Govt to promote houses for urban poor

Kolkata: After devising several housing schemes for rural masses, the government plans to go flat out in promoting low-cost housing for the urban poor. It is in the process of formulating an interest subsidy scheme for them.

The ministry of housing and urban poverty alleviation, which is framing guidelines for the subsidy programme, is learnt to be in favour of engaging commercial banks and specialised housing finance companies (HFCs) in this endeavour. At present, the government engages the Housing & Urban Development Corporation (Hudco) only to disburse soft home loans to the poorer section.

The housing and urban poverty alleviation minister (independent charge) Kumari Selja will meet banks and HFCs in Mumbai in the first week of June to sensitise them on this issue of low-cost dwelling units for economically weaker section in the urban areas.

The ministry of housing and urban poverty alleviation is also weighing an option to allow private builders to develop more floor space out of a particular plot on which the building is being constructed. This measure is aimed at improving builders’ profitability. The ministry, in turn, is planning to ask builders to cross subsidise and build low-cost dwelling units.

According to preliminary discussions, builders in Mumbai or in Bangalore may be allowed to develop total floor space which is two-and-a-half times the plot, instead of 1.5 times now. The ratio, commonly known as floor space index (FSI), is pegged at 1.5 in most states for commercial real estates and 1 for residential areas. An FSI of 1.5 indicates that the total floor area of a building is one-and-a-half time of the plot.
“A higher FSI will enable builders to improve their profitability. The ministry is, in turn, planning to ask developers’ to build low-cost houses for the poor. This is one of our suggestions to the ministry,” said DHFL Vysya Housing Finance managing director R Nambirajan.

In the proposed National Urban Housing and Habitat Policy (2007), the government included a provision to earmark at all levels, including the new housing colonies, a portion of land at affordable rates for housing for the economically weaker section (EWS) and low income group (LIG). This could be 10-15% land area to accommodate 20-25% dwelling units for EWS and LIG.

“The government is exploring ways to provide shelters to the low income group. It has convened a meeting in Mumbai to discuss this issues with banks and HFCs,” GIC Housing Finance managing director AK Guha said.

Meanwhile, the government has reclassified the income limits for various economic groups to avail loans from Hudco. Accordingly, EWS is classified as those who earn up to Rs 3,300 per month while LIGs are those who earn anything in the range of Rs 3,301 to Rs 7,300 per month.

For Hudco’s loan scheme, people earning between Rs 7,301 and Rs 14,500 per month are classified as middle income group and people with monthly income of Rs 14,501 and above are in the high income group.