Budget 2024: Is affordable housing the key card before Lok Sabha elections?

In a bid to address the pressing housing shortage in India, Prime Minister Narendra Modi’s flagship federal housing scheme is set to receive a significant boost. With elections looming, the government is gearing up to announce an extension to the scheme and increase subsidies for low-cost housing loans in the upcoming budget. Finance Minister Nirmala Sitharaman is expected to unveil the details in the interim budget on February 1, with sources suggesting a substantial rise in allocations for low-cost housing.

The Housing Challenge

India, home to over 1.4 billion people, grapples with a severe shortage of housing, particularly in rural areas. The government estimates a shortfall of more than 20 million houses in rural regions and over 1.5 million in urban areas, a figure projected to double by 2030. Modi’s ambitious “Housing for All” initiative, launched in 2015, aimed to bridge this gap and provide affordable housing to millions of citizens.

Progress and Challenges

The government has invested USD 29 billion over the last five years to support rural and urban low-cost housing. Despite these efforts, the scheme was set to conclude in December 2024. However, as the target is yet to be met, there are indications that the program might be extended for another three to five years.

Modi, in a recent statement, highlighted the construction of concrete houses for around 40 million impoverished households since 2014. However, opposition parties argue that the scheme missed its initial 2022 deadline, leaving millions without the promised benefits.

Budget Boost

In response to the evolving housing landscape, Finance Minister Nirmala Sitharaman is expected to announce a more than 15% increase in allocations for low-cost housing, reaching Rs 1 trillion (USD 12 billion) for the fiscal year 2024/25. This financial boost aims to accelerate the construction of affordable houses and meet the growing demand.

Key Features of the Scheme

The housing scheme, at its core, provides an interest-cost subsidy to households obtaining bank loans for housing construction. The subsidy ranges from Rs 100,000 to Rs 267,000 and complements subsidies offered by state governments. In light of rising costs of land and building materials, officials are advocating for an increase in financial assistance to Rs 200,000 for each house in rural areas. Additionally, an interest subsidy on home loans of up to Rs 5 million is being considered for urban areas.

Looking Ahead

As the government seeks to address the housing challenge, officials are poised to present proposals for interest subsidies on urban affordable housing to the cabinet. This move reflects a commitment to creating a more inclusive and accessible housing market, especially as urbanization continues to shape India’s demographic landscape.

Conclusion

India’s efforts to tackle the housing shortage exemplify a commitment to improving the lives of its citizens. The extension of Modi’s flagship housing scheme, coupled with increased subsidies, underscores the government’s recognition of the challenges faced by millions of Indians in securing a place to call home.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.