National Urban Housing Fund Created

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The Indian Cabinet has recently given the approval for creation of National Urban Housing Fund (NUHF). This Rs 60,000 crore National Urban Housing Fund will be used to finance the government’s ‘Housing for All programme’, which aims to build 12 million affordable housing units in urban areas by 2022.

This fund will be situated in Building Materials and Technology Promotion Council (BMTPC), an autonomous body registered under the Societies Registration Act, 1860 under the Ministry of Housing and Urban Affairs.

The fund will be raised from non-budgetary sources and could tap into existing government entities such as the Housing and Urban Development Corp. (HUDCO).

Finance minister Arun Jaitley had proposed the creation of such a fund in his budget speech and said that 3.7 million homes would be built in urban areas in 2018-19 and 5.1 million in rural areas.

For this fiscal year, the budget proposes to raise Rs25,000 crore as extra-budgetary support in order to finance housing programmes under the Pradhan Mantri Awas Yojana (PMAY). The urban component of the flagship scheme targets more than 4,300 cities and towns.

NUHF will facilitate raising requisite funds in next four years so that flow of Central Assistance under different verticals i.e. Beneficiary Linked Construction (BLC), Affordable Housing in Parternership (AHP), In-Situ Slum Redevelopment (ISSR) and Credit Linked Subsidy Scheme (CLSS) is sustained and construction of houses to address the gap in Urban Sector progresses smoothly.

The newly created fund is expected to raise the requisite funds as per requirement for the next four years and plug any budgetary shortfalls. The projected overall funding envisaged by the government is around Rs1.7 lakh crore.

The Ministry has so far sanctioned 39.4 lakh houses under Pradhan Mantri Awas Yojana (Urban). There is a very good response from the States / UTs and nearly 2 – 3 lakh houses are being sanctioned every month.

More than 17 lakh houses have been grounded and about 5 lakh houses have been completed. Under Credit Linked Subsidy Scheme (CLSS), wherein housing for EWS / LIG / MIG beneficiaries is being sanctioned by the Banks / HFCs to the eligible beneficiaries under the PMAY(Urban), the responses have grown significantly.

Nearly 87,000 Housing Loans have been sanctioned in last 8 months under the Scheme and over 40,000 applications are under consideration for approval. The target is to cater to the demand of housing shortage of nearly 1.2 crore and make available housing to all by 2022, when the Country celebrates its 75th Anniversary of Independence.

Under the scheme, each beneficiary gets financial assistance worth Rs1.5 lakh to support the construction of an affordable housing unit. In case of in-situ development of houses replacing slums, each beneficiary gets Rs1 lakh. The government has also launched a sub-component of the scheme which targets middle income groups by providing Rs2.5 lakh to Rs2.7 lakh as interest subsidy.

Under credit linked subsidy scheme (CLSS), wherein housing for EWS/LIG/MIG beneficiaries is being sanctioned by the banks/HFCs to the eligible beneficiaries under the PMAY(Urban), the responses have grown significantly.

A committee will be constituted in the ministry to be chaired by the Joint Secretary/Mission Director PMAY (Urban) to operationalise and monitor the NUHF.

In order to bridge the gap between research and development and large scale application of new building material technologies, the erstwhile Ministry of Urban Development, Government of India, had established the BUILDING MATERIALS AND TECHNOLOGY PROMOTION COUNCIL in July 1990.

The BMTPC is structured to undertake the task of the extension and application of technologies and materials developed by research institutions on the ground with the backing of financial institutions and enabling regulatory environment.

The Pradhan Mantri Awas Yojana (PMAY)– Housing for All aims at addressing the shortage of 20 million slum and non-slum urban poor households, by 2022. Under the PMAY, central assistance will be provided to the Urban Local Bodies (ULB) and other implementing agencies through union territories (UT) and states for the following –
– In-situ rehabilitation of existing slum dwellers using land as a resource through private participation
– Credit linked subsidy scheme (CLSS)
– Affordable housing in partnership
– Subsidy for survey-led individual house construction or enhancement

Among the above CLSS is the only scheme that is implemented as a central sector scheme, rest will be implemented as a central sector sponsored schemes. The CLSS is aimed at increasing the institutional credit flow to the housing needs of the urban poor as a demand side intervention.

This Scheme is being implemented through two central nodal agencies – National Housing Bank (NHB) and Housing Urban Development Corp (HUDCO). Till date the Scheme has drawn a lot of traction from the housing finance industry with 185 primary lending institutions registered under the scheme, mostly represented by housing finance companies (HFCs).

This Scheme, certainly, would address the demand size issues of the affordable housing finance segment but there is matter of concern when it is looked at a bit closer. Under this scheme, upon the receipt of the subsidy, the entire amount is reduced from the effective loan amount at the inception of the tenure, which means the borrower will have to pay off only to extent of the principal, arrived at, after the adjustment of the principal.

The Housing and Urban Development Corporation Limited (HUDCO) founded in 1970, is a government-owned corporation in India. One of the public sector undertakings, it is wholly owned by the Union Government and is under the administrative control of the Ministry of Housing and Urban Poverty Alleviation. It is mandated with building affordable housing and carrying out urban development.

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