Banks cutting interest rates is a benefit of demonetisation which is bringing more money into the open, according to Venkaiah Naidu, Union Minister for Urban Development and Housing.
In an interaction with journalists of the Hindu Group, Naidu said the exact quantum of money that has been declared after the Centre pulled ₹500 and ₹1,000 denomination currencies out of the system will only be known in a few days. But just that “the entire notes have come into the open, is an achievement.”
Also, “more money in the system means more money brought under the tax net and with more money in tax net, taxation can come down,” he said. In tandem with the banks cutting interest rates by up to 0.9 per cent, Prime Minister Narendra Modi had also announced rebates on home loans to support the middle income and low income groups. With a rebate of 3–4 per cent on home loans ranging up to ₹12 lakh, the effective home loan interest rates come down to 5.5 – 6.5 per cent and this will benefit the middle class.
He recalled the boom in real estate during the BJP-led NDA government regime when home loan interest rates ranged around 7.5-8 per cent. “A real estate boom is bound to happen,” he said.
The Centre is keen on “heavily subsidising” housing for the poor, Naidu said. It has informed State governments that if land is provided the Centre “will give houses.” That is how Andhra Pradesh was allocated about 1.9 lakh houses under the Central scheme; Tamil Nadu 1.72 lakh houses and West Bengal more than one lakh. “If the State comes with an action plan, we approve it,” he said.
His Ministry has allocated 84 per cent of the budget for the year and has sought additional funding, he said.
The Centre will treat all State governments equally irrespective of political differences. Projects are driven by States’ plans as long as they are in line with the rules. The Centre is driving a change in mindset and it is up to the States to follow, he said.
It is in this direction the Centre had accepted the recommendations of the 14th Finance Commission and opted to devolve over 42 per cent of its revenue to State governments. Along with allocation to Local Bodies and the Judiciary, over 49 per cent of its funds have been devolved. State government and local bodies have got over ₹82,000 crore in an unprecedented devolution of funds, he said.
The Prime Minister is keen on driving a behavioural change and from day one of his government had focussed on “reform, perform and transform,” he said.Whether demonetisation, direct transfer of benefits or urea subsidy — mandating neem-coated urea to prevent diversion of subsidised urea — the Centre is steadily “plugging leakages,” he pointed out. There is no “magic wand or panacea”, the government has to work within the system to bring in changes.