
Finance Minister Nirmala Sitharaman has reintroduced the interest subsidy on home loans for middle-class and lower-middle-class individuals under the Pradhan Mantri Awas Yojana (PMAY). During her Budget 2024 speech, she stated, “Under the PM Awas Yojana Urban 2.0, we will address the housing needs of 1 crore urban poor and middle-class families with an investment of Rs 10 lakh crore. This will include central assistance of Rs 2.2 lakh crore over the next 5 years. A provision for interest subsidy to facilitate affordable loan rates is also envisaged.”
Industry Reactions
Jash Panchamia, Promoter at Suraksha Group, welcomed the reintroduction of the interest subsidy under the Credit Linked Subsidy Scheme, which had been discontinued in 2022. He noted that, “With rising home loan rates, this subsidy will provide much-needed relief for home buyers in the affordable category.”
Parth Mehta, CMD of Paradigm Realty, acknowledged the relief provided by the reintroduced Credit Linked Subsidy Scheme but expressed concerns. He commented, “While this scheme offers some relief amid rising loan rates, it is insufficient. Additionally, the 12.5% flat LTCG tax on property sales without indexation benefits is a setback for investors. Comprehensive measures are needed to support the sector and facilitate homeownership for all.”
Bhavesh Shah, Joint Managing Director of Today Global Developers, praised the Budget 2024-25 initiatives. He remarked, “Moderating stamp duty charges and reducing duties for women home buyers is a commendable step towards empowering women in real estate. The return of the interest subsidy under the Credit Linked Subsidy Scheme is also positive. With increasing home loan rates, this subsidy will boost the affordable housing segment. The PMAY Awas Yojana Urban 2.0 initiative is a significant development that will support housing for the LIG and MIG categories.”
Overview of Pradhan Mantri Awas Yojana
Launched in 2015, the Pradhan Mantri Awas Yojana (PMAY) aims to provide pucca houses and basic amenities to individuals in both rural and urban areas. It is divided into two components: Pradhan Mantri Awas Yojana-Gramin (PMAY-G) and Pradhan Mantri Awas Yojana-Urban (PMAY-U), which offer financial assistance to eligible beneficiaries for building pucca houses.
PMAY-Urban Details
The Pradhan Mantri Awas Yojana-Urban (PMAY-U) focuses on helping the Economically Weaker Section (EWS), Low Income Group (LIG), and Middle Income Group (MIG), including slum dwellers. It is a credit-linked subsidy scheme that aims to provide housing for all. Beneficiaries under PMAY-U can avail of subsidies on interest paid on home loans for building, buying, renovating, or extending homes.
Eligibility Criteria for PMAY-Urban
- Income Categories:
- Economically Weaker Section (EWS): Households with an annual income up to Rs 3,00,000.
- Low Income Group (LIG): Households with an annual income between Rs 3,00,001 and Rs 6,00,000.
- Middle Income Group-1 (MIG-1): Households with an annual income between Rs 6,00,001 and Rs 12,00,000.
- Middle Income Group-2 (MIG-2): Households with an annual income between Rs 12,00,001 and Rs 18,00,000.
- Ownership Criteria: The applicant or their family members must not own a pucca house anywhere in the country.
- Family Structure: The family must consist of a husband, wife, and unmarried children.
- Location: The town or city where the family resides must be covered under the scheme.
- Previous Benefits: The family should not have previously benefited from any government housing schemes.
Scheme Features
- Slum Rehabilitation: Slum dwellers are rehabilitated with private developers using land as a resource.
- Affordable Housing Promotion: Through the Credit Linked Subsidy Scheme (CLSS), assistance is provided based on income categories, with specific house size limits.
- EWS: House sizes up to 30 square meters.
- LIG: House sizes up to 60 square meters.
- MIG I: House sizes up to 160 square meters.
- MIG II: House sizes up to 200 square meters.
- Public-Private Partnership: Central assistance is provided per EWS house in projects where 35% of houses are for EWS.
- Beneficiary-led Construction: Individual house construction or enhancement for EWS category beneficiaries is supported separately.