Modi Government Announces 60,000 Crore Home Loan Subsidy for Small Towns

New Delhi | September 26, 2023: In a bid to address housing challenges in small towns and provide economic relief to low-income families, the Modi government has unveiled an ambitious plan to allocate 60,000 crores over the next five years for subsidized home loans. This development comes on the heels of the government’s recent efforts to curb inflation by reducing domestic gas cylinder prices by 18 percent.

Prime Minister Modi initially introduced this scheme during his Independence Day speech in August, but detailed information was scarce at the time. Under the newly revealed plan, eligible applicants can avail themselves of subsidized loans up to Rs 9 lakh at an annual interest rate ranging from 3 to 6.5 percent. This represents a substantial discount compared to the current average interest rate of 9 percent. Additionally, loans of less than Rs 5 lakh, with a tenure of 20 years, will also qualify for the scheme.

The subsidy on interest rates will be directly credited to the home loan accounts of beneficiaries. The program is expected to run until 2028 but awaits approval from the Union Cabinet.

The government estimates that this initiative will positively impact 25 lakh individuals from low-income groups residing in cities, although the exact amount of home loans provided at the subsidized rate will be contingent upon housing demand. During his August speech, Prime Minister Modi emphasized the broad scope of the program, stating, “We have prepared a plan for the coming years. All people living in rented houses, slums, chawls, and unauthorized houses are going to benefit from this plan.”

As reported by Reuters, the Ministry of Home and Urban Development, in conjunction with the Ministry of Finance, has initiated discussions on the procedures related to these subsidized home loans. Banks have also started compiling lists of eligible customers for these schemes. Notably, this isn’t the first time the government has launched such a scheme; a similar initiative was planned between 2017 and 2022, although its implementation was delayed. Nevertheless, during this period, approvals were granted for 1 crore 22 lakh houses under the scheme, highlighting the government’s commitment to addressing housing needs.