Housing Scheme for Urban Poor Hits Roadblock in Lucknow

Strategic Insights -

The ambitious Sarvajan Awas Yojana, a housing scheme by the Lucknow Development Authority (LDA) to construct 10,000 affordable houses for the urban poor, has hit a roadblock due to a bureaucratic condition imposed by some banks. Under the scheme, applicants for EWS and LIG houses are required to have an annual income of or less than Rs 39,600 and Rs 72,000, respectively. However, the banks have started demanding income tax returns (ITR) as proof of income, which is a puzzling requirement for daily wage laborers and artisans who are eligible for the scheme.

Key Takeaways:

  • The LDA's Sarvajan Awas Yojana, which aims to construct 10,000 affordable houses for the urban poor, has been hindered by a condition imposed by some banks that requires applicants to provide income tax returns.
  • The banks have demanded ITR as proof of income, which is a nonsensical requirement for daily wage laborers and artisans with annual incomes of or less than Rs 39,600 and Rs 72,000.
  • The banks claim that ITR is necessary to assess the applicant's ability to repay loans, citing concerns about non-performing assets (NPAs).
  • LDA officials are in talks with UCO Bank to resolve the issue, while the loan mela scheduled for the last week of the month may still go ahead.
  • The scheme offers heavily subsidized houses, with EWS houses costing Rs 1.95 lakh and LIG houses costing close to Rs 3 lakh.
  • The government expects banks to lower interest rates for applicants and provide a 5% subsidy on interest for the first Rs 1 lakh for EWS applicants.

Statistics:

  • 80% of the housing problem is faced by the urban poor and lower middle class ((LDA source)).
  • 5,000 EWS and 5,000 LIG houses are planned to be constructed under the scheme (LDA source).
  • Rs 1.6 lakh is the minimum limit of annual income up to which no one is required to file an income tax return (chartered accountant's statement).
  • Rs 39,600 and Rs 72,000 are the annual income limits for EWS and LIG applicants, respectively (LDA source).

Sources:

  • Interview with LDA Vice-Chairman, Mukesh Meshram
  • Statement from city-based chartered accountant, Amit Agarwal
  • Banking sources
  • Lucknow Development Authority (LDA) sources
  • The Times Content (for reprint rights)