Introduction
India's rapid urbanization has led to a significant shortage of affordable housing, particularly in urban areas. To address this issue, the Indian government launched the Pradhan Mantri Awas Yojana (PMAY) in 2015, with the ambitious goal of providing affordable housing to all citizens by 2022, the 75th year of India's independence. This scheme aims to bridge the gap between housing demand and supply, ensuring that every Indian has access to a secure and dignified living environment. During India's election season, sources within the government have informed CNBC-TV18 of plans to potentially expand the coverage and scale of subsidized home loans offered through the Pradhan Mantri Awas Yojana (PMAY), which seeks to provide affordable housing for urban residents.
Under PMAY, eligible homebuyers could potentially save up to ₹2.67 lakh on interest costs over a 20-year period—the maximum loan tenure permitted under the scheme. Moreover, the largest permissible size for these affordable homes is 200 square meters. New sanctions under the credit-linked subsidy scheme stopped in March 2021. Over the previous five years, lenders supported 2.5 million low and middle-income households, incurring a subsidy of ₹59,000 crore for the government. With the revised PMAY scheme, the Modi administration aims to subsidize the acquisition or construction of 10 million residences.
Objectives and Scope
The PMAY scheme targets economically weaker sections (EWS), lower-income groups (LIG), and middle-income groups (MIG) in both urban and rural areas. Its primary objectives are to provide subsidies on home loans, offer direct financial assistance for building houses, facilitate in-situ rehabilitation of slum dwellers, and provide credit-linked subsidies for the middle-income group. The scheme is implemented through a combination of central and state government funding, as well as private-sector participation.
Types of Pradhan Mantri Awas Yojana
1. Pradhan Mantri Awas Yojana Gramin (PMAY-G):
Previously known as the Indira Awas Yojana, PMAY-G targets affordable and accessible housing units for eligible beneficiaries in rural regions of India, excluding Chandigarh and Delhi. The scheme follows a cost-sharing model, with the Government of India and respective state governments sharing the development costs in a 60:40 ratio for plain regions and 90:10 for North-Eastern and hilly regions.
2. Pradhan Mantri Awas Yojana Urban (PMAY-U):
PMAY-U focuses on urban areas in India and includes 4,331 towns and cities. The scheme is being implemented in three phases, with the first phase covering 100 cities from April 2015 to March 2017, the second phase covering an additional 200 cities from April 2017 to March 2019, and the third phase aiming to cover the remaining cities by December 2024.
Features of Pradhan Mantri Awas Yojana
1. Eligibility Criteria:
The PMAY scheme is available to families with an annual income of up to INR 18 lakhs. To be eligible, individuals must not own a permanent house in any part of India.
2. Benefits of the Scheme:
Eligible beneficiaries can receive an interest subsidy of up to 6.5% on the loan amount for the construction of a new house and up to 3% for the improvement of an existing house.
3. Implementation:
The PMAY scheme is implemented through three verticals: Pradhan Mantri Awas Yojana – Urban (PMAY-U), Pradhan Mantri Awas Yojana – Gramin (PMAY-G), and Pradhan Mantri Awas Yojana – Credit Linked Subsidy Scheme (PMAY-CLSS).
4. Funding:
The PMAY scheme is funded by the Government of India, state governments, and beneficiaries, with the funding pattern varying based on the vertical being implemented.
5. Monitoring and Evaluation:
The Ministry of Housing and Urban Affairs (MoHUA) monitors and evaluates the PMAY scheme through a web-based monitoring system called AwaasSoft, which captures data on the progress of the scheme at the national, state, and district levels.
Subsidy Rates and Beneficiaries:
The PMAY scheme offers interest subsidies ranging from 3% to 6.5% per annum, depending on the income group and loan amount. The maximum loan amount eligible for subsidy varies from INR 6 lakh for EWS and LIG categories to INR 12 lakh for the MIG-2 category.
The beneficiaries of the scheme are categorized as follows
- Economically Weaker Section (EWS): Annual income up to INR 3 lakh
- Lower Income Group (LIG): Annual income between INR 3 lakh and INR 6 lakh
- Middle Income Group I (MIG I): Annual income between INR 6 lakh and INR 12 lakh
- Middle Income Group II (MIG II): Annual income between INR 12 lakh and INR 18 lakh
Individuals belonging to Scheduled Castes (SC), Scheduled Tribes (ST), Other Backward Classes (OBC), and women from the EWS and LIG income groups are also eligible for the PMAY scheme.
Eligibility Criteria
To be eligible for the Pradhan Mantri Awas Yojana, applicants must meet the following criteria:
- Be a citizen of India
- Not own a permanent house in their own name or in the name of any family member in any part of India
- Complete the renovation or extension of an existing property within 36 months from receiving the first loan installment
- Ensure that a woman's name appears on the deed or property papers, either as a sole proprietor or joint owner (unless there are no females in the family)
- Have an annual income within the prescribed limits for the respective income group
- Not have received any other housing benefits from a government scheme
- Be the head of the household and not be over 60 years of age
Potential Expansion and Impact
According to government sources, the scope and size of the subsidized home loans under the PMAY may be widened further. Proposals under consideration include extending the scheme beyond blue-collar workers and low-income individuals to include self-employed people, shopkeepers, traders, and professionals. Additionally, the benchmark for eligibility may shift from individual income to the cost of the house, potentially enabling borrowers to secure larger subsidized loans. Another proposal suggests increasing the maximum subsidized home loan amount to INR 30 lakh for houses costing up to INR 35 lakh in both metro and non-metro cities. The government estimates the average ticket size of a subsidized home loan under the new scheme to be around INR 25 lakhs.
These changes align with Prime Minister Narendra Modi's promise to assist families living in cities, slums, and unauthorized colonies in building their own homes by providing relief on interest rates and loans from banks.
Conclusion
The Pradhan Mantri Awas Yojana has emerged as a game-changer in India's efforts to provide affordable housing to its citizens. By offering subsidies, financial assistance, and credit-linked benefits, the scheme has made homeownership a reality for many families across the country. As the government considers expanding the scope and size of the scheme, it holds the potential to impact even more lives, ensuring that every Indian has access to a secure and dignified living environment.
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