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Interim budget: Govt plans new housing scheme for middle class
The full budget is likely to be announced in July after an administration secures the electoral mandate
The government will bring in a new housing scheme for the middle class to buy or build homes, Union finance minister Nirmala Sitharaman said on Thursday while presenting the Union interim budget for the 2024-25 financial year, without disclosing specifics.
As is customary, governments refrain from announcing any new schemes or a full Union budget for the following fiscal, choosing instead an interim budget before a general election that is due this summer. The full budget is likely to be announced in July after an administration secures the electoral mandate.
“Our government will launch a scheme to help deserving sections of the middle class living in rented houses, or slums, or chawls and unauthorised colonies to buy or build their own houses,” the finance minister said.
Such an announcement was also made by Prime Minister Narendra Modi previously, who in his Independence Day speech last year said: “We are coming up with a new scheme in the coming years that will benefit those families that live in cities but live in rented houses or slums, or chawls and unauthorised colonies. If they want to build their own houses, we will assist them with relief in interest rates and loans from banks that will help them save lakhs of rupees,” Modi said at the time.
While the contours of the scheme are yet to be announced, a senior official at the Union ministry of housing and urban affairs (MoHUA) said on condition of anonymity that a detailed proposal will be placed before the cabinet for final approval.
MoHUA received a total budgetary allocation of ₹77,523.58 crore for 2024-25, nearly 12% more than the ₹69,270.72 crore allocated in the revised estimate (RE) of the current financial year. In last year’s budget, the ministry was allotted ₹76,431.60 crore.
The announcement evoked a positive response from the real estate industry. G Hari Babu, national president of the National Real Estate Development Council, said the reiteration of a new scheme for the urban middle-class population would boost the confidence of both the common man and the real estate sector. “We now look forward to a clear roadmap for this scheme,” he said.
Srikanth Vishwanathan, chief executive officer of the Janagraha, a Bengaluru-based organisation working on urban reforms, said although this is an interim budget, the focus on women, the poor, and youth gives a very important direction to the formation of equitable cities. “The focus on Namo Bharat, the RRTS are also a welcome step. I am just hoping that the success of the last 10 years through flagship schemes like PMAY (Pradhan Mantri Awas Yojna), Swachh Bharat (Mission), AMRUT (Atal Mission for Rejuvenation and Urban Transformation) will be continued,” he said.
When comparing to the budget estimates between the current and the next fiscal, the overall allocation for MoHUA is an increase of 1.43% year-on-year. But the estimated utilisation – as per RE – was roughly 10.34% lower.
For two flagship schemes, the revised budgetary estimates represented a drastic reduction. For Swachh Bharat Mission (Urban), the budgetary estimate for 2023-24 was ₹5,000 crore but it has been reduced to ₹2,550 crore in the revised estimate. Similarly, for AMRUT, while the allocation was ₹8,000 crore, the same has been revised to ₹5,200 crore in the RE.
With the focus on affordable housing, the Pradhan Mantri Awas Yojna, urban and rural combined, received ₹80,671 crore in the interim budget. For the urban component, the government has allocated ₹26,170.61 crore, roughly 18% more than the RE for 2023-24, which was at ₹22,103.03 crore. The RE, as in the case of other MoHUA allocations, was lower than the BE, which was ₹25,103.03 crore.
“We are in the process of awarding works and some are in the process. These revisions are based on the anticipation of the amount of money we will be able to spend,” said Manoj Joshi, secretary, MoHUA.
Commenting on this, Vishwanath said: “Fund utilisation is generally a concern. But this does not mean that we advocate for lowering allocations. We have to see how to raise the expenditure for capital and operation and maintenance for cities. At the same time, we have to address the challenge of fund utilisation.”
While there is no separate mention of allocation for the Central Vista scheme this year in the budget documents, the allocation for General Pool Accommodation this year has been put at ₹3,699.99 crore from 2799.95 crore set aside during the Budget announced by Sitharaman the previous fiscal year. The allocation for the 2024-25 financial year was 5.71% higher than the RE for the current fiscal.
The non-residential section, a significant part of General Pool Accommodation includes the construction of non-residential office buildings including the Central Vista project, Parliament and the Supreme Court of India.
Sitharaman also said the expansion of metro rail and Namo Bharat trains will act as a “catalyst for urban transformation”. “The expansion of these systems will be supported in large cities focusing on transit-oriented development,” she said.
The allocation for the metro projects across India will be increased to ₹21,335.98 crore in the 2024-25 fiscal year from ₹23,104 crore in the RE. In the 2023-24 BE, this figure was ₹19,518 crore. Among the other major new allocations, the PM-eBus Sewa scheme has been allotted ₹1,300 crore.
