Straining under the weight of ‘unsold' houses under the chief minister's one lakh affordable housing scheme, the govt is exploring multiple options to reduce the burden on the state exchequer.
At a recent meeting with chief minister Siddaramaiah and his deputy DK Shivakumar, Boston Consulting Group (BCG) recommended the govt provide interest subsidy of up to 5% for beneficiaries and/or explore prospects of allowing private developers build houses at their own cost with govt providing 50% to 70% of land.
Data shows the govt is in the process of building 45,000 houses at an outlay of Rs 11.2 lakh per house. A beneficiary must pay Rs 7.7 to Rs 8.5 lakh, while the govt bears the rest of the cost under Pradhan Mantri Awaz Yojana (PMAY) and other schemes. But with beneficiaries struggling to pay such a huge amount, the govt is stuck with a burden of Rs 3,700 crore.
Low CIBIL scores is the biggest reason for beneficiaries struggling to raise funds. This has resulted in banks and financial institutions providing loans at a high interest rate — between 11% to 12% for a period of 10-15 years. To mitigate this concern, a proposal has been floated to provide an interest subsidy of between 3% to 5%.
This would mean the govt will bear a smaller loss of between Rs 60 crore to Rs 170 crore per year, but there is a higher chance of beneficiaries buying these houses. Buyers will have to deposit Rs 50,000 upfront as an assurance of raising the loan and paying the remaining amount.
