The Government of India is gearing up to unveil a new affordable housing scheme, on the lines of the credit-linked subsidy model of the Pradhan Mantri Awas Yojana-Urban (PMAY-U) announced in 2015. Targeting low- and middle-income households in urban areas, the initiative is set to extend subsidies for dwelling units. Sources suggest the announcement might precede the upcoming Lok Sabha elections in April-May. The Ministry of Housing and Urban Affairs (MoHUA) is said to have engaged in discussions with top lenders to design the proposed credit-linked subsidy scheme (CLSS). The scheme aims to generate employment through the construction of affordable homes in over 20,000 locations.
In a bid to address the housing needs of low- and middle-income households in urban areas, the government is reportedly gearing up to launch a fresh affordable housing scheme. Sources familiar with the matter have revealed that this initiative, like the credit-linked subsidy under the Pradhan Mantri Awas Yojana-Urban (PMAY-U) announced in 2015, is currently under discussion.
The proposed scheme aims to provide subsidies for dwelling units in urban centres and their catchment areas. According to sources, the Ministry of Housing and Urban Affairs (MoHUA) has engaged in several meetings with top lenders to outline the specifications of a new credit-linked subsidy scheme (CLSS). These discussions also involved considerations on the financing needs of individual lenders, the finance rate for lenders, and the lending rate for borrowers. The scheme's details are anticipated to be announced before the upcoming Lok Sabha elections scheduled for April-May.
The flagship PMAY-U, initiated in 2015 by the Narendra Modi government, aims to provide all-weather pucca houses to eligible beneficiaries in urban areas through collaboration with states, Union Territories, and central nodal agencies. In August 2022, the Union Cabinet extended the PMAY-U until December 31, 2024, excluding CLSS, specifically for the completion of already sanctioned houses until March 31, 2022.
In the previous iteration of the scheme, the subsidy per beneficiary ranged from INR 2.30 lakh to INR 2.67 lakh for a 20-year loan. The proposed scheme is expected to primarily target urban areas and their catchment regions, covering over 20,000 locations. The new scheme aims to cater not only to housing but to also generate significant employment through the construction of these homes.
Under the existing PMAY-U, the interest rate subsidy for CLSS ranged from 3% to 6.5%. The subsidy percentages varied for different income groups, with economically weaker sections and low-income groups receiving higher subsidies compared to middle-income groups. The maximum loan tenure under the scheme was 20 years.
Additionally, the Reserve Bank of India's norms on affordable housing loans specify eligibility criteria for priority sector lending, with varying caps on the loan amount in metropolitan and other centres based on population thresholds. The proposed scheme is expected to build on these foundations to address the pressing need for affordable housing in urban areas.
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