Govt Plans $6.5 Billion Boost For Rural Housing Subsidies In Upcoming Budget: Report

If sanctioned, this would represent the most substantial annual rise in federal expenditure for the rural housing program since its establishment in 2016

During pre-budget consultations, economists and industry leaders urged the government to boost rural spending (Image Source: Pexels)

Source : Other

The government is reportedly set to ramp up state subsidies on rural housing in the upcoming federal budget by up to 50 per cent compared to the previous year, surpassing $6.5 billion, according to a Reuters report citing sources. This increase in housing subsidies is part of a more significant government effort to enhance expenditure on rural infrastructure, which includes village roads and employment programs aimed at aiding the sizable population of youth constrained within the agriculture sector due to limited opportunities in manufacturing.

If sanctioned, this would represent the most substantial annual rise in federal expenditure for the rural housing program since its establishment in 2016.

"The government is worried over widespread rural economic distress, driven by higher food inflation and sluggish growth in farmers' incomes," one of the government sources told the news agency.

Under the PM Awas Yojna(Rural) housing scheme, the government aims to support the construction of an additional 20 million houses in the coming years, following assistance provided for more than 26 million homes to impoverished households over the past eight years. Union Finance Minister Nirmala Sitharaman is likely to present the Union budget later this month.

In the report, the second source highlighted an anticipated significant rise in allocations for various rural schemes this year, underscoring that federal subsidies for rural housing could exceed Rs 550 billion ($6.58 billion), a notable increase from Rs 320 billion allocated last fiscal year.

The report also reveals that state expenditure on the rural jobs program was projected to increase significantly from the previously estimated 860 billion rupees. However, the government might seek parliamentary approval for this additional expenditure later, separate from the budget presentation.

It further mentions that a separate proposal to increase spending on village roads was also being considered, up from earlier estimates of 120 billion rupees in the current fiscal year. 

During pre-budget consultations, economists and industry leaders urged the government to boost rural spending to stimulate consumer demand, highlighting that private consumption was growing at half the pace of nearly 8 per cent annual economic growth.

The report indicated that to construct 20 million houses for the rural poor, the federal and state governments are expected to allocate up to Rs 4 trillion ($47.89 billion) over the next few years, with the federal government contributing approximately Rs 2.63 trillion.