Differentiate between Subsidy and Cross subsidy in housing finance

SUBSIDY

Normally housing project adapted by central govt., housing agencies like HUDCO grant concession in the loan issued for the housing project. The concession or any benefit given to the public in construction of a house is called subsidy.

For example :

Low cost projects and rural housing projects 10 to 20% is given as subsidy to the people. They need not pay these subsidy amounts to the government, balance amount only is to repaid in the long term with low interest.

The backward taluks and panchayats, the govt, provides may housing schemes with subsidy. Similarly, poor peoples, weavers, rural, peoples are benefited by the subsidy scheme.

(or)

Normally for housing projects a benefit or concession is given to the people by the Govt, for the construction of a house is called as a subsidy. A part amount of loan is borne by the Govt. department which is known as subsidy. The remaining part of the loan is around repaid by the house owner.

The central Govt. department like HUDCO, grand's 10 to 20% subsidy for the house

loan.

For Example:

The house by the housing board. Like housing board, co-operative housing societies and other agencies are also constructing houses and fix the price of houses in the above method.

CROSS SUBSIDY

Cross subsidy is concession given to the public at any intermediate stage of construction or at the final stage of the construction.

For example

If the poor people are not able to meet the expenses of construction due to poverty, the Govt. after understanding their position announces some benefits or concession at the inter mediate stages, which is called as cross subsidy.

The people constructing their houses in a backward area or slum area or providing a gross subsidy either in the form of free power supply water supply. etc.

If any disaster like flood, earthquake, landslides, Tsunami, cyclone etc. the cross subsidy is in the form of no repayment of the further installments or the total loan.

If any rural industry or backward are to encourage the rural development or entrepreneur or a small scale industry in a rural location, 15% subsidy is granted by for rural industries, free electricity or reduces of electric charges are granted which are cross subsidy of the government.

The cross subsidy is given to encourage the people who are promptly repaying the loan interest and affected by povety.