With the Reserve Bank of India raising interest rates frequently, the Cabinet on Thursday will take a call to give 1 % interest subsidy on home loans up to Rs 15 lakh.
The finance ministry has proposed 1% interest subvention on home loan of Rs 15 lakh with the cost of the house not exceeding Rs 25 lakh. According to government sources, about 30% of total home loans taken, fall within this money bracket.
The scheme has been mooted as an incentive for poor and middle-class families to buy a house at a time when the home loan interest rate range between 10 to 15%. The government proposal, however, makes it clear that the interest subvention will not be applicable on existing home loans, but only for new loans.
Finance minister Pranab Mukerjee had announced in his budget scheme on interest subsidy for home loans and the Cabinet would be considering it on Thursday.
In another pro-people move, the Cabinet will examine a proposal to provide a broadband connection to each of the 2.5 lakh panchayats in India.
Under the scheme, each panchayat will have a cyber centre to provide internet access to villagers. The centres will also work as distance education hubs with a facility of transfer of video content. The government aims to connect all panchayats through broadband with 100 mbps speed by the end of 2012.
A committee headed by Principal Scientific Advisor to Prime Minister Rajagopala Chidambaram had recommended an approach to provide broadband connection to each village through an optical fibre network.
The government also plans to extend the Rashtriya Bima Swastha Yojana to include private sector workers provided the government is not required to pay their premium. Under the scheme, a person gets annual health insurance of up to R3,000 for a nominal premium.
The Cabinet will also consider a proposal for an agreement on joint rapid response to natural disasters in south Asia.