The Pradhan Mantri Awas Yojana (PMAY) is a flagship government program with an objective to provide affordable housing to the economically weaker section of the society. Launched in the year 2015, the scheme offers a subsidy of over 6.5% on the Home Loan Interest Rate. This move is taken to encourage a large number of poor families in rural and urban areas to avail a home loan facility for owing a ‘pucca’ home of their own. The interest rate subsidies and the tax benefits offered under the PMAY scheme are also aimed at encouraging a large number of first-time homebuyers to apply for a home loan.
To ensure that eligible applicants in cities, as well as rural areas, can equally avail the facility, the PMAY is bifurcated into two primary schemes-
Pradhan Mantri Awas Yojana- Urban (for towns and cities)
Pradhan Mantri Awas Yojana- Gramin (for villages and other rural areas)
The Pradhan Mantri Awas Yojana is primarily divided into 4 components
Under the PMAY-U, the government aims to leverage the land in urban areas that are encroached by slum developments and utilize it to construct formal urban residential establishments for the slum dwellers. The scheme aims to uplift the standard of living of people in such areas. Under the in-situ redevelopment program, the eligible tenants are identified under the Housing for All Plan of Action (HFAPoA) city report. Respective authorities can involve the slum dwellers through their association for consultations about the planning and implementation of the redevelopment.
Under this initiative, the government plans to provide affordable housing to the beneficiaries by partnering with the public and private sector. This includes involving different industries from different States and Union territories in India to work together and plan affordable housing projects for the beneficiaries. To check whether you fall into the beneficiary category or not, you can check your Pradhan Mantri Awas Yojana eligibility at the official website, online.
The PMAY’s Credit Linked Subsidy Scheme (CLSS) offers an interest subsidy of 6.5% on home loan. Applicants can also enjoy an extended home loan tenure of 20 years under the PMAY CLSS. Moreover, the net present value (NPV) on the interest subsidy is calculated at a discount rate of 9%. The PMAY lists a maximum limit of INR.6 lakhs to avail the benefits of the home loan subsidy.
The beneficiaries who are not eligible for the above-mentioned PMAY schemes can get financial aid from the ‘enhanced and construction of beneficiary-led’. Under this PMAY scheme, beneficiaries belonging to the EWS (Economically Weaker Section) can avail financial assistance up to INR. 1.5 Lakhs from the Central government. These funds can then be used to construct new houses or upgrade the existing one with basic amenities.
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The PMAY scheme is an amazing platform for low-to-mid income families that cannot afford to pay the high home loan EMIs. Moreover, the bifurcation of the scheme into PMAY urban and PMAY Gramin makes it easier to ensure that the funds are allocated according to the respective requirement across states.
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