COVID-19 impact: PMAY subsidy scheme extended till FY 2021


Finance minister Nirmala Sitharaman, on May 14, 2020, announced an extension of the PMAY – Credit-Linked Subsidy Scheme for the MIG to March 31, 2021

Amid the Coronavirus pandemic, the central government has extended the Pradhan Mantri Awas Yojana – Credit-Linked Subsidy Scheme (PMAY-CLSS) for the Middle-Income Groups I & II. The last day to avail of the subsidy, for this segment, was March 31, 2020, while those in the Economically Weaker Section (EWS) and the Lower- Income Group (LIG) have time till March 31, 2022. Finance minister Nirmala Sitharaman, on May 14, 2020,  announced the PMAY subsidy scheme extension by a year to FY21. This was aimed towards a Rs 70,000-crore investment in housing projects for the mid-income group (MIG).

Given that the objective of ‘Housing for All by 2022’ was the main driver behind the PMAY scheme, experts had already pointed out that the centre will be keen to extend it. Now, the extension will benefit an added 2.5 lakh beneficiaries.

In short, those with income between Rs 6 lakhs and Rs 12 lakhs, that is MIG-I, will get an interest subsidy of 4% on a loan amount of up to Rs 9 lakhs. Those with income between Rs 12 lakhs and Rs 18 lakhs, that is MIG-II, will get an interest subsidy of 3% on a loan amount of up to Rs 9 lakhs, as has been the guidelines so far. The PMAY CLSS subsidy amount comes to Rs 2,35,068 and Rs 2,30,156 for the MIG-I and MIG-II scheme, respectively and the beneficiaries will continue to enjoy it.

See also: All about the progress of the PMAY-Urban scheme in India

 

How will Coronavirus affect the PMAY scheme?

The Coronavirus pandemic has affected the pace of construction of homes under the PMAY. A slowing economy has already been a problem for a while. After September 2019, the demand for PMAY units slackened and experts map it to the liquidity crisis of many housing finance companies and the slump in demand.

“The only way ahead, may be to consider the release of at least 50% of applicable subsidy to eligible beneficiaries, as part of their own contribution and the remaining as per present guidelines linked to loan disbursement. This will revive housing activities fast, to achieve Housing For All,” said Deo Shankar Tripathi, MD and CEO of Aadhar Housing Finance.

“Even after the lockdown is lifted, it will take significant time for the economy to get back to near normal. This can only happen, if the government tweaks the current process for the issue of applicable credit-linked subsidy of Rs 2.67 lakhs to recognised recipients through creditors, before loan disbursement. This modification will recover affordable housing growth, as envisioned in the Housing for All by 2022 mission,” says Avneesh Sood, director, Eros Group.

“The slowdown in real estate and housing finance arose, after the IL&FS crisis in September 2019. The liquidity crunch in the NBFC segment crushed building activities. As per my view, people who choose this housing section under the PMAY, will find it tough to carry out their commitments, which has now become tougher due to the COVID-19 pandemic,” adds Sood.

 

Coronavirus and the force majeure clause

The force majeure clause is always a part of government contracts and the same stands true for the PMAY mission.

“That in case there is any delay in the implementation of the mandatory conditions or submission of any periodic reports, etc., by the Second Party (lender), due to the circumstances beyond the control of the Second Party (i.e., Force Majeure), the decision on the matter of extension of time for the implementation of the goals and objectives of HFA shall be at the discretion of the First Party (central nodal agency),” the PMAY scheme guidelines note.

Hence, it is understood that some arrangements will be made between buyers and builders.

Read the full text of the PMAY guidelines here.

 

COVID-19 public grievances about housing

The Nodal Officer for COVID-19 public grievances for the Ministry of Housing & Urban Affairs is:

Name:- Shri Manish Thakur, Joint Secretary,

E-mail:- manish.thakur@nic.in

Phone Number:- 9599085666

 

FAQs

What is the last date to avail of the subsidy under PMAY-U?

The last date to avail of the subsidy under the PMAY-U for the MIG segment is March 31, 2021. The last date for the EWS and the LIG segments is March 31, 2022.

What is the PMAY CLSS subsidy for MIG-I segment?

An interest subsidy of 4% is provided to eligible individuals with income between Rs 6 lakhs and Rs 12 lakhs, on a loan amount of up to Rs 9 lakhs.

What is the PMAY CLSS subsidy for MIG-II segment?

An interest subsidy of 3% is provided to eligible individuals with income between Rs 12 lakhs and Rs 18 lakhs, on a loan amount of up to Rs 9 lakhs.

 

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