Budget to unveil credit-cum-interest subsidy scheme for EWS

The elections are due in 2009 and the government has started preparing platform for the elections. The current budget is likely to unveil a credit-cum-interest subsidy scheme for the economically weaker section (EWS). The poor might get a 5% interest subsidy on home loans which might leave the exchequer poorer by around Rs 1,600 crore annually. So it can be said that 2009 elections might help the aam admi’s dream of owning a house come true.


“The discount offered by banks and financiers would be met through interest subsidies provided by the government,” a housing ministry official said.

In November with RBI the National Housing & Habitat Policy announced schemes; the ministry is working on the protocols of the schemes.



“The Budget may define the salary brackets eligible for the interest subsidy,” the official added.



Kumari Selja housing and urban poverty alleviation minister feels that the boom in the real estate is targeting only the upwardly section of society.

“The objective of the interest subsidy scheme is to ensure the economically weaker section gets the opportunity to own houses,” the official added.

During the 11th Plan period shortage of dwelling units was anticipated at 45 million.

Out of which the weaker section needs more than 31 million. In the next five years the government is planning to address at least 50% of the requirement.


The credit-cum-subsidy scheme is expected to fix a loan ceiling of Rs 80,000 for EWS and Rs 1.50 lakh for the low income group (LIG). EWS comprises up to Rs 3,300 per month of those earning and LIG Rs 3,301-7,300 per month.

During this fiscal period the credit flow from banks and specialized housing finance companies (HFCs) for promotion of rural housing has not been encouraging. In 2007-08 banks and HFCs are expected to offer loans for 3.5 lakh dwelling units.


According to industry watchers the withdrawal of 0.5% concession on interest rate on refinance from the National Housing Bank (NHB) is the reason for low credit flow.

“We have requested the NHB to reintroduce the concession so that HFCs get some kind of incentive to offer more housing loans to the weaker sections,” DHFL Vysya Housing Finance managing director R Nambirajan told ET.