Funds for housing urban poor, solar power get cabinet okay

NEW DELHI: The central government has decided to establish a 1,000 crore mortgage risk guarantee fund to facilitate lending for housing for the urban poor and also announced a low-cost housing scheme that could benefit from the funds.

The union cabinet also approved a fund for solar power producers to cover defaults to state electricity boards to reduce payment risk.

A meeting of the Cabinet Committee on Economic Affairs, chaired by Prime Minister Manmohan Singh, has approved launch of the first phase of Rajiv Awas Yojana (RAY) to facilitate affordable housing for slum dwellers, Home Minister P Chidambaram said after the meeting.

The low-cost housing scheme will benefit 32 million slum dwellers in 250 cities.

The Centre would bear 50% of the cost of slum redevelopment which could be used by the states and cities towards viability gap funding in order to encourage private sector participation.

"They (slum dwellers) will benefit by way of property rights and access to decent shelter, basic amenities and a dignified life", he said, adding that the initiative would also prevent mushrooming of slums.

The Central assistance would be conditional to reforms undertaken by the states, including conferring property rights to the owners, Chidambaram said.

The 486 crore contingency fund to compensate solar power producers for possible default by state electricity boards, giving a boost to the rapidly growing sector.

The fund would be utilized for phase 1 of the National Solar Mission and would act as a security to the central agency purchasing solar power from the developers. This scheme will facilitate setting up 1000 MW grid connected solar power projects.

The CCEA also decided to increase the post-matric scholarship amount and other benefits given to students from scheduled tribes and those disabled.

The government also approved increasing the incentive provided to BPL families for construction of toilets by 1,000.