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ShareMumbai: The central government will help slum dwellers and other urban poor to buy flats if they quit slums.
The ministry of housing and urban poverty alleviation (HUPA) will provide heavy interest subsidy for housing loans to encourage the poor and slum dwellers to buy flats or houses. It will also help them to get houses and flats at cheaper rates.
The ministry has signed a memorandum of agreement with 17 nationalised banks and six financing institutions, which will provide an interest subsidy of 5% on loans up to Rs1 lakh to people from the economically weaker section (EWS) and lower income group (LIG). The loan can be repaid in 15-20 years.
Households with a monthly income of Rs3,300 come in the EWS group and those with a monthly income of Rs3,300 to Rs7,300 in the LIG. A ministry official said preference will be given to SC, ST, minorities, persons with disabilities, and women.
While agreeing that the subsidy on Rs1 lakh may not be sufficient for the poor to build or buy flats in cities, HUPA minister Kumari Selja said, "This is not the only answer but one of the options. We are trying to prevent the growth of future slums." This was the beginning, she said, and depending on the success of the scheme, the government would think of increasing the loan amount.
The government, in partnership with the private sector, is working separately on a plan to provide cheap and affordable houses to the urban poor. The government will cap the prices of such houses so that builders do not extract money from the poor. The upper limit of the sale price will be fixed after discussing with the state governments.
The loan will be available for building new houses. The beneficiaries can choose the option of fixed or floating rates. Mortgaging the house will be acceptable as primary security. A budget of Rs1,100 crore has been allocated for the interest subsidy scheme for housing the urban poor over the next four years. At least 3.10 lakh houses will be built for EWS/LIG people.
"The governments of Gujarat, Maharashtra, Kerala, Karnataka, Andhra Pradesh, Madhya Pradesh, Uttra Pradesh, Rajasthan, Orissa, and Chhattisgarh have already come on board," Selja said. "We hope to rope in the others too."
