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Modi govt planning to spend Rs. 60,000 crore on subsidised home loan

Ahead of polls mulling big housing scheme implementation

Ravindra Ojha @ EW News 

New Delhi: The Centre is considering spending 60,000 crore ($7.2 billion) to provide subsidised loans for small urban housing over the next five years, two government sources told this reporter. Banks are likely to roll out the scheme in a couple of months, ahead of key state assemblies elections later this year and Lok Sabha polls due in April or May next year.

 

Last month, the government cut cooking gas prices for households by about 18 per cent to rein in inflation ahead of elections.  Prime Minister Narendra Modi announced the plan in a speech in August to mark the country’s Independence Day, but its details have not been previously reported.

 

The scheme will offer an annual interest subsidy of between 3-6.5 per cent on up to Rs 9 lakh of the loan amount. Housing loans below Rs 50 lakh availed for a tenure of 20 years will be eligible for the proposed scheme, the sources said, “The interest subvention will be credited upfront to the housing loan account of beneficiaries. The scheme proposed till 2028 is close to finalisation and will require approval of federal Cabinet,” one government official said.”

 

The scheme could benefit 2.5 million loan applicants in low-income groups in urban areas but the quantum of subsidised credit will depend on demand for such homes, the official said. “We are coming up with a new scheme in the coming years that

 

will benefit those families that live in cities but are living in rented houses, or slums, or chawls and unauthorised colonies,” Modi had said in his August speech. The officials did not want to be named as the scheme is under finalisation.

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