The Union Budget, likely to be presented in the Lok Sabha in the second half of July, may announce a revamped interest subvention scheme for affordable urban housing. According to sources, the subvention could be 3-6% per annum on home loans up to Rs 50 lakh in urban areas, with the cost to the exchequer of roughly Rs 60,000 crore over five years.
On June 10, the first Cabinet meeting of the Modi 3.0 approved assistance to construct 30 million additional houses including under PMAY-Urban and PMAY-Rural.
Sources said the carpet area under the reworked scheme will likely be “much higher” compared with the Credit Linked Subsidy Scheme (CLSS) for the urban poor under PMAY-U. The CLSS scheme expired in March 2024.
Under CLSS scheme of PMAY-U, the Centre gave an interest subsidy of 6.5% for home loans up to Rs 6 lakh for the economically weaker sections (carpet area 30-60 sqm), 4% and 3% on loan amount of Rs 6-12 lakh and Rs 12-18 lakh to beneficiaries belonging to MIG-I (160 sqm) and MIG-II (200 sqm) categories, respectively for acquisition/constructions of houses (including re-purchase).
After PMAY-U was launched on June 25, 2015, the scheme has made significant progress in its goal of providing affordable housing. The scheme has sanctioned a total of 11.8 million houses, 11.4 million houses have been grounded for construction, and 8.37 million houses have been completed so far.
Besides empowering the neo-middle class in urban areas, the scheme would boost labour-intensive construction activities, leading to jobs creation.
The actual expenditure on subsidy under the new scheme in the current financial year would depend on the offtake by home buyers.