Credit Guarantee Fund for urban poor on the anvil

Amid constraints over the availability of funds from banks and other financial institutions, the Centre plans to soon launch a scheme to trigger credit markets for the urban poor.

The Credit Guarantee Fund (CGF) will cover the risks of the bank’s lending to the urban poor, who would be covered in the Centre’s ambitious slum-free India scheme.

The CGF also aims to pave the way for the participation of private sector, as the flow of credit will be ensured for the urban poor. Minister for housing and urban poverty alleviation Kumari Selja made the announcement in this regard on Tuesday.

In her address at a conclave here on urban poverty alleviation and Rajiv Awas Yojana (RAY), she said the Centre also plans to improve the incomes of the urban poor by providing them assistance for skill upgradation and setting up of self-employment ventures. Besides, Selja announced her ministry’s plan to launch National Urban Livelihoods Mission to address the issues of urban livelihoods.

“Integrated action on both these fronts is required if we are to make our cities inclusive and equitable,” she said. “This cannot be done by the government alone. What is needed is a partnership between all the stakeholders.

The Rajiv Awas Yojana aims at a holistic approach by bringing the existing slum within the formal system and correcting the deficiencies in our planning processes and procedures, which keep affordable housing out of the reach of the urban poor.” RAY is envisaged as a reform-driven scheme consolidating and building on the reforms initiated under the Jawahar Nehru National Urban Renewal Mission, she added.

Selja said her ministry would lay emphasis on more and more participation of the private sector for achieving the vision of slum-free India.

However, she said she was aware of the constraints the private sector were facing in terms of limited supply of developed land, access to credit and a transparent and simple techno-legal framework.

“My ministry has already constituted a task force with central and state officials and representatives of the private sector to formulate a separate set of guidelines for reducing the complications and time consumed in getting the project approvals,” the minister informed.

In order to further encourage private sector participation, RAY has been dovetailed with two schemes: Affordable Housing In Partnership and Interest Subsidy for Housing the Urban Poor.

In Mumbai, Maharashtra chief minister Prithviraj Chavan said RAY would benefit both the state and its capital, which has at least 5 million people residing in slums and shanties. Nearly half the money under the scheme would come from the Centre, he added.