Additional funds may go to housing, MNREGA to generate jobs, spur growth

All measures unlikely to be implemented at one go

Looking at multiple options to spur growth and generate jobs, the Centre is zeroing in on housing and social sector schemes, besides focusing on women’s self-help groups.

Though all of these measures might not come at one go, officials said the steps, if implemented, could augment economic growth, create jobs, and generate additional consumption demand mainly in the semi-urban and rural areas. One way to generate demand, they said, could be to increase spending under the flagship Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) to create extra jobs. 

The Ministry of Rural Development has already sought extra budgetary support of Rs 17,000 crore for the 2017-18 financial year over and above the budgeted Rs 48,000 crore to meet the demand for additional person-days of work. 

More funds will also be needed as almost 65 per cent of the budgeted amount will be exhausted by September 30 due to front-loading of expenditure after the Budget presentation was advanced to February 1 this time.

The thinking while placing the demand was to meet any extra work need arising due to uneven monsoon. But now this could also be used to stimulate overall economic growth, which fell to 5.7 per cent in the first quarter of financial year 2017-18, the lowest in the Narendra Modi regime.
 

That apart, there is a thinking within the government to enhance the credit linkage to women’s self-help groups (SHGs) in rural parts which would generate additional employment. In 2016-17, credit linkages of around Rs 42,000 crore were provided to SHGs, which the Centre plans to raise to Rs 50,000 crore in 2017-18. 

The target is to provide institutional credit linkage of over Rs 60,000 crore by 2018-19, but officials said this would be easily breached and the deadline could be brought forward as the appetite was growing in rural and semi-urban areas for self-employment opportunities. 

“Moreover, unlike big companies, the default rate among SHGs is among the lowest in all sectors where banks lend,” a senior official said.
 

The third and the most vital of the sectors where the government could look at kick-starting the job market is the housing sector. Under the rural housing programme called the ‘Pradhan Mantri Awas Yojana — Grameen’, the Centre plans to build 10 million new houses by March 2019, but with the pace picking up in the past few months, it is confident of meeting the target by December 2018 itself.  

“We are even ready to undertake any additional target as well as our house construction pace has really picked up,” another official said. He said the Centre might raise the house construction target by 25 per cent, which would create more work.

The long-term plan is to construct 20.7 million houses in rural areas by 2022, which the government and its arms are confident of meeting before the deadline. The budgetary allocation for the rural housing scheme is around Rs 23,000 crore in 2017-18, of which 80 per cent would be exhausted by September 30. As the target has been enhanced while the deadline has also been brought forward, the ministry might need additional funds. 

Though the government has the facility to borrow from NABARD to fund its rural housing programme, allocation through budgetary support is easier to execute. 

The fourth area being looked at is to allow construction of affordable houses in peripheral villages — those which lie alongside urban clusters. 
 

As land is a scarce commodity, particularly in urban centres, the idea is being looked at to free up areas for construction of dwellings. This would also boost the construction sector. 

The new minister for housing and urban development, Hardeep Singh Puri, at a conference in Mumbai last week, had said the Centre would soon take a view on allowing urban housing projects in peripheral villages and talks were going on in this regard with the Ministry of Rural Development.

“Yes some discussions have started in this regard but all this is at a very preliminary state and we have told them to raise the matter with state governments as most periphery village lands are with state governments,” an official said. 

For boosting affordable housing, which, in turn, could help create additional jobs, the Ministry of Housing and Urban Affairs has unveiled a new PPP policy for builders and also extended the interest subsidy till March 2019.