As per reports, around 2.75 lakh Indian citizens have opted for a subsidy scheme under the Pradhan Mantri Awas Yojana (Urban). Gujarat topped the chart, followed by Maharashtra and Madhya Pradesh – with maximum people availing the Credit Linked Subsidy Scheme (CLSS) under PMAY. Realty experts had vouched for this initiative when the government had launched PMAY and indeed, it is a firepower to boost the industry. But what is Pradhan Mantri Awas Yojana? How is it helping thousands of Indians realize their dream of owning a home?
What is Pradhan Mantri Awas Yojana?
With the objective of revamping the Indian economy and provide a home for everyone in the country, Prime Minister Narendra Modi launched the Pradhan Mantri Awas Yojana (PMAY) in 2015. An ambitious project, PMAY envisions the government’s promise of ‘Housing for All’ by 2022. The initiative includes a target of building more than two crore homes across the nation to benefit the citizens from diverse categories.
The government has chosen 2500 Indian cities and towns to begin the construction process for the initiative. Some states that fall under this scheme are Rajasthan, Odisha, Madhya Pradesh, Kerala, Jharkhand, Gujarat and Chhattisgarh. With this initiative, major nationalised and private banks have offered low interest rates for home loans and therefore the popular dream of owning a house in the cities is moving closer to reality for many Indians.
The brains behind PMAY architected the body of the scheme, mainly keeping in mind the urban poor of the country –which comprises people belonging to economically weaker sections, lower income groups and middle income groups. This was further broken down to various sub-categories, which are:
- Insitu Slum Rehabilitation
Targeted at citizens who inhabit slums, people in this category can receive a grant of Rs.1 lakh from the government and utilize it for the construction of their own house.
- Beneficiary Led Construction
Targeted at families that fall under EWS and would like to either build a new house or restructure their old one. But there is condition – the beneficiary must own land. If it’s approved, the central element of Rs. 1.5 lakh will be provided to the beneficiary for construction or rebuilding the house.
- Affordable Housing
Under this category, the beneficiary can request for the central assistance of Rs.1.5 lakh in construction of a new house, provided they do not own land or house and are not in a position to afford constructing one without the help of a home loan.
- Credit Linked Subsidy Scheme
Targeted at citizens who can afford to construct/buy/rebuild a house with the help of home loans. A subsidy will be given on the interest component of the home loan EMI under lined the eligibility criterions are duly met. The maximum subsidy one can avail isRs.2.67 lakh and one can apply for it at all the major banks. The following table illustrates the characteristics of the CLSS scheme:
|Main Category||Minimum household income||Maximum loan amount on which subsidy is calculated||Interest Subsidy (%)||Maximum subsidy in Rupees||Maximum Carpet Area (square metres)|
|EWS and LIG||Up to Rs. 50,000 per month||Rs. 6,00,000||6.50%||Rs. 2,67,000||60|
|MIG 1||Rs. 50,001 – Rs. 1,00,000 per month||Rs. 9,00,000||4.00%||Rs. 2,35,000||120|
|MIG 2||Rs. 1,00,001 – Rs. 1,50,000 per month||Rs. 12,00,000||3.00%||Rs. 2,30,000||150|
Today, even as the builders in India’s metros sit on a heap of unsold residences (price point:INR 50+ lakh), the country is expected to have a dearth of approximately 20 million housing units required by the rural and urban poor, at much lower price points of INR 5-15 lakh. PMAY has proved to be a perfect solution for this problem. In the near future, it’s speculated that PMAY will further incentiviseIndia’s construction and realty sector to decrease its traditional obsession with wealthy home buyers in the cities.