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The Pradhan Mantri Awas Yojana (PMAY) | Details | Apply | Subsidy

One of the primary needs of any human being is a house. A house is a security that allows every individual to flourish under a sense of security, knowing that at the end of day’s hard work, there is a place where he or she can relax his or her mind a body and prep up for the struggle that waits for him or her the very next day. A house is where new dreams are born and are nurtured, thus making it one of the most basic needs for survival. From dens to huts to today’s multistoried building – all are screaming testimony of what really a house means.

pradhan-mantri-awas-yojana-2016

The Government of India took a major step towards ensuring that people can get a house within their financial capability. Prime Minister Narendra Modi launched a nationwide scheme known as Pradhan Mantri Awas Yojana. Previously known as Housing for All scheme, this Yojana comes with a bold vision of providing affordable housing solutions for all Indian citizens.

Launched on June 25, 2015, the primary aim for this Yojana is to ensure that 2 crore houses are built across nation’s length and breadth. The estimated completion year for the scheme is 2022, which means that these 2 crore homes will be constructed over a period of 7 years.

Here are the quick highlights of Pradhan Mantri Awas Yojana in a tabular format:

Parameters Details
Scheme Name Pradhan Mantri Awas Yojana
Launch Date 25th June, 2015
Estimated Time for Completion 7 years (2022)
Primary Objective Providing affordable houses to Indian citizens
Number of Houses to be Built 2 crores +
Primary Target Group Poor people of India belonging to LIG and EWS groups. LIG stands for low income group and EWS stands for Economically Weaker Sections
Primary Target Area LIG and EWS people of urban areas
Scope of Scheme Across India
Previous Name Housing for All scheme
Launched by Prime Minister Narendra Modi

Phases of Pradhan Mantri Awas Yojana

The Pradhan Mantri Awas Yojana has its blueprint divided into three phases. In other words, the scheme is designed to be completed in three phases, which are:

Phase I

Phase I (one)
Target Date of Start April 2015
Target Date of Ending March 2017
Number of Cities Targeted 100 cities in India
What to Expect? Development and completion of affordable houses under the scheme.

Phase II

Phase II (two)
Target Date of Start April 2017
Target Date of Ending March 2019
Number of Cities Targeted 200 cities in India
What to Expect? Development and completion of affordable houses under the scheme.

Phase III

Phase III (three)
Target Date of Start April 2019
Target Date of Ending March 2022
Number of Cities Targeted All remaining cities in India
What to Expect? Development and completion of affordable houses under the scheme.

Who are the target group of Pradhan Mantri Awas Yojana?

As mentioned earlier, the target group for this scheme are people who belong to LIG and EWS segments of the urban societies of India. However, here are further specifications of people who are targeted as direct beneficiaries:

  • Indian women of all religions and castes. There will be no biased approach depending on the said factors and everyone will be equally eligible.
  • People who come from low income and economically weaker sections of the society.
  • Scheduled tribes.
  • Scheduled castes.

What are the primary features of Pradhan Mantri Awas Yojana?

The Pradhan Mantri Awas Yojana comes with several important features which are summed up in the bullet list provided below:

  • A subsidy will be granted to people from LIG and EWS segments of urban population. The subsidy will come from central government treasury and will range anywhere between INR 1 lakh and INR 2.30 lakh. This subsidy will allow people from target segment to afford a house under the scheme.
  • Government will also offer subsidy for interest rates on loans availed for the Yojana. 6.5% interest rate subsidy will be offered to the beneficiaries against the loans they avail. This interest subsidy will last for a period of 15 years from the date on which the loan is disbursed to the borrower.
  • Female members will get preference when it come allotment of houses under this scheme. Simply put, applications from female beneficiaries will be accepted easily compared to applications from male beneficiaries. This makes the scheme a pro-women scheme.
  • For ground floor houses, the government will give first preference to people who are differently abled or those people who are aged.
  • The government has strictly instructed that the housing enclaves developed under the scheme strictly follow eco-friendly construction technology.

Drastic reduction of EMI under Pradhan Mantri Awas Yojana

The Pradhan Mantri Awas Yojana comes with a promise of subsidized interest rate of 6.5% against housing loans under the scheme. Currently the market rate for interest on housing loans is 10.5%. This means that those who want to avail housing loans for the scheme, they will enjoy a rate of interest which is 4% below the market rate. This clearly implies that there will be a drastic reduction in the amount of EMI one needs to repay every month.

Let us take a quick example of how much reduction can be expected in EMI payments under the Pradhan Mantri Awas Yojana.

Let us assume that a person takes out a loan of INR 6,00,000 under normal market rates (10.50%) for a loan tenure of 15 years. Thus, the amount of EMI he or she needs to pay per month will be INR 6,632 per month. In case the person wants to take out the same loan under the housing scheme, the interest rate applicable will be 6.5%. This will lead to an EMI of INR 4,050 a month. This means that under the scheme, the person needs to pay well over INR 2000 less compared to what he or she would normally pay under normal or market interest rates. This is a drastic drop in EMI, making home purchase far more pocket friendly for LIG and EWS people of the urban sectors of the nation.

Some more interesting features of Pradhan Mantri Awas Yojana

Here are three more important features of the scheme:

  • Under the scheme, the central government will be granting an average of INR 100,000 to each beneficiary.
  • Apart from that, a central government funded financial aid of INR 150,000 will be provided to beneficiaries for promotion of housing stock, however, one needs to keep in mind that 35% of the housing units are preserved for people belonging to EWS category.
  • Eligible poor from the urban sectors of the nation will get INR 150,000 central funding in case they want to build their own house or make some kind of renovations.

Credit-Linked Subsidy Scheme of Pradhan Mantri Awas Yojana

One of the key features of Pradhan Mantri Awas Yojana is its credit-linked subsidy scheme. We have already mentioned two important features of this housing scheme, which are:

  1. Government loan of up to INR 600,000 for a period of 15 years or less.
  2. Subsidized interest rate of 6.5%.

Now, these two components are not different from each other. In fact, one complements the other in such a way that they cannot exist independently.

To further explain…

The interest rate of 6.5% will be applicable only if someone applies for a home loan under the Pradhan Mantri Awas Yojana. There are some rules to this. The rules are:

  1. The loan amount cannot exceed 600,000 rupees if the subsidized interest rate is to be enjoyed.
  2. If the loan amount is greater than INR 600,000, any amount above that mark will be subject to normal market interest rates. So, if a person applies for INR 700,000 as loan, he or she will have to pay normal market interest rate (for home loans) for the additional INR 100,000.
  3. A person has to be from EWS or LIG category to be able to avail this loan.
  4. The subsidized rate of interest will be available for a maximum of 15 years. This means that if a person is taking out a loan for say, 20 years, he or she will have to pay 6.5% interest for first 15 years and then the interest rate will be increased to market rate for home loans. If, the tenure of the loan is less than 15 years, the subsidized rate will be applicable as the loan tenure will not exceed 15 years anyway.
  5. The loans can be availed for purchasing a new house constructed under the Pradhan Mantri Awas Yojana but that is not mandatory. This means that a person from LIG or EWS category can take out a loan under this scheme even if he or she already has a house that requires extension or renovation or he or she actually wants to build a new home on his or her own instead of purchasing a new apartment from the pool of housing units constructed under the government scheme.
  6. If the loan is taken for extension or renovation of a new house, the carpet area of the house has to be 30 square meters for EWS category people and 60 square meters for LIG category people. If this condition is not met, loan under this scheme cannot be availed.

 

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