The benefits of PMAY: From housing to enlivening the economy

The benefits of PMAY: From housing to enlivening the economy
After the introduction of the PMAY scheme, India is witnessing a great demand for affordable homes.

The ambitious Pradhan Mantri Awas Yojana (PMAY) scheme of the Government of India envisages housing for all in the country by 2022.

PMAY, under the credit-linked subsidy scheme, has been reaching all strata of society. This scheme has been categorized on the basis of the household income. The categories are: Economically Weaker Sections (EWS), Low Income Group (LIG), Middle Income Group (MIG), and MIG II.

This scheme is benefiting first-time home-buyers. Initially, the scheme was meant to cover EWS and LIG households, income not exceeding Rs 6 lakh per annum. Later, the scope of the scheme was extended to incorporate MIG I and II groups, household income above Rs 6 lakh but below 18 lakh.

In this context, the PMAY CLSS scheme has given an impetus to the construction and realty sectors. The subsidy fixed for CLSS scheme ranges from 3 to 6.5%. The eligible loan amount for EWS & LIG is Rs 6 lakh and for MIG I & MIG II, Rs 9 lakh and 12 lakh respectively. The maximum subsidy amount for a Rs 6-lakh loan is Rs 2.67 lakh and for a Rs 12-lakh loan is Rs 2.3 lakh.

The subsidy under CLSS scheme is credited upfront to the loan account of the beneficiary, providing them the much-needed relief. Moreover, the PMAY CLSS subsidy is calculated for a 20-year tenure, thereby reducing the total cost of owning a house by a minimum of Rs 1 lakh.

Main conditions

The main condition is that the beneficiary family should not own a Pucca house and they should not have used any central housing assistance.

The PMAY CLSS scheme can be used for the construction of house, purchase of house/flat and home renovation. But renovation loan cannot be sought by MIG I & II categories.

The beneficiary family would comprise a main beneficiary, his wife/husband, unmarried son and unmarried daughter. An adult earning member, irrespective of the marital status, can be treated as a 'separate household.' So, such individuals can secure the benefit under the scheme, provided he/she does not own a Pucca house any where in India.

The properties should fall in the specified town list as per 2011 census.

The benefits of PMAY: From housing to enlivening the economy
The PMAY CLSS scheme can be used for the construction of house, purchase of house/flat and home renovation.

In the current scenario, banks and financial institutions are bound to get a substantial number of 'takeover' cases. But no beneficiary can secure subsidy from multiple banks.

Demand surges

After the introduction of the PMAY scheme, India is witnessing a great demand for affordable homes. This demand will play a pivotal role in the surge of loan book size of bank and housing finance companies and other affiliated businesses.

(The author is a certified credit risk professional)

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