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GOI and World Bank signs loan agreements to provide affordable housing to low-income groups in Tamil Nadu

The agreements have been signed for two projects- $50 million Tamil Nadu Housing and Habitat Development Project and $200 million First Tamil Nadu Housing Sector Strengthening Programme.

Jun 30, 2020 14:00 IST
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The World Bank, the Government of India, and the Tamil Nadu Government on June 29 signed legal agreements to provide access to affordable housing to low-income groups in Tamil Nadu.

The agreements have been signed for two projects- $50 million Tamil Nadu Housing and Habitat Development Project and $200 million First Tamil Nadu Housing Sector Strengthening Programme.

The two projects will strengthen the state government’s housing sector policies, regulations, and institutions. Nearly half of Tamil Nadu’s population is Urban and has been expected to increase to 63% by 2030 and around 6 million people are currently living in slums. 

The signing of the Agreements:

The loan agreements were signed on behalf of the World Bank by Junaid Kamal Ahmad, Country Director (India) and on behalf of Government of India by Shri Sameer Kumar Khare, Ministry of Finance.

While the project agreements were signed by Shri Junaid Kamal Ahmad on behalf of the World Bank and by Shri Hitesh Kumar S. Makwana, Principal Resident Commissioner, on behalf of the Tamil Nadu Government.

Shri Sameer Kumar Khare while signing the loan agreements mentioned that providing affordable and safe housing is a key priority for Tamil Nadu. He added that with the allocation provided under the two projects from World Bank and Pradhan Mantri Awas Yojana (Urban), a large number of urban poor in the state will get access to better housing which will also improve their living conditions.

While Mr. Junaid Kamal Ahmad from World Bank talked about how the COVID-19 pandemic has put urban households at risk of increased poverty, loss of assets, human rights, and livelihoods. The impact will be mostly on the poor who have been living in overcrowded slums with limited access to basic services. He assured that the projects will support the state’s vision of providing affordable housing with improved living conditions.

The loans of $50 million and $200 million from the International Bank for Reconstruction and Development (IBRD) have a maturity of 20 years which includes a grace period of 3.5 years.

About First Tamil Nadu Housing Sector Strengthening Programme:

The $200 million programme will support the state government’s ongoing efforts to increase the availability of affordable housing by gradually shifting the state’s role from being a main provider to the enabler.

The programme also aims at unlocking regulatory barriers and incentivise the private sector participation in providing affordable housing to low-income families.

Yoonhee Kim, Task Team Leader for the Housing Sector Strengthening Programme and Senior Urban Economist, World Bank mentioned that the global experience indicates that the public sector alone cannot address growing housing demand, especially as countries are undergoing rapid urbanization. The public sector plays an important role in providing regulatory and market incentives to make affordable housing more attractive to the private sector.

About Tamil Nadu Housing and Habitat Development Project:

The board has also approved a $50 million Tamil Nadu Housing and Habitat Development Project to strengthen housing sector institutions in the state and to support innovations in housing finance.

The project will finance the newly created Tamil Nadu Shelter Fund (TNSF) by providing an equity contribution of $35 million.

Abhijit Shankar Roy, Task Team Leader for the project and Senior Urban Specialist, World Bank stated that both the projects will complement each other. It will also strengthen the key institutions to transform the housing sector in Tamil Nadu.

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