Housing is a basic necessity for every human being. It provides a sense of security and ensures an environment of nourishment. It has over the years become a pivotal survival need. Keeping this in mind, Narendra Modi launched the Pradhan Mantri Awas Yojana in June 2015. This scheme has one simple objective: providing housing to all. The primary target of this scheme are the low-income groups or economically weaker sections of the society, female citizens and scheduled caste and scheduled tribe candidates.
Divisions In PMAY
There are two types of division under the Pradhan Mantri Awas Yojana. The schemes that are completely sponsored by the central government are:
- Land Allocation to slum dwellers in order to implement in-situ development.
- Affordable housing facilities.
- Subsidy for the construction of house or renovation of a house.
The scheme which acts as the Central Sector Scheme of PMAY is Credit Linked Subsidy Scheme.
Features of Government Sponsored Schemes Under PMAY
We will first discuss the features of all the government sponsored schemes. Following are some key points under this:
- The lower income groups and economically weaker citizens of urban India will get a housing subsidy from the government. The amount of subsidy attained from the government is approximately INR 1 Lakh. Thus the weaker earning sections will be able to afford housing facilities easily. It falls under the government sponsored schemes.
- Women and differently abled individuals will be given preference under this Scheme. The preference is given in sense that their application will be processed and taken into consideration earlier. This falls under the government sponsored scheme.
- For the development of rural India, housing facilities are being to all slum dwellers and the homeless citizens. Under the Union Budget 2017-18, 23,000 crore INR is being extended towards this project.
To sum up the features, the government is crediting INR 100,000 to citizens who belong to the weaker earning sections. Also in the case where citizen under this category wants to buy a house or renovate their house a loan of INR 1.5 Lakhs will be extended from the government.
Credit Linked Subsidy Scheme Under PMAY: Features
There will be a subsidized rate of interest linked to house loans. According to Union Budget 2017-18, there has been an increase in the time period from 15 years to 20 years, for the rate of interest will be to be 6.5%. The market rate for housing loans is 10.5%. This means that if someone applies for a home loan under PMAY, then they can enjoy a benefit of 4% where the interest rate is concerned. This scheme is also known as the Credit Linked Subsidy Scheme.
The subsidized interest rate ensures that the EMI that the beneficiary of loan has to pay will be much lesser than normal market rates. For example, if a person avails a loan of INR 6 Lakhs, the EMI payable as per market rates (10.5%) for 20 years is INR 8842. For the same principle, the EMI payable at subsidized rate of 6.5% for 20 years is INR 5400. Thus a benefit of INR 3442 is gained.
Some important characteristics of the Credit-Linked Subsidy Scheme are as follows:
- Only urban sections of the society belonging to lower income groups (LIG) and Economically Weaker Sections (EWS) can avail this loan.
- To get subsidized rates of 6.5%, the maximum loan value is 600,000 INR. Above this limit, the interest has to be paid at market rates.
- If the loan period is exceeding 20 years, then the beneficiary has to pay at subsidized rates for first 20 years. The remaining balance has to be paid at market rates.
- In the case of house extension or renovation, the loan will only be provided if the carpet area of the house is 30 meters for EWS category citizens and 60 meters for LIG category citizens.