NEW DELHI: The government is seeking to mitigate the huge shortage of housing in cities around the country in an election year by proposing to set up an Urban Housing Fund with an initial allocation of Rs 2,000 crore in 2013-14. This comes along with a move to provide Rs 6,000 crore of additional funds for the Rural Housing Fund.
The Urban Housing Fund will be set up by the National Housing Bank and will help in creation of new homes in the budget and affordable housing categories, helping bridge the humongous shortage homes in the country.
“The Urban Housing Fund has been created for the first time. We will be formulating a scheme for it soon. These funds will be utilized to give refinance to banks, housing finance companies and RRBs for their retail loans in urban areas and the thrust will be on lower loan slabs,” said RV Verma, chairman of NHB. The government has estimated that there is a deficiency of 18.78 million homes in the country of which 96% are in the economically weaker section and low-income group categories. This lack of housing has led to the creation of unregulated slums in the big cities such as Delhi and Mumbai.
The Rural Housing Fund set up through the National Housing Bank is used to refinance lending institutions, including Regional Rural Banks (RRBs) that extend loans for rural housing. “So far, 400,000 rural families have taken loans. In the last Budget, we provided Rs 4,000 crore to the Fund. In consultation with RBI, I propose to provide Rs 6,000 crore to the Rural Housing Fund in 2013-14,” said the finance minister P Chidambaram .
This will create further demand for rural housing as RRBs will have more money to lend to home seekers in rural areas.
This new demand that will be created through the flow of credit will drive creation and supply of new homes in both rural and urban areas.
“The setting up of the Urban Housing Fund by the NHB with an allocation of Rs 2000 crore will infuse liquidity for urban housing, thereby boosting demand,” said Anuj Puri, chairman and country head, Jones Lang LaSalle India .
