Pradhan Mantri Awas Yojana – Housing For All
Here is all you need to know about Pradhan Mantri Awas Yojana:
A house is one of the basic necessity and a dream for every individual throughout the day. However, Owing an own house still has been a dream especially for people from Economically Weaker Sections/Low Income Group in India. But not to worry anymore, here is good news.
Hon. Prime Minister Mr. Narendra Modi announced “Pradhan Mantri Awas Yojana – Housing for All (Urban)” scheme in June 2015, with an objective of providing houses to all eligible families/ beneficiaries by 2022. The beneficiaries under the scheme cover individual/s belonging to Low Income Group (LIG) and Economically Weaker Section (EWS). EWS households are those with an annual income up to Rs. 3 lakhs. LIG households are those with a yearly income between Rupees Three Lakhs One (Rs. 3,00,001) up to Rupees Six Lakhs (Rs. 6,00,000). However, State/ UTs can redefine the annual income criteria based on the local conditions after consulting with the Centre.
So, if you belong to EWS/LIG, you can benefit from this scheme. Also, if you know someone who belongs to EWS/LIG, you can guide them to take benefit from the scheme. The scheme is active from June 17, 2015 up to March 31, 2022, and has an estimated target of building two crore affordable houses across the length and breadth of the country in a span of 7 years.
Implementation Methodology of Pradhan Mantri Awas Yojana
The scheme will address the housing requirement of urban poor including the slum dwellers via the below four components:
1. “In-situ” Slum Redevelopment using land as Resource with participation of private developers:
The objective of this approach is to leverage the locked potential of land under slums for providing houses to the eligible slum dwellers bringing them into the formal urban settlement. Slum rehabilitation grant of Rs. 1 lakh per house on an average would be provided for all the houses built for eligible slum dwellers.
2. Promotion of Affordable Housing for weaker section through Credit Linked Subsidy:
Under this component, credit linked subsidy will be provided on home loans availed by eligible urban poor for construction or acquisition of the house.
What is a Credit Linked Subsidy?
One of the important features of Pradhan Mantri Awas Yojana – Housing for All (Urban) scheme is its credit linked subsidy. It is available for people from Low Income Group (LIG) and Economically Weaker Section (EWS).
Under this, the beneficiary is eligible for the interest subsidy on the loans availed for construction or acquisition of the house. The interest subsidy is restricted up to a loan amount of Rs. 6 lakhs and the applicable interest rate would be 6.5% for loan tenure of 15 years or during tenure of loan whichever is lower. In case of additional loan availed beyond Rs. 6 lakhs, the additional amount will be at a non-subsidized rate. The NPV (Net Present Value) of the interest subsidy will be calculated at a discount rate of 9%, and the subsidy pay-out would be around 2.3 lakhs per house for both the categories.
Credit Linked Subsidy would be available in case of housing loans availed for the purpose of new construction and addition of rooms, toilets, kitchen, etc. to existing home as incremental housing. The carpet area of the house being constructed or enhanced under this component should not exceed 30 sq. meters in case of EWS category and 60 sq. meters for LIG. However, the beneficiary at his/her choice can build a house of larger area and in case he/she avails additional loan beyond Rs. 6 lakhs, the additional amount will be at a non-subsidized rate.
Note: Carpet area is the area enclosed within the walls i.e. the actual area to lay the carpet and does not include the thickness of the inner walls.
Individual/s from Low Income Group (LIG) and Economically Weaker Section (EWS) who are looking for housing loans from Housing Finance Companies, Banks and other institutions are eligible. A beneficiary family will comprise husband, wife and unmarried children. Also, the beneficiary family should not own a Pucca house (an all weather dwelling unit) either in her/his name or in the name of any member of her/his family in any part of India.
Note: For identification of an EWS/LIG beneficiary under the scheme, an individual loan applicant will have to submit self-certificate/affidavit as proof of income.
Procedure for the receipt of interest subsidy benefit-
• The bank will first claim subsidy benefit from National Housing Bank (NHB) for the eligible borrowers.
• The NHB will then exclude the multiple claim requests from the customers after conducting a due diligence, post which subsidy amount will be paid to the bank for the eligible borrowers.
• Once the bank receives the subsidy interest, it will be credited upfront to the loan account of the borrower through lending institutions resulting in reduced effective housing loan and Equated Monthly Installment (EMI).
3. Affordable Housing Partnership with Public & Private sectors:
This is a supply side intervention. Under this, Central will provide assistance of Rs. 1.5 lakhs per EWS house to the project promoting housing stock for urban poor, provided at least 35% of the houses under the project belong to EWS category and a single project has minimum of 250 houses.
4. Subsidy for beneficiary-led individual house construction or enhancement:
The 4th component under the scheme is for assisting individual eligible families belonging to EWS category who are not able to take advantage on any of the above 3 components under the scheme. Such families may take assistance from Central of Rs. 1.5 lakhs for constructing a new house or enhancing existing house.
Beneficiaries who wish to take assistance from Central are required to approach the Urban Local Bodies along with the appropriate documents regarding the availability of land owned by them. Such beneficiaries may either be families residing in a slum or outside the slum. Beneficiaries belonging to the slums that are not redeveloped shall be covered under this component if they have a Kutcha or Semi-Pucca house.
Phases of Pradhan Mantri Awas Yojana
The scheme has been designed to cover the entire urban area comprising of 4041 statutory towns with an initial focus on 500 Class I cities and will be implemented in three phases as illustrated in the table below:
House Ownership under the scheme
The house acquired or constructed with central assistance under the scheme must be in the name of the female head of the household/family or in the joint name of the male head of household and his wife. In case, there is no adult female member in the household; the house can be under the name of the male member of the family.
Preference for Beneficiaries
Preference under the Scheme, subject to beneficiaries being from EWS/LIG segments, should be given to:
• Manual Scavengers
• Women (with overriding preference to widows)
• Persons belonging to Scheduled Tribes/ Scheduled Castes/Other Backward Classes, Minorities
• Persons with disabilities
Also read: Mudra Loan: Pradhan Mantri Mudra Yojana
If a borrower has availed a home loan and is benefited from interest subvention under the scheme but later on switches to another Primary Lending Institutions (PLI) for the balance transfer, such beneficiary will not be eligible to claim the benefit of interest subvention again.