Multilateral funding agency Asian Development Bank has approved a USD 150 million (about Rs 1,095 crore) loan for a sustainable housing project for the urban poor in Tamil Nadu.

The loan to provide access to inclusive, resilient, and sustainable housing for the urban poor in Tamil Nadu was approved on September 3, 2021, ADB said in a release on Monday.

The Manila-headquartered funding agency said Tamil Nadu is vital to India's economic growth, contributing 8.54 per cent to the country's gross domestic product (GDP).

Economic opportunities have increased rural urban migration in the state, which already has one of the highest urbanisation rates in India.

"Tamil Nadu's housing shortfall accounts for 6.66 per cent of the national deficit, and when mapped against income levels, low-income households bear most of the shortage," said ADB Principal Safeguards Specialist for South Asia Ricardo Carlos Barba.

The aim is to provide vulnerable and disadvantaged households access to inclusive, safe, and affordable housing infrastructure and services, Barba said.

Tamil Nadu has a population of more than 72 million (7.2 crore), nearly half of which are living in urban areas.

The rapid urbanization and growth in the urban population will require adequate urban infrastructure and services, including housing, ADB said.

With this USD 150 million loan, through the Tamil Nadu Slum Clearance Board, the project will construct housing units in nine different locations and relocate about 6,000 households vulnerable to natural hazards to safer locations.

It will also help Tamil Nadu's Directorate of Town and Country Planning develop regional plans to map the state's economic and infrastructure development including affordable housing, environmental protection, disaster risk management, and gender, ADB said.

A portion of ADB's assistance will be invested by the state government as equity into the Tamil Nadu Shelter Fund to catalyze private sector financing and support investments mainly in industrial housing and working women's hostels for low-income and migrant workers.

In addition, ADB will provide a USD 1.5 million (nearly Rs 10.95 crore) technical assistance (TA) grant from its Technical Assistance Special Fund to support the capacity building of government agencies responsible for delivering affordable housing and regional planning in the state.

The TA will document successful approaches to affordable housing delivery, including the graduation programme for vulnerable relocated beneficiaries, that can be adopted in other cities and countries, it said.