Background of PMAY
‘Roti, kapda, aur, makaan’ – this popular Indian phrase sums up beautifully the importance of a house in the life of an individual. A house – a dwelling, a permanent residence is among the most primary needs of any human being. And yet, the problem of homelessness and not owning a house is a reality that millions of Indians face even today.
With a goal to address this issue, the present government at the centre devised a scheme to help citizens who do not have a roof to call their own – get a house with a little assistance from the government. Prime Minister Narendra Modi launched a nationwide scheme called the Pradhan Mantri Awas Yojana (PMAY) on 25th June 2015 with a vision to provide affordable housing to all Indian citizens by the year 2022 to coincide with India completing 75 years of independence.
Overview of PMAY
Pradhan Mantri Awas Yojana aims to build over 2 crore houses across the length and breadth of the country in a period of 7 years ending 2022. The main objective of the scheme is to provide affordable pucca houses with water facility, sanitation, and round-the-clock electricity supply to Indian citizens. Earlier, the primary target groups were poor people belonging only to economically weaker sections (EWS) and low-income group (LIG). However, the scope of the scheme has recently been expanded in January this year. It now also covers the housing needs of the mid-income group (MIG) besides LIG and EWS sections of the society.
Pradhan Mantri Awas Yojana is of 2 types:
- Pradhan Mantri Gramin Awas Yojana (Rural)
- Pradhan Mantri Awas Yojana (Urban or Shehari)
Pradhan Mantri Awas Yojana – Gramin (PMAY-G)
Many poor people in Indian villages still do not have a house of their own or live in make-shift accommodation. The condition of such houses is often quite miserable. The majority of India’s rural poor do not have adequate financial resources to build houses on their own. Besides, they cannot avail housing loans as banks and financial institutions are wary of offering loans as the rural poor do not have strong assets to provide sufficient guarantee for loan approval.
The central government, under the aegis of Pradhan Mantri Gramin Awas Yojana, is providing financial assistance to eligible citizens in rural areas to construct pucca houses. The government has decided to build a record 1 crore houses in rural areas by 2019. The overall PMAY project deadline, however, is 2022. The total estimated sanctioned project cost for the PMAY – Gramin is Rs. 81,975 crores. All rural areas in the country are covered under this scheme except for Delhi and Chandigarh.
The central government has recently decided to increase the sanctioned amount per house from Rs. 1 lakh to Rs. 1.2 or 1.3 lakh. If the house is being built in the plains, the new sanctioned amount is Rs. 1.2 lakh. If the house is built in a hilly area or a region with difficult topography like a desert, the new sanctioned limit is Rs. 1.3 lakh. The amount will be given as a direct subsidy by the government to the final recipient and the cost will be shared by the central and state governments.
The government will refer the Socio-Economic and Caste Census of 2011 (SECC 2011) to identify the potential beneficiaries of Pradhan Mantri Gramin Awas Yojana. This census identified socially and economically backward masses in the country. Village panchayats and tehsils will also be consulted before drawing the final list of beneficiaries under this rural housing scheme. The use of SECC will result in transparency, ensuring that funds reach deserving individuals.
National Technical Support Agency (NTSA) – a national level supporting body has been setup to ensure that this mammoth task of constructing 1 crore houses is achieved within the declared time-frame and estimated budget. The NTSA will provide technical support, ensuring proper project implementation and resource allocation, thereby helping remove systemic discrepancies.
The cost of the Pradhan Mantri Gramin Awas Yojana will be borne by both the centre and state governments. In the plains, the central government will bear 60% of the per unit project cost. The remaining 40% will be borne by the state government. However, in hilly areas and North Eastern states, the central government will bear 90% of the cost, while the state government will bear the remaining 10%.
The allocated funds will reach the listed and identified beneficiaries by way of direct fund transfer into their bank accounts or post office accounts. Electronic transfer ensures transparency and guarantees that the beneficiaries get the sanctioned amount directly without any involvement of a third party. This method ensures proper resource allocation and fair expenditure of allocated funds.
Along with financial assistance, each beneficiary is being offered 90 days employment under the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA), which effectively translates to approximately Rs. 18,000. Another Rs. 12,000 will also be offered to construct toilets.
There is no way to apply for Pradhan Mantri Awas Yojana – Gramin. The beneficiaries are chosen from the list prepared by the Gram Sabha which is based on the Census 2011 (SECC 2011).
Pradhan Mantri Awas Yojana – Housing for All (Urban)
The sky-high price of real estate in urban areas means that the common man cannot think of buying a home outside of their dreams. To transform this dream into reality, the Pradhan Mantri Awas Yojana aims to provide individuals residing in urban areas, a house of their own. This scheme is in force and being implemented from 2015-2022, providing central assistance to Urban Local Bodies (ULBs) and other implementing agencies throughout every state and union territory for:
- In-situ rehabilitation of existing slum dwellers using land as a resource through private participation
- Promotion of affordable housing for weaker sections through credit linked subsidy
- Affordable housing in partnership with public and private sectors
- Subsidy for beneficiary-led individual house construction/enhancement
Scope of PMAY(Urban)
The mission of Pradhan Mantri Awas Yojana – Housing for All (Urban) is to provide central assistance to implementing agencies throughout states and union territories for providing houses to all eligible families/beneficiaries by 2022. A beneficiary family comprises of a husband, wife, unmarried sons and/or unmarried daughters. The beneficiary family should not own a pucca house in its own name or in the name of any family member in any part of India in order to be eligible to receive central assistance.
