Stimulus via housing: Subsidy on loan rates,tax breaks,new projects

Convinced that housing is among the best antidotes for the economic slowdown,the Centre has asked states to announce large-scale housing schemes in urban areas....

Written by Smita Aggarwal | New Delhi | Published: February 7, 2009 12:54:47 am

Convinced that housing is among the best antidotes for the economic slowdown,the Centre has asked states to announce large-scale housing schemes in urban areas. Simultaneously,to kick-start demand,it plans to subsidize home loans up to Rs 20 lakh,and extend tax incentives to buyers.

TKA Nair,Principal Secretary in the PMO,last week asked all states to make land available to housing development agencies and individuals. “Large housing schemes by the government can minimize the impact of the global economic downturn,” he told chief secretaries in a meeting.

The housing package is likely to be announced on February 16 when the government presents its Interim Budget,officials said. The finance ministry and Planning Commission have largely finalized the vote-on-account.

A concept note,formulated and circulated among concerned ministries,has found favour at the highest level. A Planning Commission official told The Indian Express,“A proposal to provide interest subsidy for home loans up to Rs 20 lakh is under active consideration. The Centre will meet full cost of the subsidy under the scheme.”

Two months ago,the government had announced an interest subsidy of 5 per cent on loans up to Rs 1 lakh for by the urban poor during the Eleventh Plan. “The quantum of interest subsidy is likely to be lower than this as home loan rates have fallen since their peaks last year,” another official said.

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