In an upcoming move, India plans to unveil an extension of Prime Minister Narendra Modi's flagship housing scheme and an increase in subsidies for low-cost housing loans in the Interim Budget 2024, as reported by Reuters citing insider sources. Finance Minister Nirmala Sitharaman, scheduled to present the interim budget on February 1, is expected to allocate over $12 billion, marking a more than 15% increase, for low-cost housing in the fiscal year 2024/25, compared to the 2023/24 budget of 790 billion rupees, according to government insiders.

With a population exceeding 1.4 billion, India is grappling with a shortage of over 20 million houses in rural areas, as per the government's internal estimates. Additionally, industry forecasts predict that the urban housing shortage, currently at more than 1.5 million, is likely to double by 2030. Launched by Modi in 2015, the "Housing for All" scheme aims to address these housing challenges.

Over the past five years, the Central and state governments have collectively spent $29 billion under the program to provide support for rural and urban low-cost housing, according to information shared in parliament last month. Originally slated to conclude in December 2024, the government may extend it for an additional three to five years to meet its ambitious targets, suggested an anonymous government source.

Prime Minister Modi highlighted on Monday that his government has constructed concrete houses for approximately 40 million impoverished households since he assumed office in 2014. However, opposition parties argue that the scheme missed its original 2022 deadline, leaving millions without the intended benefits.

Facing rising costs of land and building materials, officials are pushing for an extension of the program and an increase in incentives. Under the housing scheme, the government offers an interest-cost subsidy ranging from 100,000 rupees to 267,000 rupees to households obtaining bank loans for housing construction, along with additional subsidies from state governments.

Officials are advocating for an increase in financial assistance to around 200,000 rupees per house in rural areas and an interest subsidy on home loans of up to 5 million rupees in urban areas. Proposals for interest subsidies in urban affordable housing are expected to be presented to the cabinet soon, according to Hardeep Singh Puri, India’s Housing and Urban Affairs Minister, who refrained from commenting on the budget proposals for the housing sector.