In preparation for upcoming elections, the Indian government is set to unveil an extension to Prime Minister Narendra Modi’s flagship federal housing scheme in the next month’s budget. The plan includes a substantial increase in subsidies for low-cost housing loans, according to three government sources.
Finance Minister Nirmala Sitharaman, scheduled to present an interim budget on February 1, is expected to allocate over 15% more funds for low-cost housing, raising the budget to 1 trillion rupees ($12 billion) for the fiscal year 2024/25. The current budget for 2023/24 stands at 790 billion rupees.
India, with a population exceeding 1.4 billion, grapples with a shortage of over 20 million houses in rural areas, and industry forecasts predict that the urban housing shortage, currently at more than 1.5 million, could double by 2030. Prime Minister Modi launched the “Housing for All” scheme in 2015, aiming to address this housing deficit.
The federal and state governments have collectively invested $29 billion in the last five years to support rural and urban low-cost housing under the program, according to information shared by the government in parliament last month. Originally set to conclude in December 2024, the government is considering an extension of three to five years to meet its targets.
Prime Minister Modi, in a statement on Monday, announced that his government has built concrete houses for approximately 40 million impoverished households since he assumed office in 2014. However, opposition parties argue that the scheme missed its original 2022 deadline and that millions are yet to receive benefits.
To address rising housing demand and costs, officials are urging the finance minister to extend the program and enhance incentives. The proposed adjustments include an increase in financial assistance to about 200,000 rupees for each house in rural areas and an interest subsidy on home loans of up to 5 million rupees in urban areas.
A proposal outlining interest subsidies for urban affordable housing is expected to be submitted to the cabinet soon, said Hardeep Singh Puri, India’s Housing and Urban Affairs representative. The Finance Ministry has not provided an official comment on these plans.
The initiative reflects the government’s commitment to addressing the housing crisis and enhancing the living conditions of its citizens, aligning with Prime Minister Modi’s broader vision of ensuring housing accessibility for all.