August 12, 2024: The Union Cabinet, chaired by Prime Minister Narendra Modi approved the Pradhan Mantri Awas Yojana-Urban (PMAY-U) 2.0 on August 9, 2024 under which financial assistance will be provided to 1 crore urban poor and middle-class families through states/union Territories (UTs)/PLIs to construct, purchase or rent a house at an affordable cost in urban areas in five years. The government assistance of Rs 2.30 lakh crore will be provided under the scheme.
The Union Cabinet on June 10, 2024 passed a resolution to provide assistance to 3 crore additional rural and urban households for the construction of houses, to meet the housing requirements arising out of the increase in the number of eligible families. PMAY-U 2.0, with an investment of Rs 10 lakh crore, will address the housing needs of one crore families, ensuring that every citizen leads a better quality of life.
Additionally, the corpus fund of Credit Risk Guarantee Fund Trust (CRGFT) has been increased from Rs 1,000 crore to Rs 3,000 crore to provide benefit of credit risk guarantee on affordable housing loans from banks/housing finance companies (HFCs)/primary lending institutions (PLIs) to economically weaker section (EWS)/low income group(LIG) segments for construction/purchase of their first home.
Further management of Credit Risk Guarantee Fund will be transferred to National Credit Guarantee Company (NCGTC) from National Housing Bank (NHB). Credit Risk Guarantee Fund Scheme is being restructured and modified guidelines will be issued by Ministry of Housing & Urban Affairs (MoHUA).
PMAY-U 2.0 eligibility criteria
Families belonging to EWS/LIG/Middle Income Group (MIG) segments having no pucca house anywhere in the country are eligible to purchase or construct a house under PMAY-U 2.0.
- EWS households are families with an annual income up to Rs 3 lakh.
- LIG households are families with an annual income from Rs 3 lakh up to Rs 6 lakh.
- MIG households are families with an annual income from Rs 6 lakh up to Rs 9 lakh.
According to Vivek Rathi, national director research, Knight Frank India, “Cabinet approval for affordable housing which was announced during the recent fiscal Budget is a pivotal step in addressing India’s housing needs in the affordable segment. With growing housing requirement in the cities, substantial government investment, regulatory reforms and infrastructure development, these initiatives are designed to create a more inclusive and sustainable housing market.” He added, “An investment of Rs 10 trillion and a subsidy of Rs 2.5 trillion has been set for the next 5 years. This is higher than the expenditure made under PMAY-U 1.0, while the housing target remains the same of 1 crore. Under PMAY -U 1.0, thus far, an investment of Rs 8.07 trillion has been approved in addition to government expenditure of 1.54 trillion. Widening allocation underscore the scale of the commitment of the policy makers towards achieving housing goals.”
Talking about the PMAY Housing Scheme, Rishi Anand, MD & CEO, Aadhar Housing Finance, said, “The focus clearly seems to be tilted towards affordable housing with a subsidy proposed to be limited for loans up to Rs 25 lakh and property value up to Rs 35 lakh. The proposed subsidy under ISS (CLSS) is Rs 1.80 lakh to be granted over 5 years to the end user, which will eliminate any probable misuse of the scheme. This is a welcome step. The scheme proposes considering an income category up to Rs 9 lakh which would cover EWS/LIG MIG segment consumers. The details of credit guarantee and the list of all qualifying towns and locations in the Interest Subsidy Scheme are yet to be announced. Affordable Housing in Partnership and Affordable Rental Housing are very good to augment supply.”
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