Budget

Published: January 17, 2024
Updated: January 17, 2024

Boosting Affordable Housing: Anticipated Developments in Interim Budget 2024

Allocation Surge for Low-Cost Housing:

As India eagerly awaits the presentation of the interim budget on Feb. 1, Finance Minister Nirmala Sitharaman is expected to make significant announcements. According to reports, allocations for low-cost housing may witness a substantial boost of more than 15%, reaching $12 billion for the fiscal year 2024/25.

Background: Flagship Housing Scheme and Expenditure

Prime Minister Narendra Modi's flagship housing scheme, initiated in 2015 with the goal of "Housing for All," has been a cornerstone in addressing the housing deficit in the country. With a population exceeding 1.4 billion, India faces a shortage of over 20 million houses in rural areas, and the urban housing deficit is estimated to double by 2030. In the last five years, a considerable $29 billion has been expended under the program, aiming to provide support for both rural and urban low-cost housing.

Extension Plans and Target Challenges:

Originally slated to conclude in December 2024, the housing scheme might witness an extension for another three-to-five years, as it has yet to meet its ambitious targets. Opposition parties criticize the program for missing its original deadline of 2022, asserting that millions are still awaiting benefits. The government is contemplating the extension to overcome challenges arising from the rising costs of land and building materials.

Incentive Structure: How the Affordable Housing Scheme Operates:

Under the current housing scheme, the government offers an interest-cost subsidy ranging from 100,000 rupees to 267,000 rupees to households obtaining bank loans for housing construction. Additionally, state governments provide supplementary subsidies. Officials are now advocating for an increase in financial assistance to approximately 200,000 rupees for each house in rural areas and an interest subsidy on home loans of up to 5 million rupees in urban areas.

Proposed Enhancements and Cabinet Considerations:

In response to the escalating costs in the housing sector, officials are proposing an increase in financial assistance and interest subsidies. The recommendation includes boosting financial aid for rural housing and extending interest subsidies for urban affordable housing. Hardeep Singh Puri, India’s Housing and Urban Affairs, indicated that a proposal for interest subsidies would soon be submitted to the cabinet.

A Potential Game-Changer for Affordable Housing:

As the interim budget 2024 approaches, the potential surge in allocations for low-cost housing presents an encouraging prospect for addressing India's housing challenges. The proposed enhancements and extensions underscore the government's commitment to ensuring affordable housing for all. The coming budget may mark a significant milestone in advancing the ambitious housing scheme, benefiting millions and contributing to the broader socio-economic development of the nation.