Govt panel recommends hike in grant for India Awas Yojna

A govt-appointed committee has recommended a hike in allocation of grants for construction of rural houses for Below Poverty Line category from Rs 45,000 to Rs 75,000 per dwelling unit.

The Banker's Committee on Rural Housing submitted its report to Rural Development Minister Vilasrao Deshmukh on recommending the hike in grant for the Indira Awas Yojana for the people living Below Poverty Line.

The committee also proposed a loan of Rs 50,000 to BPL families in form of affordable credit at four per cent under Differential Rate of Interest (DRI) scheme of the Centre.

One of the key recommendations of the committee is to extend the repayment period for the loans to 15 years.

It has viewed that since the loan is given for housing, the EMI may be limited to Rs 300-350 so that it is within the repayment capacity of the borrower.

Deshmukh said the recommendations of the expert committee would be examined by the ministry towards its commitment of providing affordable housing for the rural people across the country.

So far the benefits available under Indira Awas Yojana are grant of Rs 45,000 each for construction of new houses in plain areas and Rs 48,500 in hilly and difficult areas, while it is Rs 15,000 for upgradation of old houses.

The eight-member panel headed by R Sridhar, CMD of Central Bank Of India also recommended a group based lending approach for rural housing for giving better results and need for policy changes with regard to linking of repayment of rural housing loans to crop cycle.

The Bankers' Committee also suggested that a multi dimensional strategy with necessary risk safeguards is required to be adopted which will focus on effective collaboration and partnership with financial institutions and other successful channels including NGOs for evolving projects as 'community-managed and driven'.

The panel proposed setting up a dedicated "Rural Habitat Development Fund" for the planned development of rural housing and housing finance landscape.

It also recommended setting up a "Rural Risk Fund" with contributions from all stakeholders to encourage insurance-linked products with housing so as to reduce the cost of housing finance to various stakeholders.

The committee has also made certain recommendations for providing loans with subsidy and without subsidy to Above Poverty Line (APL) households, saying the loan amount without subsidy should be decided by the lending institution based on the credit worthiness of the borrower.