Another pre-poll sop: TN hikes funds for housing

With barely a year left for the assembly election, chief minister M Karunanidhi loosened the treasury purse strings again for the poor electorate, announcing increased contribution by the state for the Indira Awaas Yojana (IAY). Speaking at the two-day collectors' conference, which began on Friday, Karunanidhi said the government would increase its allocation from Rs 60,000 to Rs 75,000 per unit for constructing houses under IAY
.Under the scheme, the Centre contributes Rs 33,750 per unit and the state chips in with Rs 26,250. After the hike in allocation, the state's contribution will go up to Rs 41,250 per unit. As the state plans to construct 1.02 lakh IAY houses this year, the increase in allocation would cost the exchequer Rs 153 crore.

With this move, Karunanidhi hopes to maintain parity in allocation between the 100% state-funded Kalaignar Housing Scheme (KHS) and IAY. Only on August 15, he increased the funding per dwelling unit under KHS to Rs 75,000. About three lakh houses would be constructed under KHS this year.

The government has announced a series of sops in the recent days. On Thursday, with a view to setting right pay anomalies for about two lakh government employees, including teachers and pensioners, Karunanidhi allocated an additional Rs 223 crore towards the state's hefty salary bill. As an Independence Day gift to farmers, he announced that free energy-efficient motors would be given to small and marginal farmers and 50% subsidy for big farmers to buy new motors. The scheme, aimed at replacing energy inefficient old motors, would cost the exchequer around Rs 2,700 crore. Earlier this month, the state government raised the honorarium by Rs 300 to Rs 500 per month for 30,000 employees engaged in retail sale of liquor in Tamil Nadu State Marketing Corporation outlets.

The IAY is a flagship scheme of the Union ministry of rural development and has been in operation since 1985-86. Funded by the central and state governments on a 75:25 ratio, it benefits rural people living below the poverty line (BPL), who are identified by gram sabhas. Construction of new houses as well as upgradation of kutcha ones are taken up under the scheme. While no design is prescribed for IAY houses, the size should be 20 sq. m (215sqft). The units should have sanitary facilities and smokeless stoves. Beneficiaries undertake the construction with locally available material, using low cost technologies.

While 60% of the houses are reserved for scheduled castes and scheduled tribes, the rest are given to other communities on condition that 3% of the beneficiaries are physically and mentally challenged persons and 15% are minorities. Also, IAY houses are expected to be allotted in the name of the women of the household.

The Reserve Bank of India has included IAY under the differential rate of interest scheme for lending up to Rs 20,000 per housing unit at a nominal 4% interest per annum. Tamil Nadu is among the very few states that have utilized more than 100% central allocation under IAY in 2009-2010.

However, even at Rs 75,000 per unit, the funding for both IAY and KHS is grossly insufficient for quality construction, say experts in the construction industry. The government provides only Rs 349 per sqft for a 215sqft house, which is hardly one-third of what a private builder spends on construction and half of what the Tamil Nadu Housing Board spends. For providing quality housing stock in rural areas, the government needs to increase the allocation by at least another Rs 1 lakh per unit, they say.