The Hon’ble Prime Minister, Shri Narendra Modi, envisions ‘Housing for All’ in India when the country steps into its 75th year of independence in 2022. The Prime Minister, in his New Year’s Eve speech on December 31, 2016, emphasized the government’s focus on implementing the ‘Housing for All’ mission in the rural sector by announcing a 33 percent increase in the proposed number of homes that are to be built under the Pradhan Mantri Awas Yojana (PMAY).
PMAY, launched in June 2015, is the union government’s flagship initiative to provide affordable homes with round-the-clock water supply, electricity facility, and sanitation. The initiative, ‘Housing for All’, will make it possible for the Economically Weaker section (EWS) and Low Income Group (LIG) to avail easy home loans through a Credit-Linked Subsidy Scheme (CLSS) that will ease the financial burden of the loan user. Needless to mention, it will also be a key growth driver across industry verticals such as banking, cement, steel, construction, and electricity.
The ‘Housing for All’ Mission, a Centrally Sponsored Scheme (CSS), Addresses the Following Issues –
- Rehabilitation package for slum dwellers via Public-Private Partnership (PPP) funding model using land as a resource.
- Promotion of ‘Affordable Housing’ with proper sanitation, water, and electricity facility through the Credit Linked Subsidy Scheme.
- ‘Housing for All’ in rural and semi-rural areas with private sector collaboration.
- Interest subsidy for a beneficiary-led single unit, or a multi-storeyed construction.
Key Aspects of the Pradhan Mantri Awas Yojana for the Economically Weaker Section and Low Income Group
‘Beneficiary families’ under the Credit-Linked Subsidy Scheme covers husband, wife, and unmarried children. However, in order to avail the benefits offered by this scheme, they should not own a pucca house (an all-weather housing unit) under their name in any part of India. Here are some other key factors.
- Economically Weaker Section (EWS) – EWS families have been categorised as households who have a yearly income up to 3,00,000.
- Low Income Group (LIG) – LIG households have been classified as families who have an annual income between 3, 00,001 up to 6,00,000.
- Respective state governments, depending on the local conditions, can make certain changes in the annual income criteria for both EWS and LIG in consultation with the Central Government.
- The Economically Weaker Section, under the scheme, can build an ‘all-weather’ single unit or a multi-storeyed infrastructure with basic services like toilet, electricity, and water up to a maximum carpet area of 30 square meters. The Low Income Group can avail loans and interest subsidy for similar infrastructure up to a carpet area of 60 square meters.
Loan Tenure Extended to 20 Years
- Loan tenure which was earlier at a maximum of 15 years is now 20 years.
Credit-Linked Subsidy Scheme
- Beneficiaries of Low Income Group (LIG) and Economically Weaker Section (EWS) applying for housing loans through lending Institutions like housing finance companies, rural, and cooperative banks are eligible for an interest subsidy of 6.5 % for a loan tenure of 20 years.
- The CLSS EWS/LIG is available for a maximum loan amount of up to 6,00,000. Any additional loan won’t qualify under this scheme and will be charged at non-subsidized rates. The interest subsidy on 6,00,000 will be paid upfront by the Central Government to lower the effective loan exposure and Equated Monthly Instalment (EMI).
- The subsidy can go up to Rs 2,67,000 for these two categories, payable upfront in the borrower’s loan account.
- Single women, widowed, physically disabled, transgenders, scheduled tribes (ST), scheduled castes (SC), and other backward classes (OBC) will get special preferences under the ‘Housing for All’ scheme for the Economically Weaker Section and Low Income Group.
The particular advantage of the scheme is the delivery of the subsidy amount upfront in the borrower’s loan account, thus greatly reducing EMI burden.
As a large number of home finance companies, scheduled commercial banks, regional rural banks, and state cooperative banks and other institutions will be involved in implementing the scheme, the reach, coverage and ease of delivery are expected to be very well. The central nodal agencies (CNA) for channelizing the subsidy and monitoring the progress are Housing and Urban Development Corporation (HUDCO) and National Housing Bank (NHB).
The ‘Housing for All’ (HFA) is one of the most crucial initiatives undertaken by the present government to ensure affordable homes for everyone by 2022. The Union Cabinet on February 01, 2017, chaired by Prime Minister Shri Narendra Modi, proposed to construct one crore houses by 2019, raising the fund allocation for HFA from 15,000 crore to 23,000 crore.