At the peak of the election season in India, government sources tell that the scope and size of the subsidised home loans under the Pradhan Mantri Awas Yojana (PMAY), an affordable housing programme for poor people living in cities, may be widened.
Under the PM Awas Yojana, home buyers could save a maximum of ₹2.67 lakh in interest cost over a period of 20 years (the maximum tenure for home loan allowed under the scheme).
The maximum size of these affordable homes are 200 square metres.
There are at least four changes to the PMAY benefits under government consideration, according to sources:
Proposal: Sources told that the PMAY programme would soon be taken beyond blue-collar workers and people with low salaries to include self-employed people, shopkeepers, traders, and professionals, among others.Impact: More people will be eligible to apply for home loans under PMAY.
Currently, loans under PMAY depend on the borrowers’ income.
Proposal: One proposal under consideration is to change the benchmark to the cost of the house instead of the individual’s income.Impact: Linking the loan to the cost of the house may enable eligible borrowers to get bigger home loans.
Proposal: Home buyers may get subsidies on home loans upto ₹30 lakh for houses that cost upto ₹35 lakh in both metro and non-metro cities.
Under the existing provisions, people could get a maximum of ₹12 lakh as home loan as long as their annual income didn’t exceed ₹18 lakh. Impact: Borrowers can cover a bigger chunk of the cost with subsidised loans.
The government estimates the average ticket size of a subsidised home loan at ₹25 lakhs under the new scheme.
Interest subsidy on these home loans is likely to be pegged around 4%. Stamp duties on registration may also be tweaked.
Currently, the interest subsidy on home loans under PMAY is anywhere between 3% and 6.5%.
These changes are in line with some of the promises made by Prime Minister Narendra Modi in his Independence Day Speech last year. “We are coming up with a new scheme in the coming years that will benefit those families that live in cities but are living in rented houses, slums, chawls, and unauthorised colonies. If they want to build their own houses, we will assist them with relief in interest rates and loans from banks that will help them save lakhs of rupees,” he had said
Fresh sanctions under the credit-linked subsidy scheme were closed in March 2021. In the five years before that, lenders had financed 2.5 million low and middle-income homes, which cost the government ₹59,000 crore in subsidy.
The Modi administration plans to subsidise the purchase or construction of 10 million homes under the changed PMAY scheme.
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