If voted to power, home loan EMIs would become cheaper than house rent: Finance Minister Arun Jaitley

After Reserve Bank of India's (RBI) interest rate cut yesterday, Finance Minister Arun Jaitley said government wants to further reduce the burden of interest rates on the common man to a level where paying equated monthly installments (EMIs) for home loans will be cheaper than paying house rents.

Speaking at an industry event yesterday, Jaitley said the Narendra Modi government has not increased tax rates in the last five years, but has still been able to double the tax base and increase tax collection. He said, if voted to power, the government would pursue policies to enable further reduction in interest rates and also continue with fiscal consolidation.

"Low interest rates will make borrowings cheaper, particularly for homebuyers, and boost consumer demand that will boost economic growth," Jaitley also said in an interview to Hindustan Times.


Giving an example of previous NDA government under former Prime Minister Atal Bihari Vajpayee, Jaitley claimed that When Vajpayee was the prime minister, home loans had become so cheap that EMIs were less than renting a house. "I think that’s where we need to take interest rates," he added.

Atal Bihari Vajpayee government had introduced income tax deductions in lieu of interest payments on home loans, which lowered the cost of borrowing and boosted that housing sector.

He said that the Modi government have consciously tried to strengthen India’s middle class. With every budget, the government has tried to increase the spending capacity of middle-class by liberating it from taxes. "We brought indirect taxes – GST [Goods and Services Tax] down. For housing , we have brought it down to negligible level," he added.

"The future of the Indian economy is the middle class and the neo-middle class and today’s poor should eventually become a part of that," Jaitley said.