Giving a push to the real estate sector just before Diwali, Finance Minister Nirmala Sitharaman increased the fund allocation for the Prime Minister Awaas Yojana-Urban (PMAY-U). The amount was increased by as much as Rs 18,000 crore, which is over and above the Rs 8,000 crore earmarked in the budget for the financial year 2020-21.
According to the Minister, the higher allocation towards the PMAY-U scheme will help in starting construction work of 12 lakh houses and completing 18 lakh houses.
Launched in June 2015, PMAY-U mission intends to provide housing for all in urban areas by 2022. The decision to increase the allocation for PMAY-U is expected to act as a booster to the real estate sector. But it will also give a thrust to the overall economy by raising demand for key industrial inputs like steel and cement, and generate employment opportunities.
Spurring overall demand
While unveiling the scheme, Sitharaman says that it will result in the creation of 78 lakh jobs, besides improving the demand for steel and cement by an additional 25 lakh tonnes and 131 lakh tonnes, respectively. Over the past several months, the government has taken several initiatives to revive demand in the housing sector.
She also says that the SWAMIH scheme, with an approved outlay of Rs 13,200 crore, will result in the completion of 87,000 houses and flats.
Under the PMAY scheme, a home buyer who takes a housing loan from any financial institution can get an interest subsidy of up to Rs 2.67 lakh. The interest subsidy is of 6.5 percent, 4 percent and 3 percent on loan amounts up to Rs 6 lakh, Rs 9 lakh and Rs 12 lakh for a house with carpet area of up to 60, 160 and 200 square meter for EWS/LIG (economically-weaker section and low-income group; those whose household income is less than Rs 6 lakh), MIG I (middle-income group; household income is between Rs 6-12 lakh) and MIG II (household income is between Rs 12-18 lakh) categories, respectively. So, the maximum subsidy amount ranges from Rs 2.3 lakh to Rs 2.67 lakh, depending on three factors: the loan amount, size of the house and the borrower’s annual income.
According to experts, the decision to allocate more funds for the purpose will narrow the housing gap in the country significantly. “Funding issues have been a major challenge for real estate,” says Dr Niranjan Hiranandani, President, NAREDCO and Assocham. “It will result in more homes for home seekers, more employment opportunities as also good business for suppliers and industries peripheral to real estate and construction,” added Hiranandani.
Mani Rangarajan, Group COO, Housing.com, Makaan.com & PropTiger.com echoes the thoughts and says, “At a time when we are facing an unprecedented situation, the latest announcement of Rs 18,000 crore additional funding for PMAY for Urban area is a relief to people who are looking to move into their homes. Realtors have been talking about the importance of strengthening real estate and allied sectors.”
The announcements made by the government as part of the Atmanirbhar 3.0 plan, on the eve of the Diwali festival is a step in that direction. As per government data, 108.01 lakh houses have been sanctioned under PMAY-U, of which as many as 66.86 lakh units are under construction and 38.15 lakh completed/delivered.
The central government has committed Rs 1.72 lakh crore under the scheme and Rs 76,787 crore assistance has been released. The Prime Minister Awaas Yojana-Urban (PMAY-U) is a flagship Mission of the Government of India, being implemented by the Ministry of Housing and Urban Affairs (MoHUA). The Government had said the Mission addresses urban housing shortage among the EWS/LIG and MIG categories, including slum dwellers, by ensuring a pucca houses to all eligible urban households by the year 2022, when the Nation completes 75 years of its independence.(The writer is a freelancer)