Urban ministry seeks changes in second stimulus packageJanuary 2nd, 2009 - 5:20 pm ICT by IANS
New Delhi, Jan 2(IANS) The urban development ministry has asked for additional changes at the last minute to the second stimulus package, slated to be announced Friday, to make the package beneficial for the end-user.Last month, Commerce Minister Kamal Nath announced that the second stimulus package would attempt to include special provisions to help exporters and the real estate and infrastructure sectors.
“The ministry has demanded specific sops, like interest rates for home loans up to Rs.5 lakh (Rs.500,000) be reduced to 6.5 percent, while loans between Rs.5 lakh to Rs.30 lakh (Rs.3 million) be 7.5 percent annually,” a senior ministry official told IANS.
“Apart from that, it is suggested that the ceiling for income tax rebates on interest paid on home loans be raised to Rs.300,000 from Rs.150,000,” the official added.
The domestic demand for real estate has fallen sharply amid high lending rates and tight liquidity.
“Housing projects should be treated on par with the infrastructure sector for all purposes, including bank funding,” Urban Development Minister Jaipal Reddy said in a letter to the prime minister.
The official said the ministry has asked that the package be redesigned in a way that it helps end-users and the middle class and not just the industry. “And that is the reason the interest limit on high-end segment and luxury housing was removed,” he said.
“There is enough scope for profit in middle housing segment and unless the prices will come to the realistic level, end-users will get no relief,” Jaipal Reddy told IANS last month.
“So developers must come out of the niche luxury housing segment and focus on affordable housing,” the urban development minister added.