Budget 2024: Affordable housing may get $12 billion boost as govt plans incentives for low-cost housing

Budget 2024: The government is likely to announce an extension to Prime Minister Narendra Modi's flagship housing scheme - Pradhan Mantri Awas Yojana - Gramin (PMAY-G) in the interim buidget this year, reported Reuters. As per the report, the government is also planning to increase the available subsidies for low-cost housing loans.

Budget allocation for low-cost housings

Finance Minister Nirmala Sitharaman is likely to raise allocations for low-cost housing by more than 15% to $12 billion for FY25. During the winter session, the government told the Parliament that in the last five years, $29 billion was spent under the programme to provide support for rural and urban low-cost housing.

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As part of the housing scheme the central government offers an interest-cost subsidy ranging from Rs 1 lakh to Rs 2.67 lakh to households securing bank loans for housing construction. This follows in addition to subsidies from state governments.

As per Reuters, an increase in financial assistance to about Rs 2 lakh for each house in rural areas, and an interest subsidy on home loans of up to Rs 5 million in urban areas is likely to be presented

Low-cost housing scheme

The scheme is to end by December 2024, however, Reuters has reported that the government could extend it for another three-to-five years as it has still to meet its target. The government estimates reveal a significant housing shortage of over 20 million homes in rural areas. As per industry forecasts, urban housing shortage is estimated at more than 1.5 million.

Lok Sabha Elections

Prime Minister Narendra Modi, launched this scheme in 2015 with the goal of 'Housing for all'.

On Monday he said that the government has built concrete houses for approximately 40 million impoverished households.

"A country's development is only possible when the benefits of government schemes reach everyone. The 10 years of my government have been dedicated to the poor," he said during the 'Pradhan Mantri Janjati Adivasi Nyaya Maha Abhiyan' event.

The proposal comes ahead of the Lok Sabha election, as the incumbent government is looking to woo voters