Housing for all: CCEA increases interest subvention on loans for affordable homes to 6.5%
The Cabinet Committee on Economic Affairs (CCEA) today approved a hike in interest subsidy for promoting affordable housing for the poor in urban areas under the Housing for All by 2022 initiative.
The CCEA, which was chaired by Prime Minister Narendra Modi, has accepted the recommendations of an inter-ministerial committee to increase interest subvention to 6.5% on housing loans to beneficiaries belonging to economically weaker sections (EWS) including slum dwellers and low income groups (LIG).
“CCEA’s decision benefits urban poor by an amount of Rs 2.30 lakh each,” said a statement from the ministry of Urban Development.
While approving the urban component of Housing for All scheme in February, the cabinet had desired an inter-ministerial committee to further fine tune the urban housing mission. The committee had subsequently held a series of meetings after which it came out with recommendations.
After today’s CCEA decision, interest subsidy under affordable housing through credit linked subsidy component of urban housing mission would increase by Rs 50,000 to Rs 1,10,000 for each beneficiary. Under the earlier proposals, EWS beneficiaries were to get Interest Subsidy of 4.98% (Rs 1,80,000 each) on housing loans while LIG category was to get a subsidy of 3.33% (Rs 1,20,000) each on net present value basis, the statement said.
The inter-ministerial committee also recommended to peg interest subvention at 6.5% even if interest rates increase later. At present, housing loans for affordable housing would be available at only 4%.
Central assistance in the range of Rs 1 lakh to Rs 2.30 lakh per beneficiary would be provided under different components of the national urban housing mission in urban areas to build two crore new houses to meet the housing shortage over the next seven years.
The urban housing mission will be taken up in all the 4,041 cities and towns. Initially, focus would be on 500 cities and towns with a population of one lakh and above each, as they account for about 75% of urban population. 100 such cities will be included in Phase-1 (2015-March, 2017) and 200 cities in Phase-2 (April, 2017-March, 2019) and the remaining would be covered during 2019-22. The Credit Linked Subsidy Scheme would however be implemented in all cities and towns from the current year onwards.