New Delhi, September 10
Keeping up with another promise made by Finance Minister Pranab Mukherjee in his budget speech this year, the government today approved one per cent interest rate subvention for housing loans up to Rs.10 lakh.

The decision was taken at the meeting of the Union Cabinet here chaired by Prime Minister Manmohan Singh. The Cabinet also gave an approval for allocation of Rs.1,000 crore for the scheme. It will come as a major boost to the housing sector and fuel greater development.

Briefing newsmen after the Cabinet meeting, Information and Broadcasting Minister Ambika Soni said, "the one per cent subvention would be for the first 12 EMIs (equated monthly instalments) on loans up to Rs.10 lakh".

She clarified that this would be for expenses incurred on construction, purchase or extension not exceeding Rs.20 lakh.

The government said the interest rate subsidy scheme was in line with the announcement by Finance Minister Pranab Mukherjee during a debate on the budget for 2009-10 in July.

The interest subsidy would be provided through the commercial banks and housing finance companies registered with the National Housing Bank.

In another major decision the government also approved a “Rehabilitation Package” to provide additional relief to the victims of 1984 riots with a financial outlay of Rs.714.76 crore.

The package was issued earlier by Ministry of Home Affairs on January 16 last and was for states of Uttar Pradesh, Madhya Pradesh, Chhatisgarh, Haryana, Bihar, Jharkhand, Jammu & Kashmir, Himachal Pradesh, Orissa, Maharashtra, Uttarakhand, Punjab and the NCT of Delhi.

The main aim of the proposal is fulfill the assurances given by the government in both the Houses of Parliament on the Report of Justice Nanavati Commission of Inquiry into 1984 riots.

After approval of the proposal by the Cabinet, necessary instructions will be issued immediately to the concerned state governments and Union Territory Administration for implementation of the decision of the Union Cabinet. The Cabinet also took a decision to allocate Rs.1,473 crore for the Cotton Corp of India (CCI) to meet the losses it has incurred in procuring cotton under the minimum support price (MSP) scheme.

“The implementation of the decision will not only ensure remunerative returns to the cotton growers without quantitative restriction but also enable the CCI for smooth conduct of MSP operations during the cotton season,” the government said in a statement.

“It will also enable the CCI to meet anticipated losses to be incurred on procurement of raw cotton from the farmers,” it added.

A decision was also taken to release Interest Subvention to Public Sector Banks (PSBs), Cooperative Banks (Short Term Cooperative Credit Structure-STCCS) and Regional Rural Banks (RRBs) and to NABARD for refinance to RRBs and Cooperative Banks.

This has been done to operationalise the announcement made in the Union Budget earlier in the year for ensuring that the farmer receives short term crop Loan at seven per cent per annum (six per cent for prompt payers) with an upper limit of Rs.three lakh on the principal amount.

The interest subvention is available to Public Sector Banks, Regional Rural Banks (RRBs) and Cooperative Credit Institutions (CCIs) on disbursements out of their own funds and to NABARD for concessional refinance to RRBs and CCIs.

For the year 2009-10, the target for flow of credit to agriculture sector has been revised from Rs.2,80,000 crore in 2008-09 to Rs.3,25,000 crore, of which the total short term crop loan disbursements by all banks is likely to be around Rs.2,00,000 crore.