PMAY-U: Centre to give interest subsidy on loan amounts up to Rs 12 lakh

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Published: May 15, 2020 6:30:22 AM

While the scheme has benefited 3.3 lakh families so far, the extension is expected to benefit another 2.5 lakh families in FY21, finance minister Nirmala Sitharam said.

The move signals use of PPP model, which has been employed with considerable success in infrastructure segments like highways, airports etc., to the low-end housing segment.The move signals use of PPP model, which has been employed with considerable success in infrastructure segments like highways, airports etc., to the low-end housing segment.

The Centre on Thursday extended the credit-linked subsidy scheme (CLSS) by a year to FY21 aiming at Rs 70,000 crore investment in housing projects for the middle income group and also proposed to launch a scheme for affordable rental housing complexes (ARHC) through public-private partnership. The move signals use of PPP model, which has been employed with considerable success in infrastructure segments like highways, airports etc., to the low-end housing segment.

The steps will also give the much-needed impetus to the revival of the real estate sector and allied industries like steel and cement.

Under CLSS scheme of Pradhan Mantri Awas Yojana-Urban (PMAY-U), the Centre gives an interest subsidy of 4% and 3% on loan amounts up to Rs 9 lakh and Rs 12 lakh to beneficiaries in the MIG-I and MIG-II categories respectively, for acquisition/construction of houses, including re-purchase. The scheme, for people with annual income between Rs 6-18 lakh, was launched in May 2017 and was extended till March 31, 2020.

While the scheme has benefited 3.3 lakh families so far, the extension is expected to benefit another 2.5 lakh families in FY21, finance minister Nirmala Sitharam said. “This will create significant number of jobs by giving boost to housing sector and will stimulate demand for steel, cement, transport and other construction materials,” Sitharaman said.

To provide migrant workers, urban poor and students affordable/convenient rental housing in urban areas, a scheme under PMAY will provide them with access to quality accommodation and security by converting government funded housing in the cities into ARHC under PPP mode through concessionaire.

Industries, manufacturing units and institutions will also be incentivised to develop AHRC on their unutilised land. Incentives will also be given to state government agencies/CPSEs on similar lines to develop ARHC and operate. Affordable rental housing would encourage migrant workers to not return to their native places in a crisis like Covid-19. The administrative ministry will issue detailed guidelines soon in this regard.

“The guidelines should factor in streamlining of the approval process by introducing single window clearance mechanism and encourage developers to participate in the ARHC by offering them higher subsidies through fee waivers,” said Ashoo Gupta, partner, Shardul Amarchand Mangaldas & Co.

The implementation of PMAY(U), envisaged to be implemented during 2015-2022, has induced a remarkable investment in housing sector especially in the affordable housing segment. The houses sanctioned till December 2019 under the mission involved an investment of about Rs 5.70 lakh crore with central assistance of Rs 1.6 lakh crore.

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