Budget 2024: What Reports Say on Possible Boost in National Housing Bank Funds for Affordable Housing
Budget 2024: What Reports Say on Possible Boost in National Housing Bank Funds for Affordable Housing

Expectations for the Budget: Union Finance Minister Nirmala Sitharaman, during her Budget speech for 2023-24, announced the establishment of the Urban Infrastructure Development Fund (UIDF) under the National Housing Bank. This fund aimed at creating urban infrastructure in Tier 2 and Tier 3 cities. Now, there's speculation that the corpus under the National Housing Bank for affordable housing might be increased once again to tackle challenges faced by mid-tier cities, as reported by ET Now.

During the presentation of the Union Budget 2023, FM Sitharaman stated that the urban infrastructure development fund would be managed by the National Housing Bank and utilized by public agencies. She mentioned, "We aim to allocate Rs 10,000 crore annually for the urban infrastructure development fund." Additionally, she highlighted the continuation of 50-year interest-free loans for states. These loans, with a principal repayable in five equal annual installments within seven years from the withdrawal date, come with a moratorium period of two years, while interest will be payable on a quarterly basis.

Earlier reports from Reuters suggested that FM Sitharaman might increase allocations for low-cost housing by over 15 percent to Rs 1 lakh crore for 2024/25 from the previous Rs 790 billion.

In July 2023, the UIDF was launched with an initial corpus of Rs 10,000 crore to supplement state government efforts by providing a stable and predictable source of finance for urban infrastructure creation in Tier 2 and Tier 3 cities.

Currently, the UDIF covers 459 tier-2 cities with a population of 50,000 to less than a lakh and 580 tier-3 cities with a population of one lakh to less than a million, according to the 2011 census.

India Inc. has urged the government to extend the interest subvention scheme to cover the total housing cost of up to Rs 35 lakh, up from the current Rs 25 lakh, to promote low-cost and affordable housing.

CREDAI (Confederation of Real Estate Developers' Associations of India) pointed out that the allocation under Affordable Housing, which was previously capped at Rs 45 lakh, needs revision. Inflation alone has significantly increased real estate prices in the past seven years. Data from the National Housing Bank (NHB) shows a 24 percent increase in housing rates since June 2018 in India, making the current cap of Rs 45 lakh impractical for developers to adhere to. Hence, CREDAI recommends revising the definition of affordable housing to "a unit with 90 square meter RERA Carpet Area in Metro Cities and 120 square meter RERA Carpet Area in Non-metros without a cap on the cost of the unit."

The Pradhan Mantri Awas Yojna, launched in June 2015 with the objective of "housing for all," initially set its deadline for December 2024. However, reports suggest that the NDA government might extend the scheme for another three to five years due to missing this target.

Under the housing scheme, the central government provides an interest-cost subsidy ranging from Rs 1 lakh to Rs 2.67 lakh to households securing bank loans for housing construction, in addition to subsidies from state governments.

In the past five years, the government has reportedly spent nearly $29 billion under the programme, as stated in the Parliament during the winter session held in December.

Earlier this month, PM Narendra Modi handed over 15,024 homes in Solapur district, Maharashtra, to beneficiaries from economically weaker sections, including unorganized workers, textile workers, beedi workers, construction workers, ragpickers, and garment workers. This marks the world's largest affordable housing project being executed under the Pradhan Mantri Awas Yojana - Urban (PMAY-U).

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