1% rate-cut for home loans up to Rs 10 lakh

The government on Thursday sought to bring cheer to the common man even as the country faces the prospect of a slowdown in the economy due to inadequate monsoons and external financial crises.

The Union Cabinet announced interest rate subsidy of one per cent for housing loans up to Rs 10 lakh (Rs 1 million) and earmarked Rs 1,000 crore (Rs 10 billion) for the scheme.

The subsidy of one per cent will be available for first 12 EMIs (equated monthly installments) on loans up to Rs 10 lakh for houses not costing more than Rs 20 lakh (Rs 2 million), Information and Broadcasting Minister Ambika Soni said after a meeting of the Cabinet.

The Cabinet approved the scheme for providing interest rate subsidy on houses in pursuance with the announcement made by Finance Minister Pranab Mukherjee while replying to the debate on the budget for 2009-10 in July.

The interest subsidy will be routed through the commercial banks and the housing finance companies registered with the National Housing Bank, the minister said.

5% dearness pay hike for government staff

The government on Thursday announced a 5 per cent increase in the dearness allowance for the central government employees and pensioners, with effect from July this year, entailing an outgo of about Rs 2,904 crore (Rs 29.04 billion) this fiscal.

Announcing the decision taken by the Union Cabinet, Soni told reporters that the combined impact on the exchequer on account of hike in dearness allowance and relief would be of the order of Rs 4,355.35 crore (Rs 43.553 billion) for a full year.

The impact for the current fiscal would be Rs 2903.55 crore (Rs 29.035 billion), as the increase would be effective for nine months only from July to March.

The 5 per cent increase in the DA for the employees and dearness relief for pensioners would be over the existing rate of 22 per cent of the basic pay or pension, the minister said.

Govt cuts farm loan interest subsidy to 2%

The government cut the interest rate subsidy to 2 per cent for this fiscal on farm loans given by the public sector banks from 3 per cent last year.

A decision to this effect was taken by the union cabinet, information and broadcasting minister Ambika Soni told reporters.

The financial implication due to the interest subsidy on farm loans by PSU banks, Regional Rural Banks and co-operative credit institutions were at Rs 4,311 crore (Rs 43.11 billion) in 2008-09. It was estimated to be at about Rs 4,000 crore (Rs 40 billion) in the current fiscal, the minister said.

Under the interest subvention scheme, the government will pay 2 per cent interest subsidy to banks for granting short- term crop loan to farmers at a concessional rate of 7 per cent.

In the Budget speech this year, Finance Minister Pranab Mukherjee had said, "I propose to continue the interest subvention scheme for short-term crop loans to farmers for loans up to Rs 3 lakh (Rs 300,000) per farmer at the interest rate of 7 per cent per annum."