20 million new rural homes to be built at existing unit assistance rates

Total financial provision 27 per cent lower than FY25 Budget Estimates

The Union Cabinet approved last week the construction of 20 million new homes in rural areas over the next five years starting FY25, but the unit assistance for each home was earmarked at Rs 120,000 for plains and Rs 130,000 for hills.

This is lower than the unit assistance approved in the FY25 Budget where a footnote under the Ministry of Rural Development said the per unit assistance for the 20 million new homes in a rural area would be at a higher rate of Rs 200,000 for plains and Rs 220,000 for hills.

“The beneficiary households are being provided unit assistance of Rs 1.2 lakh in plain areas and 1.3 lakh in Integrated Action Plan (IAP) districts/Hill/ North-Eastern states.  However, the unit assistance is being enhanced to Rs 200,000 in plain areas and Rs 220,000 lakh in IAP districts/Hilly/ North-Eastern states and difficult areas from FY 2024-25 onward with a target to construct 20 million houses,” the Budget footnote read.

The total outlay for the 20 million new houses over the next five years was estimated at Rs 418,200 crore within which the central share was Rs 263,466 crore and states were required to provide the balance of Rs 154,734 crore.

Based on the five-year outlay, the full Budget of FY25 had allocated a sum of Rs 54,500 crore as the Centre’s share for the first year of the five-year programme.

However, the Union Cabinet decision of August 9, by maintaining the per unit assistance at the existing levels of Rs 120,000 for plains and Rs 130,000 for hills seems to have projected a lower financial burden on the Central exchequer over the next five years.

The revised total outlay for the programme over the next five years as per the August 8 Cabinet decision is now Rs 306,137 crore for rural homes, which is almost 27 per cent less than the Budget Estimates, while the Centre’s share is 22 per cent lower at Rs 205,856 crore.

Assuming that the final expenditure on rural houses in FY25 is closer to the one which has been approved by the Union Cabinet, the actual expenditure by the Centre should be around Rs 42,000 crore, 23 per cent lower than the Budget Estimates.