New Delhi: The government is considering creating a corpus fund of Rs.1,000 crore in the current fiscal that would encourage banks to give housing loans in "significant volumes" to the urban poor, Prime Minister Manmohan Singh said Tuesday.
Addressing a conference on the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) here, Manmohan Singh said the corpus of Rs.1,000 would be set aside to create a credit risk guarantee fund that could be used to cover any bank losses.
"Developing housing for the poor is critical for any strategy of sustainable urban development. Availability of bank credit will be a key determinant of successful implementation," Manmohan Singh stressed.
"To encourage banks to lend in significant volumes to the economically weaker sections and low-income groups, we are considering the establishment of a credit risk guarantee fund with a corpus of Rs.1,000 crore, to start with, in the current year," he said.
The prime minister said the challenges in urban development were "truly enormous" as he projected the Indian urban population to touch 600 million by 2031.
Currently 377 million Indians live in urban areas.
"Rapid growth will bring a faster rate of urbanisation. That is almost a corollary. As a result, our urban population is projected to increase to over 600 million by 2031," he said.
Manmohan Singh emphasised the "urgent need" to focus on metropolitan planning, improving connectivity through better and larger networks of roads, expressways and highways.
He placed emphasis on better public transport in relation to affordable housing for the economically weaker sections of society.
"City planners must rethink traditional concepts of town planning. Master plans in the past did not consider spatial requirements for living and working of the poor. This must change, and change fast enough."
He mentioned the government`s Rajiv Awas Yojana (RAY) launched this year for "creating inclusive and slum-free cities, while leveraging the value of land to generate revenues".
"The aim is to achieve slum redevelopment and create affordable housing stock by providing assistance to those states that are willing to assign property rights to slum dwellers. This reform will give the urban poor a formal stake in the cities` economic and social development."