Budget 2026 cuts PMAY Urban 2.0 allocation by 5.9%, affordable housing may take a hit

Union government allocated Rs 18,625.05 crore for PMAY Urban 2.0 scheme in Budget 2026-27

• PMAY Urban 2.0 allocation dips 5.9 percent to Rs 18,625 crore in Budget 2026-27
• Budget 2026-27 cuts funds for AMRUT and Smart Cities Mission by 20 percent
• No new measures for affordable housing; sector expresses disappointment

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The Union Budget 2026-27 saw a marginal dip of 5.9 percent in the government's flagship housing scheme Pradhan Mantri Awas Yojana (PMAY) Urban 2.0.

While presenting the Union budget for 2026-27, Finance Minister Nirmala Sitharaman allocated Rs 18,625.05 crore for the government’s ambitious PMAY (Urban) 2.0 scheme to fuel its expansion plan and give a further boost to the programme to provide affordable housing.

However, the current allocation in 2026-27 budget estimates is 5.9 percent lesser than the budget estimates of 2025-26. In Budget 2025-26 the central government had allocated Rs 19,794 crore for PMAY Urban 2.0 scheme, which is focused on the government's motto of "Housing for All".

However, in the revised budget estimates of 2025-26, the allocation for PMAY Urban 2.0 was reduced to Rs 7,500 crore.

In the interim Union Budget 2024-25 the government had allocated Rs 80,671 crore for the PMAY. In budget estimates for Budget 2023-24, the government had allocated Rs 79,590 crore for PMAY.

According to experts, the PMAY has been a crucial initiative in addressing the housing shortage across both urban and rural areas. The scheme offers essential credit-linked subsidies, helping eligible families to achieve homeownership and access basic amenities significantly improving their living conditions. In the last 10 years, the scheme has facilitated the completion of more than 4.21 crore homes.

Budget 2026-27 also saw around 20 percent reduction in allocation for Urban Rejuvenation Mission: AMRUT and Smart Cities Mission. The Budget 2026-27 allocated Rs 8,000 crore for Urban Rejuvenation Mission: AMRUT and Smart Cities Mission while it was Rs 10,000 crore in 2025-26 budget estimates.

In the Budget 2026-27, there was no specific announcement for the affordable housing, which left the  real estate sector players "dissappointed".

According to ANAROCK data, the sales share of affordable housing has sharply declined, falling from over 38 percent in 2019 to 26 percent in 2022 and further to around 18 percent in 2025.

CREDAI National President Shekhar Patel said developers welcome the continued emphasis on infrastructure spending but was “deeply disappointed” by the lack of concrete measures for affordable housing.

"CREDAI is deeply disappointed that the Budget offers nothing concrete for affordable housing. With the current outdated definition of affordable housing, CREDAI estimates that the segment’s share could decline further from 18 percent to nearly 12 percent of total housing supply. This is a serious warning sign for India’s lower middle class and middle class," he said.