Acknowledging the importance of urban development and urban renewal to meet the growing aspirations of the people for better urban living, the union government has increased Plan Outlay for urban related projects by 251.44% in the General Budget for 2014-15 presented to the Parliament yesterday. The Plan Outlay which was Rs. 6,561.34 cr in the Revised Budget for 2013-14 has been hiked to Rs.16,497 cr for the current financial year.
To meet the demands of better urban living from growing urbanization, besides increasing Plan Outlay, the government has offered tax and non-tax incentives to promote investments in urban infrastructure and housing sectors.
Noting that ‘a neo-middle class is emerging which has aspiration of better living standards’, the government has provided Rs.7,060 cr for realizing the Prime Minister Shri Narendra Modi’s vision of developing “one hundred Smart Cities”. These cities will be developed as satellite towns of large cities and by modernizing the existing mid-sized cities. These Smart Cities will accommodate the burgeoning number of people without which the existing cities would soon become unviable.
Assistance to the ongoing Metro Rail Projects in the cities of Delhi, Jaipur, Mumbai, Kolkata, Bengaluru, Chennai and Kochi has been substantially increased by Rs.2,265 cr to Rs.8,025 cr as against Rs.5,759 cr. In addition, Rs.100 cr has been provisioned for the new Metro projects in Lucknow and Ahmedabad.
In a major initiative, the government has proposed a corpus fund of Rs. 50,000 cr to promote and finance infrastructure projects in urban areas on shared risk basis under ‘Pooled Municipal Debt Obligation Facility’ over a period of five years. This facility set up in 2006 has corpus of only Rs.5,000 cr.
A new ‘Mission on Low Cost Affordable Housing’ will be launched under which Rs.4,000 cr has been provisioned for providing cheaper credit for affordable housing to the urban poor, Economically Weaker Sections(EWS) and Low Income Group(LIG) segments through National Housing Bank.
Other proposals and incentives to urban projects include:
1. To encourage development of Smart Cities, requirement of the built up area for Foreign Direct Investment(FDI) has been reduced from 50,000 square metres to 20,000 sq.metres and capital requirement from US $ 10 million to US $ 5 million;
2. To further encourage this activity, such projects committing at least 30 per cent of the total project cost for low cost affordable housing will be exempted from minimum built up area and capitalization requirements, with the condition of three year lock in;
3. Supporting 500 habitations for providing safe drinking water and sewerage management, use of recycled water for growing organic fruits, solid waster management digital connectivity through private capital and expertise through Public Private Partnership(PPP) to renew their infrastructure and services in the next ten years;
4. Promotion of Metro Rail projects including light rail systems in two million plus cities in the PPP mode with central governments support through VGF;
5. Inclusion of slum development in the list of Corporate Social Responsibility(CSR) activities to encourage private sector contribution;
6. Increasing the deduction limit on account of interest on loan in respect of self occupied house property from Rs.1.50 lakh to Rs.2.00 lakh to address the concerns of middle and lower middle classes due to high cost of financing;
7. Conducive tax regime for Real Estate Investment Trusts and the proposed new ‘Infrastructure Investment Trusts’ to promote investments in infrastructure and construction sectors which play a significant role in reviving the economy.
Following presentation of General Budget to the Parliament yesterday, Minister of Urban Development and Housing & Urban Poverty Alleviation Shri M. Venkaiah Naidu has directed the senior officials of the two ministries for initiating action immediately for operationalizing new initiatives.