The Union Budget for the year 2011, especially in housing sector, the focus is clearly on the affordable and rural segment. In order to enable easier availability of housing loans for the affordable segment, the Government has proposed to create Mortgage Risk Guarantee Fund under Rajiv Awas Yojana scheme which provides guarantee for the loan taken by the Economically Weaker Section (EWS) and Lower Income Group (LIG). For rural housing, allocation of approximately INR 3,000 crores has been made to enable targeted groups in the rural areas to avail housing finance.

The Union Budget has taken cognizance of the growth potential in the residential sector especially in the priority sector and has announced a laudable interest subvention.  The budget has redefined the priority housing sector to include property up to Rs. 25 lakhs in urban areas and Rs. 15 lakhs in rural areas granting such properties. This is expected to increase the development momentum in such locations. This will have a positive impact in the smaller towns as well as the distant suburbs of the major metros, and may possibly prompt some of the larger developers and funds to enter these segments. Furthermore, the Budget has also indicated an investment linked deduction to businesses which develop affordable housing under a notified scheme.