The Hindu Business Line : Panel for focus on institutional finance for rural housing

A Standing Parliamentary Committee of the Ministry of Rural Development has underlined the need for a focussed attention to institutional finance for rural housing, keeping in view that many in rural areas are homeless.

Stating that some of the experts who deposed before the Committee were in favour of a separate national housing bank for rural areas, the Panel said the data furnished by the National Housing Bank (NHB) shows that only 10 to 11 per cent of the lending for housing could be made available to rural areas.

Poor coverage

The role played by the public sector banks that have wider coverage in rural areas has also not been up to the desired level. It said the suggestions given by NHB for creation of a national shelter fund and national risk fund to augment the resources of NHB might be critically analysed by the department.

After deliberations with commercial banks, the Committee found that the existing limit of refinance to each financial institution is Rs 1,000 crore. "When some of the banks are not availing of the refinance facility, the other banks that are availing of and fall short of the refinance can be provided refinance," it said, adding that the interest rates, which have been at the lowest in the recent past, have started moving up.

In view of the rising interest scenario, the financial institutions may lack liquidity and their own resources might be costlier, and may need more refinance facility from the government agencies like NHB and NABARD (National Bank for Agriculture and Rural Development).

No review

Referring to R&D in housing for rural areas, the Committee felt that there is no system to review the work done by various agencies. The Department of Rural Development, which is the nodal agency for rural housing, and Advancement of People's Action and Rural Technology, which has the mandate for advancement of rural technology, have no mechanism to review their work in the field of R&D.

It said that as per the guidelines of the flagship programme `Indira Awass Yojana', zila parishad/district rural development agencies should contact various organisations/ institutions for seeking expert opinion on innovative technologies. But in reality, they have not done this, it said.

While recommending compulsory use of cost-effective technology, the Committee said there was an urgent need to make technical skill/material available to the beneficiaries. Besides technology resource centre at district level, there should be one cost-effective material mart at the block-level so as to help the beneficiaries.

Priority needed

The Committee said that as per the estimates made by the NHB by the end of the Eleventh Plan (2007-12), Rs 1,86,000 crore would be required to help the homeless. NHB has estimated an average cost of construction of a dwelling unit as Rs 1.50 lakh.

Besides, as per the estimates of NABARD, Rs 1,46,000 crore would be needed to meet the shortfall in rural houses. Whereas, if the Department of Rural Development estimates are taken into account, Rs 55,000 crore would be required by the end of the Eleventh Plan.

Thus the annual requirement of funds would be around Rs 11,000 crore per year. But the existing allocation is merely Rs 2,920 crore i.e. the allocation made during 2006-07. So, in order to achieve the target, there is a need to accord priority to step up the allocation of rural housing. A multi-pronged strategy entailing the different institutions with the task is needed, it said.

More Stories on : Rural Development | Housing Finance

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page