Rs 80,000-crore stimulus in the works: Two crore houses for the urban poor

In its last few weeks,the UPA Government is working overtime to clear what it hopes will help kickstart the sputtering economy...

In its last few weeks,the UPA Government is working overtime to clear what it hopes will help kickstart the sputtering economy: a 25-square-metre house for each of the estimated 2 crore urban households below the poverty line BPL across the country.

With an upfront subsidy of Rs 40,000 to each family for the house estimated to cost Rs 1 lakh each,the scheme,outlined by the Ministry of Housing amp; Urban Poverty Alleviation,envisages a Rs 80,000-crore package almost thrice the investment this year on the National Rural Employment Guarantee scheme.

The beneficiaries will be selected from the 2002 list of BPL families and the land or dwelling units would be allotted to the female member of the household or jointly to both husband and wife.

Providing housing for the urban poor,the scheme will provide a fillip to economic activity as it would raise demand for cement,steel and other ancillary sectors and generate large scale employment.

Although different states will have different models for developing the housing scheme,on an average,each square foot construction in a three-floor complex would generate demand for 3 kg of steel,10 kg of cement and 27 skilled and unskilled workers.

For those families who do not own land,the Centre has got states to agree to release land at controlled prices which the state could either apportion among individual families or hand over to housing boards,cooperatives or private builders to construct housing complexes that would then be allotted to the BPL families.

The benefit to private builders would be that they would get a certain portion of the built-up area for commercial use or market sale,depending on state norms. For example,Mumbai allows a floor space index of 2.5 to developers who build houses for the poor,compared to 1.33 allowed usually.

Story continues below this ad

One reason for pushing this through is that though lending to real estate sector picked up last November and December,the credit extended until December was Rs 22,000 crore paltry compared to Rs 70,000 crore extended to individuals and Rs 30,000-40,000 crore to developers in urban areas last fiscal year.

The scheme,on the lines of Indira Awas Yojna for the rural poor,would also address the glaring housing shortage that is expected to climb to 26.53 million units at the end of 11th Plan from 24.71 million at the start of the Plan.

Providing for this shortage would require Rs 3.65 lakh crore for housing projects and Rs 2 lakh crore for developing the associated infrastructure, said government officials. The Centre does not have the money to fulfil this shortage,they said.

Since maximum shortage,99 per cent,is in the economically weaker section and low income group category,the subsidy would be restricted to them, they said.

Story continues below this ad

For a state to qualify for the scheme,it would have to provide land at controlled rates,said sources. And in lieu of states agreeing to provide such land,the Centre would share half of the infrastructure development cost.

This would help reduce land costs, says the minutes of a meeting of the Committee of Secretaries on January 22.

Central funding for infrastructure development would be paid through Jawaharlal Nehru National Urban Renewal Mission,a decision taken at the CoS meeting as state ministers had said that they were not averse to making land available at controlled prices for affordable housing but they passed a resolution that Central government should have a stake in such a programme.

The scheme has been passed on to the Finance Ministry and the CoS has asked the Planning Commission to indicate availability of funds.