, the land use planning authority for the Chennai Metropolitan Area; and Tamil Nadu Infrastructure Fund Management Corporation Limited, the asset management company of TNSF.
“Both projects in Tamil Nadu will complement each other and strengthen key institutions to transform the housing sector in Tamil Nadu,” said Abhijit Sankar Ray, Senior Urban Specialist, World Bank and Task Team Leader for the Tamil Nadu Housing and Habitat Development project said.