The Central government’s focus on housing has found a new dimension in this week’s announcement by Union Minister for Housing, Poverty Alleviation, and Urban Development M. Venkaiah Naidu that the government planned to bring the entire housing sector under priority-sector lending.
Mr. Naidu said that he wanted to bring down the interest on housing loans within the seven-to-eight per cent range from the current double-digit rates.
The Minister told a meeting in Mumbai on Smart Cities that his ministry had made a pre-Budget representation to the Finance Ministry, requesting softer interest rates for the housing sector.
Mr. Naidu said that the government would act urgently as the Prime Minister Narendra Modi would soon convene a meeting of the Finance and Housing secretaries to discuss the modalities of the proposal.
The decision on interest rates on home loan assumes significance in the light of the government’s aim of providing housing for all by 2022 and to build 100 Smart Cities, where housing will be a major component.
The government is moving ahead quickly with the Smart Cities proposal. A round of meetings of State representatives with the Union Minister is scheduled to begin on January 30.
A final concept paper on Smart Cities is expected to emerge at the end of the meetings with the State secretaries from housing sector.
A Cabinet note on the project is expected to come up for approval during the ensuing session of Parliament.
As per a Reserve Bank of India (RBI) circular of February 2014, priority-sector lending is now confined to housing loans of up to Rs.25 lakh to individuals in metropolitan centres with a population above ten lakh, and Rs.15 lakh in other centres for purchase or construction of dwelling units per family.
The other priority sectors are agriculture, small and micro enterprises, education loans of up to Rs.10 lakh to study in India and Rs.20 lakh to study abroad.
Setting a priority for some chosen sectors is meant to ensure timely and cheaper credit to them.
