Budget 2024: Govt Plans To Boost Affordable Housing Subsidy Hike, Scheme Extension Ahead Of Elections

India is set to unveil an extension of Prime Minister Narendra Modi's flagship federal housing scheme and an increase in subsidies for low-cost housing loans. The announcement is expected to come in the upcoming budget presentation on February 1 to address the escalating housing crisis, as the nation gears up for crucial elections later this year.

Sources told Reuters that Finance Minister Nirmala Sitharaman is likely to amplify allocations for low-cost housing by over 15%, reaching a substantial 1 trillion rupees ($12 billion) for the fiscal year 2024/25, up from Rs 79,000 crore in the previous year's budget. This proactive measure aims to tackle the severe housing shortage, surpassing 20 million homes in rural areas, and an estimated 1.5 million in urban regions, projected to double by 2030.

Launched in 2015 with the ambitious goal of "Housing for All," Prime Minister Modi's housing initiative has been a cornerstone of his administration. In the past five years, both federal and state governments have collectively invested $29 billion under the program, providing crucial support for low-cost housing in both rural and urban areas.

Although the scheme was initially set to conclude in December 2024, insiders suggest a potential extension for an additional three to five years, underscoring the government's commitment to achieving its housing targets.

Facing the reality of rising land and building material costs, officials are urging Finance Minister Sitharaman to extend the housing program and enhance incentives. With a staggering urban housing shortage expected to double by 2030, the need for decisive action has never been more pressing.

The housing scheme currently offers a federal interest-cost subsidy ranging from Rs 1,00,000 to Rs 2,67,000 for households securing bank loans for housing construction. This subsidy is in addition to support from state governments. However, officials are advocating for a boost in financial assistance to approximately Rs 2,00,000 for each rural house and an interest subsidy on home loans of up to Rs 50 lakh in urban areas.

Despite Prime Minister Modi's claim of constructing concrete houses for around 40 million impoverished households, opposition parties argue that the scheme missed its original 2022 deadline. Millions of people are still waiting to reap the benefits of the initiative, raising concerns about its efficiency and impact.

The Finance Ministry has refrained from commenting on the potential extension of the housing program and the subsidy increase. However, with elections looming, the government's commitment to addressing the housing crisis is evident.

In a bid to further streamline housing initiatives, a proposal is expected to be presented to the cabinet soon. The proposal includes interest subsidies for urban affordable housing, aiming to enhance accessibility for those in need.

Hardeep Singh Puri, India's Housing and Urban Affairs representative, refrained from providing details but confirmed that proposals for the housing sector in the budget were under consideration. The anticipation is high as India awaits critical measures to alleviate the housing crunch and make significant strides towards the "Housing for All" vision.

As India prepares for a budget presentation, the potential extension of the federal housing scheme and increased subsidies underscore the government's commitment to tackling the housing crisis. With elections on the horizon, the move not only addresses a pressing societal need but also becomes a crucial factor in shaping political narratives.

*Inputs from Reuters*