New Delhi: After announcing a ₹ 3 trillion scheme to build 20 million houses for the urban poor, the Union cabinet chaired by Prime Minister Narendra Modi approved a plan on Wednesday to construct 1 crore houses for the rural poor in the next three years.

Both schemes are part of the Pradhan Mantri Awas Yojna (PMAY) or Housing For All programme that the government aims to complete by 2022. The Modi government had in June given its go-ahead for the ambitious urban poor housing plan.

Given the multiplier potential of construction, the scheme is expected to boost job creation in rural areas, hit by two successive droughts and unseasonal rain, besides giving a fillip to the economy in general.

“A house is an economic asset and contributes to upward social mobility with salutary impact on health and educational achievement. The tangible and intangible benefits flowing from a permanent house are numerous and invaluable to both the family and the local economy," a government statement on the key decision said.

Briefing reporters on the outcomes of the cabinet meeting, Ravi Shankar Prasad, minister of communication and information technology, told reporters that the “expenditure involved in implementing the project in a span of three years from 2016-17 to 2018-19 is ₹ 81,975 crore."

Of this, ₹ 60,000 crore will come from budgetary allocations and the remaining through Nabard, Prasad said.

“It is proposed that 1 crore households would be provided assistance for construction of pucca (permanent) house under the project during the period from 2016-17 to 2018-19. The scheme would be implemented in rural areas throughout India," the minister said, adding that the cost of construction of the houses would be shared between the centre and states.

“The cost of unit (house) assistance is to be shared between central and state governments in the ratio 60:40 in plain areas and 90:10 for north-eastern and hilly states," the government statement said.

Beneficiaries of the rural houses would be chosen according to data taken from the Socio-Economic Caste Census of 2011, Prasad said, adding that the central government had decided on an allowance for construction of houses of ₹ 120,000 in plain areas and ₹ 130,000 in hilly areas and those in the grip of Maoist insurgency.

“Funds will be transferred electronically directly to the account of the beneficiary," the statement said, explaining that the beneficiary can use the services of those working under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).

“This will be ensured through a server linkage between Pradhan Mantri Awas Yojna (PMAY) and MGNREGS," the statement said.

To increase synergy between the PMAY and MGNREGS, “the manufacture of bricks using cement-stabilized earth or fly ash will be taken up under MGNREGS", the statement said.

“The construction sector generates the second largest employment opportunities in India. The sector has strong backward and forward linkages with over 250 ancillary industries. The development of rural housing creates jobs for those living in the rural community to meet the new demand in the construction-related professions," the statement said.

“Purchase of building material, use of services of skilled and unskilled labour, transport services and the consequent flow of financial resources create a positive cycle of economic activities and increase demand in villages," it said.

“The intangible benefits from improvement in housing condition are gains in labour productivity and positive health benefits. It positively influences human development parameters of nutrition, sanitation, maternal and child health," the statement added.

So far, the government has spent ₹ 1,05,815.80 crore on building 351 lakh rural homes, the statement said.

In another key decision, the cabinet gave its approval for India to accede to the Ashgabat Agreement, an international transport and transit corridor facilitating transportation of goods between Central Asia and the Persian Gulf, Prasad said.

The Ashgabat Agreement was signed by five countries in April 2011. It aims to establish a new international transport and transit corridor linking the Central Asian countries and Iranian and Omani ports.

For India, signing up will mean access to landlocked Central Asia through Iran and Oman. It will also possibly mean access to landlocked Afghanistan, which is inaccessible to India by road because of tensions with Pakistan.

“The Ashgabat Agreement has Oman, Iran, Turkmenistan and Uzbekistan as founding members. Kazakhstan has also joined this arrangement subsequently," a government statement said.

“Accession to the Agreement would enable India to utilize this existing transport and transit corridor to facilitate trade and commercial interaction with the Eurasian region. Further, this would synchronize with our efforts to implement the International North South Transport Corridor (INSTC) for enhanced connectivity," the statement said.

Among other decisions, the cabinet decided to give an additional dearness allowance of 6% to government employees with effect from 1 January, benefiting 5 million government employees and 5.8 million pensioners. This will cost the government an additional ₹ 14,000 crore in 2016-17, Prasad said.

The cabinet also gave ex facto approval for a memorandum of understanding between India and the United Arab Emirates signed on 11 February to mobilize long-term investment in the National Investment and Infrastructure Fund.

The procurement of launch services and realization of ground segment for the GSAT-11 spacecraft at a cost of ₹ 1,117 crore was also approved. The launch is expected to provide a high throughput capacity of about 10 Gbps to render broadband connectivity, especially in rural areas.

The $1,500 million World Bank support to the Swachh Bharat Mission (Gramin) got the cabinet’s go-ahead. The project provides for incentivizing states on the basis of their performance in the mission.

Separately, the Cabinet Committee on Economic Affairs (CCEA) cleared doubling of the Kiul-Gaya Railway line of 124 km costing ₹ 1,354.22 crore and doubling of the Ranchi (Hatia) railway line of 158.5 km costing ₹ 1,921.94 crore.

The CCEA also approved fixing of nutrient based subsidy rates for phosphatic and potassic fertilizers for 2016-17 at the rate of ₹ 13.2 and ₹ 15.5 per kg, respectively.

At similar consumption levels in 2016-17 as in the year before, the total subsidy will cost around ₹ 21,274 crore, the government said in a statement.

In another decision, the CCEA gave its nod to the extension of the special industry initiative scheme for Jammu and Kashmir till 2019-20. The scheme, known as Udaan, was to end later this month.

Sayantan Bera contributed to this story.

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