India plans to announce an expansion of Prime Minister Narendra Modi’s flagship federal housing scheme in next month’s budget and an increase in available subsidies for low-cost housing loans, three sources said, ahead of elections this year.
Finance Minister Nirmala Sitharaman, who will present an interim budget on February 1, is likely to raise allocations for affordable housing by more than 15% to 1 trillion rupees ($12 billion) for 2024/25 from 790 billion rupees in 2023. /24 budget, two of the government sources said.
India, with a population of more than 1.4 billion, faces a shortage of more than 20 million houses in rural areas according to the government’s internal estimates. The urban housing shortage, estimated at more than 1.5 million, was expected to double by 2030, according to industry forecasts.
Modi, who faces voters in national polls by the end of May, launched the scheme in 2015 with the objective of “Housing for All”.
India’s federal and state governments have spent $29 billion over the past five years under the program to provide support for rural and urban affordable housing, the government told parliament last month.
It was due to end in December 2024, but the government could extend it for another three to five years because it still has to meet its target, said a third government source, declining to be identified because budget proposals are not public.
The Finance Ministry declined a request for comment.
Modi said on Monday that his government had built concrete houses for about 40 million poor households since he became prime minister in 2014.
Opposition parties said the scheme missed its original 2022 deadline to meet its targets, with millions of people still receiving benefits.
INCREASED HOUSEHOLD PRICE, COSTS
Officials want the finance minister to extend the program and increase incentives due to rising costs of land and building materials.
Under the housing scheme, the federal government provides an interest-cost subsidy of between 100,000 rupees to 267,000 rupees to households that obtain bank loans for housing construction, in addition to subsidies from state governments.
Officials favored an increase in subsidy to about 200,000 rupees for each house in rural areas, and an interest subsidy on home loans of up to 5 million rupees in urban areas.
A proposal will soon be sent to the cabinet for interest subsidies for urban affordable housing, India’s Housing and Urban Affairs Minister Hardeep Singh Puri said on Friday.
He declined to comment when asked about proposals for the housing sector in the budget.