Rural Habitat Finance

As per the 2001 Census, 71 % of the population of India lives in rural areas with acute problem of housing shortage and lack of civic amenities. Apart from this absolute shortage, if congestion, obsolescence as also the damage to houses due to vagaries of nature such as cyclonelflood/earthquake, etc., were taken into consideration, the actual requirement would further increase to about 24 million.

Government of India has taken a number of initiatives to improve the availability of houses in rural areas. The approach has been two­pronged - providing outright grant support to the very poor for construction of new houses and up gradation of unserviceable kutchha houses, and offering subsidy linked with credit to certain sections of the poor who have the wherewithal.

Refinance support provided by National Bank for Agriculture and Rural Development (NABARD) and National Housing Board (NHB) to the Primary Lending Institutions, steadily increasing over the years, has mainly benefited the salaried and self-employed segment of the rural population. NGOs like Gram Vikas, Development Alternatives and Orissa DevelopmentTechnocrats Forum also facilitate housing finance integrated with technical support services by using donor funds, bank credit and community contribution.

A working group on rural habitat set up by NABARD with members from NABARD, NHB, commercial banks (SBI, BOI, UB, BOM) and the NGO sector (DA) to identify the constraints facing rural housing development has come up with numerous suggestions to improve the flow of finance to the rural housing sector and also provide inputs for the formulation of the draft National Rural Housing and Habitat Policy. Some of the major suggestions are indicated below:

i. Housing for individuals and SHGs linked to livelihood loans: A combined finance product model is suggested for low-income rural people who require livelihood supports (work shed/petty shop/animal shed, etc.) to help them to pay back the small housing loans.

ii. Sanitation for individuals and communities: Provision of bath and toilet facilities should be an integral part of the rural housing loan. Wherever they have not been provided, there should be a separate loan for construction of toilets and bathrooms.

iii. Insurance scheme for borrowers: Formulation of an insurance package encompassing life insurance, accident insurance and insurance to take care of hospitalisation expenses, with affordable premiums - on the lines of the pilot scheme for Self Help Group (SHG) members introduced by SBI in Maharashtra - is recommended.

iv. Promotion of eco-friendly technologies: The working group has recommended various measures to promote the use of eco-friendly cost­effective building technologies in rural areas.

v. Finance to village Panchayats for essential infrastructure: Bankable schemes for power generation, water supply, community sanitation and waste disposal services, etc., should be developed.

vi. Collaboration of banks with Panchayats for implementing development projects: Panchayats can issue certificates of land titles for individuals and make land available to build public infrastructure.