Why the PMAY is crucial for boosting the housing sector in India

by Litty Jose Finance Analyst

Sustainable housing is one of the key features of a well-developed country. In India though, a good percentage of the population lives in tenements that are a far away from a sustainable. To remedy this the PMAY or the Pradhan Mantri Awas Yojana was formulated in 2015. This scheme has been designed to make sustainable housing available to the middle and lower income groups. PMAY is an interest subsidy scheme that has been named as 'Credit Linked Subsidy Scheme for Middle Income Groups - CLSS (MIG)'. As per this new subsidy, middle-income groups with incomes in the eligible range will get a subsidy on their interest rate of three to four percent.

Through this scheme, housing loans have been made available to a big part of the country’s population. This means that more people can now purchase homes of their own and this in turn will boost the housing sector of the country. It also means that more people who were previously living in slums or chawls can move into proper housing facilities and better their lives. This CLSS scheme is a step towards development for India.

Recently, the home loan eligibility criteria for the PM Awas Yojana scheme have been revised. Previously this scheme was mostly extended to people with an annual income below 6 lacs. As per this revision people in the higher income groups too are now eligible for the Pradhan Mantri Home Loan scheme. The tenure of this scheme, which was previously only 15 years has now been extended to 20 years as well.

Here are the income slabs as be the revision of the Pradhan Mantri Awas Yojana

People with an annual income of Rs.6 lacs and below can avail of loan of Rs.6 lacs at an interest of 6.5% for a tenure of 20 years.

People with an annual income of Rs.12 lacs and below can avail of loan of Rs.9 lacs at an interest of 4% for a tenure of 20 years.

People with an annual income of Rs.18lacs and below can avail of loan of Rs.12 lacs at an interest of 3% for a tenure of 20 years.

The Prime Minister Awas Yojana gives special preference to women. Widows, single working-women, persons belonging to scheduled castes and scheduled tribes, backward classes, differently abled and transgender people are also given more preference.

Non-banking finance companies and micro finance institutions are also recognized under this scheme in order to ensure that maximum number of people can benefit from it.