The UPA government is aggresively pursuing its flagship housing project for slum dwellers, the Rajiv Awas Yojna, to bring in the second phase of urban reforms.
The Centre is holding talks with state governments and seeking their cooperation to roll out the project that promises a slum-free India in the next five years.
This is the second such initiative for urban reforms after the successful implementation of the Jawaharlal Nehru National Urban Renewal Mission launched in FY06.
According to a senior government official, while the Centre will fund 50 per cent of the project costs, the states should do their bit by executing certain conditions, including the enactment of a new law that would give property rights to slum dwellers.
"The states will have to ensure that 20 to 25 per cent of the municipal budget is earmarked for the urban poor.
The states would have to provide 10-15 per cent of land for all housing development projects or 20-25 per cent of the floor area ratio, whichever is higher, for projects under this scheme," Kiran Dhingra, secretary of Housing and Urban Poverty Alleviation told Business Standard.
The states have also been asked to modify their prevailing tenancy acts to accommodate necessary changes. The Centre had already circulated two model draft legislations to the states.
"One of them is the model property rights bill and the other is the residential tenancy act," said Dhingra.
While Congress-ruled Andhra Pradesh has already drafted a property rights act along the lines of the central law and plans to introduce it before the assembly soon, BJP-ruled Chhatisgarh and Madhya Pradesh, Congress-led Rajsthan and BJD-governed Orissa, have accepted the UPA policy.
Apart from undertaking these reforms measures, the states will also have to provide land for building low-cost housing schemes for the urban poor.
The Cabinet Committee on Economic Affairs had approved the RAY scheme last week. The UPA government's scheme is aimed to provide affordable housing through partnership and interest subsidy to people living in urban slums.
The government plans to provide low-cost houses for 32 million slum-dwellers across 250 cities and towns. It will also encourage the public-private-partnership (PPP) model to achieve this target.
The Centre has already sanctioned Rs. 800 crore (Rs. 8 billion) for this scheme for the current financial year. It has decided to set up a Rs. 1,000-crore (Rs. 10 billion) mortgage risk guarantee fund for this purpose. The fund will help the poor get steady credit flow and institutional finance for housing.
After deliberations within the government, the draft Rajiv Awas Yojana scheme was evaluated by an independent expert group headed by Deepak Parekh. HUPA has selected 30 cities across 16 states for initiating the 'National Slum Free City Campaign'.