Cash crunch shakes foundation of govt’s slum development plan

Unofficial estimates peg the total cost of RAY at around Rs 7-8 lakh crore. In the initial draft of the scheme,the housing ministry had decided to retain the financing pattern on the lines of the existing Jawaharlal Nehru National Urban Renewal Mission (JNNURM),whereby the central government provides 50 per cent funds (up to 90 per cent in case of special category states) and the rest is matched by the states concerned.

Senior officials told The Indian Express that it would be impossible for the central government to bear the cost or step up assistance to states from current levels under the JNNURM scheme. “Bigger states like Andhra Pradesh,Maharashtra and Karnataka are asking for a higher Central share. Some of the states have also raised issues regarding squatting on central government land like railways,airports and public sector undertakings,” said a senior official. The housing ministry will soon form a separate committee to resolve these issues,said the official,and is aiming at rolling out the scheme by March 2010.

As per current estimates,around 70-80 lakh new dwellings will have to be constructed to accommodate the country’s slum population. The government may even tap funds generated by collection of construction cess to fund this scheme. Some of the existing schemes of central government related to urban poor housing — such as Affordable Housing for All and Interest Subsidy for Housing for Urban Poor — will also be subsumed in this scheme.

“The scale of RAY is much bigger and it makes sense to dovetail these schemes into a single scheme. Even two of the components under JNNURM may be merged with RAY,” the official said.