Government shelves plan to involve private developers in housing project

The State government, which plans to construct one lakh houses for the poor in Bengaluru, has decided to drop the revenue-sharing model involving private developer and instead take up the project with internal funding.

The change of plan for funding, a senior official in the government said, came after the Chief Minister’s office developed cold feet over involving private developers to construct houses, which could put the project on a sticky wicket if deadlines are not met. However, instead of going back to the Cabinet to modify the proposal, it is going ahead with the ₹5,500-crore to ₹6,000-crore project without the involvement of private developers, sources said.

The online application process for the houses started last week. The project is being subsidised through three existing housing schemes — Pradhan Mantri Awas Yojana of the Union government, and Ambedkar and Vajapayee schemes of State government — that would cover more than 50% of the house cost for SC/ST applicants and more than 25% of the cost for general category applicants. While a small portion of the cost would be borne by the beneficiary, the revenue-sharing model was meant to bridge the funding gap.

As per the plan, the government was to auction 40% of the land to raise money to fund the revenue gap if construction is taken up by the Rajiv Gandhi Rural Housing Corporation. In case where development of houses is taken up by a private developer under the PPP model, 40% of the land could be used by the developer.

THE HINDU