The NHP draft, a copy of which is with The Financial Express, says that the shelter fund will be used for low cost housing while the risk fund will cover lending risk to the urban poor.

The policy, as announced by union minister for urban affairs and employment, Ram Jethmalani, will be tabled in parliament in the ongoing budget session and will boost housing activity to meet the target of 20 lakh additional houses a year.

Higher allocation of tax-free bonds in view of the requirement of large quantum of low cost funds will be encouraged and there will be increased access to banking sector funds for housing through expanding percentage of incremental deposits and earmarkingdedicated funds under the priority sector for economically weaker section (EWS) and low income group (LIG).

The policy envisages fiscal incentives for investment in housing activities under section 10 (23) G and 80 (1) A of the Income Tax Act, continuing assistance to HFIs under section 36 (1) VIII of IT Act, increasing quantum of confessions under section 36 (1) VIII for loan assistance for EWS/LIG, extending tax concessions to the corporate sector and HFIs for contribution to the proposed shelter fund and risk fund and tax concessions under wealth tax for promoting rental housing. It proposes allocation of funds from VDIS from the centre and states' share for supporting housing programmes, amendments to National Housing Bank (NHB) for early foreclosure procedures, accessing larger low cost funds for housing from international agencies such as ADB, World Bank, increased allocation from the insurance sector for EWS/LIG and provide access to long- term funds-provident fund/pension fund through ministry oflabour.

The policy stresses the need to facilitate efforts of state, urban land banks and private sector in developing supporting infrastructure. The National Housing Bank will consider involvement of HFIs, set targets for individual HFIs taking into account the spatial location, assess the finance requirements of HFIs and their ability to mobilise the same and above all develop innovative instruments for mopping up domestic resources in association with HFIs.

The policy calls for linkages between the formal and informal sector to be developed by HFIs and introduction of savings cum insurance-linked housing scheme targeted towards the urban poor who largely depend upon informal mechanism.

It emphasises the need for specifying modalities of setting up of a secondary mortgage market in the country. An independent organisation will be required to be set up which would buy the mortages from HFIs and issue securities supported by the mortgage. ``This would greatly help in releasing the funds of HFIs forrecycling, which are otherwise locked up for a long duration.''

The policy says that the government would encourage setting up an independent rating agency for builders/promoters. Similarly, it calls for a formation of a professional body to undertake housing demand assessment and survey in different areas. This body could be a joint venture of HFIs working independently. Such an arrangement is necessary as in the absence of independent demand assessment, often the speculative pressures create artificial demand which is not desirable.