Union Finance Minister Nirmala Sitharaman today announced a slew of measures to boost the housing sector, including lower interest rates on house-building advance for government employees. Government employees contribute to a major component of demand for housing and it will encourage them to buy more new houses, the Finance Ministry said.
According to the announcement made by the finance minister, the interest rate on house-building advance for government employees will be lowered and linked with 10-year G-Sec yields.
The government today announced a special window to provide last-mile funding for housing projects that are non-NPA and non-NCLT projects and are net-worth positive in affordable and middle income category. The objective is to focus on construction of unfinished housing units.
The size of the special window for funding of incomplete projects will be ₹20,000 crore, to be contributed by Govt of India and roughly the same amount by outside investors. The fund would be run by experts from the housing and banking sector.
The special funding window for incomplete housing projects would be on the lines of National Investment and Infrastructure Fund or NIIF, which was set up in 2016 as an investment vehicle to fund commercially viable greenfield, brownfield and stalled projects.
The government also today announced a relaxation of external commercial borrowing or ECB guidelines for lending institutions for financing of home buyers under the Pradhan Mantri Awas Yojana or PMAY scheme.
Earlier this year, the government in the Budget had announced an additional income tax deduction for interest paid on home loans borrowed up to 31 March, 2020, for purchase of house valued up to ₹45 lakh.