Keeping in view the higher cost of construction of houses, Finance Minister P Chidambaram on Friday proposed to enhance the subsidy per unit in respect of new houses for poor sanctioned under the Indira Awas Yojana.

The subsidy will be raised from Rs 25,000 to Rs 35,000 in plan areas and Rs 27,500 to Rs 38,500 in hilly or difficult areas, he said in his Budget speech in the Lok Sabha.

Chidambaram informed the House that the subsidy for upgradation of houses will be increased from Rs 12,500 per unit to Rs 15,000, but still a beneficiary will need own funds to complete the house.

Accordingly, he said, the public sector banks would be advised to include IAY houses under the differential rate of interest scheme and lend up to Rs 20,000 per unit at an interest rate of four per cent.

Housing for the poor is one of the six elements of Bharat Nirman and is implemented through IAY. Against a target of constructing 60 lakh houses, 41.13 lakh houses have been constructed up to December 2007 and the cumulative number will be 51.77 lakh houses by the end of March this year, he added.

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