Sources said the issue of allowing foreign investment has been deferred for the time being due to lack of consensus among cabinet members. To accelerate the pace of building activity and improve the quality of construction in both rural and urban areas, the policy also envisages the use of foreign technology in the housing sector.

In the case of NRIs who step into housing sector, the lock-in period would be three years.

However, the BJP-led government's plan to allow private sector to raise external commercial borrowings for the housing sector has been deferred.According to highly placed sources in the urban affairs and employment ministry, with greater participation of private sector in the house building activities, thegovernment would play the role of a facilitator and the new policy would serve as a broad framework for formulation of plans and execution of programme for development activities in the sector all over the country.

As part of its role as a facilitating agency, it would form policies for increased fund flow of housing finance, serviced land, innovative building materials, provision of upgraded technology, fiscal incentives and legal reforms.

The new housing policy, according to experts, is nothing but an improvement over the 1994 housing policy announced by the Narasimha Rao government and envisages provision of 2 million houses both in urban and rural areas for economically weaker sections and also for low income groups per year. The existing policy which envisages one million housing units per year could not be accomplished per year.

Under the new policy the Housing and Urban Development Corporation (Hudco) will be the funding agency. Other important feature of the policy will be commercialexploitation of unutilised land in the main city centres, the sources revealed.