INDIA: A House For Rs.100,000?

Aam Aadmi Awas, the Rs 1-lakh house NEW DELHI (The Sunday Express), October 28, 2007: After the National Rural Employment Guarantee scheme, government is working to launch another scheme for the aam aadmi (common man). Tentatively called the Aam Aadmi Awas (AAA), its goal is to provide “affordable” homes that ensure “reasonable quality of life” for the “urban-rural poor.” With the housing shortage estimated at 45 million units by 2012, the Government plans to construct 31 million houses, each costing Rs 1 lakh — this excludes the land cost. These houses will be made available to those whose combined monthly income is less than Rs 7,300 (the Lower Income Group/Economically Weaker Sections). Union Minister of State for Finance, Pawan Bansal told this newspaper: “It would be inappropriate to talk about the issue at this stage. The endeavour of the UPA government is to reduce the chasm between the haves and the have-nots. The government is keen that every citizen have a safe and comfortable house.” The National Housing Bank proposal, accessed by The Sunday Express, says each AAA house will have an area of around 25 sq metres with a “kitchen, toilet and a multipurpose room." "These houses will be built in clusters of 1000-2000 contiguously to allow related infrastructure such as internal paths, recreational area, community hall, primary health facilities and basic shopping facilities,” a top official of the NHB told The Sunday Express. The benefits, according to the proposal, include: employment generation directly in construction and, indirectly, in related sectors; “indirect impact” on education and health; collateral in times of need; “financial and emotional stability” and women’s empowerment. As a first step, the government will target making at least 15 million houses by the end of the Eleventh Five Year plan in 2012. This would involve an investment of Rs 2 lakh crore, about 10% of the “non-food gross bank credit.” As for funding, the proposal says: “It is envisaged that the funds will largely be accessed from banks, financial institutions with possible viability gap funding required from the Government.” “We have submitted an interest subsidy scheme to Ministry of Housing and Urban Poverty alleviation where an interest subsidy of 5% per annum will be available to each beneficiary. The rationale is to level the playing field for the non taxpayer, as the taxpayer enjoys a subsidy on housing loan on account of tax relief on interest and principal,” said a senior NHB official. The scheme, according to the proposal, is expected to create 1.4 million jobs per year and generate an additional income of about Rs 9.42 lakh crore in the economy. Rough estimates suggest that investment in building materials and ancillary industries alone would be around Rs 97,400 crore and Rs 250,000 crore. By Dinker Vashisht © 2007: Indian Express Newspapers (Mumbai) Ltd.