By Saad Alam Khan
New Delhi: The World Bank has inked a tripartite agreement with the Union as well as Tamil Nadu governments to provide $ 250 million loans for affordable housing for low-income groups in Tamil Nadu.
The loan’s break up is $ 200 million for First Tamil Nadu Housing Sector Strengthening Programme and $ 50 million for Tamil Nadu Housing and Habitat Development Project. The amount will be provided by World Bank’s lending arm, the International Bank for Reconstruction and Development (IBRD).
According to Abhijit Sankar Ray, Senior Urban Specialist, World Bank, both projects will complement each other and strengthen key institutions to transform the housing sector in Tamil Nadu.
The loans will have a maturity of 20 years including a grace period of 3.5 years.
A Union Finance Ministry press communique stated here on Tuesday that the $200 million loan would support the government’s ongoing efforts to increase the availability of affordable housing by gradually shifting the role of the state from being the main provider to an enabler. “It will also aim to unlock regulatory barriers and incentivise private sector participation in affordable housing for low-income families,” it added.
The $50 million loan would support innovations in housing finance and strengthen housing sector institutions in the state, the press release stated, and elaborated that it would finance the newly created Tamil Nadu Shelter Fund (TNSF) – “an innovation in housing finance in India” – by providing an equity contribution of $35 million.
“This initial support to TNSF will enable cross-subsidisation opportunities where higher returns from commercial and high-income developments will compensate for lower returns from affordable housing,” it stated and added that this will make affordable housing commercially viable for potential investors. The project was expected to strengthen the capacity of key housing institutions including the Tamil Nadu Slum Clearance Board, the state’s main provider of affordable housing; Chennai Metropolitan Development Authority, the land use planning authority for the Chennai Metropolitan Area; and Tamil Nadu Infrastructure Fund Management Corporation Limited, the asset management company of TNSF.
“Nearly half of Tamil Nadu’s population is urban, and this is expected to increase to 63 percent by 2030. An estimated 6 million people were currently living in slums in Tamil Nadu that represented 16.6 percent of the state’s urban population,” said Sameer Kumar Khare, Additional Secretary, Department of Economic Affairs, Ministry of Finance, who signed the agreement on behalf of the Government of India on Monday.