States and union territories may decide a cut-off date on which beneficiaries will need to be a resident of that urban area for being eligible to take benefits under the scheme. Urban Housing for All is being implemented as Centrally Sponsored Scheme (CSS) except for the component of credit linked subsidy, which is being implemented as a Central Sector Scheme.
All statutory towns as per Census 2011 and towns notified subsequently are eligible for coverage under the mission. However, in the spirit of cooperative federalism, all states and union territories have the flexibility to choose the best option among the four mission verticals to meet the housing demand of their states/territories.
The mission supports the construction of houses having a carpet area of up to 30 square meters with basic civic infrastructure like water, sanitation, sewerage, road, electricity, etc. The design and construction of houses should meet structural safety requirements against earthquake, flood, cyclone, landslides, etc. and conform to National Building Code (NBC) and other relevant Bureau of Indian Standards (BIS) codes. Also, all houses that are built or expanded mandatorily need to have toilet facility.
The houses constructed/acquired with central assistance under the mission should be in the name of the female head of the household or in the joint name of the male head of the household and his wife. Only in cases when there is no adult female member in the family, the house can be in the name of male member of the household.
The scheme is being implemented in 3 phases (all 4041 statutory towns as per Census 2011 with focus on 500 Class I cities):
- Phase 1: April 2015 to March 2017 – covers development work from start to finish in 100 cities
- Phase 2: April 2017 to March 2019 – covering development work in additional 200 cities
- Phase 3: April 2019 to March 2022 – covering the final phase of development work in remaining cities
The Ministry of Housing and Urban Poverty Alleviation will have the flexibility to include additional cities in earlier phases if there is a resource backed demand from states and union territories.
- The central government provides an interest subsidy of 6.5% on housing loans availed by beneficiaries for a period of 15 years from the time of beginning of the loan – this is 4% less than the market rate of interest
- The house is preferably allotted to the lady member of the family. In general, women applicants are given preference in this scheme.
- Differently-abled and old people are given preference when allotting houses on the ground floor
- Houses are constructed using eco-friendly materials and technology
- The grant subsidy ranges anywhere between Rs. 1 lakh and Rs. 2.30 lakh for LIG and EWS sections of urban population
Updated Scheme Details
|Field||Revised Scheme 2017|
|Loan Amount (which will be eligible for subsidy)||Up to Rs. 9 lakhs||Up to Rs. 12 lakhs|
|Eligibility Criteria||The income criteria are not defined. The number of borrowers has increased as mid-income group has also been included in 2017. However, the income of MIG people has not been defined.|
|Loan Tenure||15 years||15 years|
|Subsidy Calculation (for a loan tenure of 15 years)||4% on interest||3% on interest|
|Actual Subsidy Amount||Subsidy of Rs. 1.94 lakhs for a loan amount of Rs. 9 lakhs||Subsidy of Rs. 1.91 lakhs for a loan amount of Rs. 12 lakhs|
Individuals with an annual income of more than Rs. 3 lakh or Rs. 6 lakh can receive support from a bank in the form of a housing loan up to Rs. 9 lakh or Rs. 12 lakh respectively.
Equated Monthly(EMI) Installment Charges
|Prime Lending Rate (%)||8.5%||10.5%|
|Subsidy Amount||Rs. 1.9 lakhs||Rs. 2.2 lakhs|
|EMI (no subsidy)||Rs. 11,817 (15 years)||Rs. 13,264 (15 years)|
|Subsidy Percentage (%)||3%||6.5%|
|EMI (subsidy)||Rs. 9,931 (15 years)||Rs. 10,428 (15 years)|
|Loan Amount||Rs. 1.2 lakhs||Rs. 6 lakhs|
|Subsidy Amount||Rs. 1.2 lakhs||Rs. 6 lakhs|
- The central government gives a loan of Rs. 1 lakh on an average to all the beneficiaries under this urban housing scheme
- Beneficiaries belonging to economically weaker sections (EWS) and low-income group (LIG) receive an interest subsidy of 6.5%
- Every beneficiary receives an assistance of Rs. 1.5 lakh from the central government to promote housing stock. However, 35% of all units under the project are reserved for the economically weaker sections (EWS) category.
- In addition to the above, Rs. 1.5 lakh is offered to all eligible urban poor who want to construct their own house in urban areas or want to make renovations to their existing house
- A home loan under this scheme can also be availed to construct a toilet in an existing house
Beneficiaries of Pradhan Mantri Awas Yojana
The scheme aims to target specific groups of people from society. These are:
- Women – regardless of their caste and religion
- Economically Weaker Section (EWS)
- Scheduled Castes (SCs)
- Scheduled Tribes (STs)
Under this scheme, the central government is granting a subsidy of Rs. 1 lakh -2.3 lakhs to people from the above-mentioned categories so that they can fulfil their dream of buying a house.
How to Apply
People can apply for Pradhan Mantri Awas Yojana – Housing for All (Urban) in 2 ways – online and offline. Application forms are available online so that more people can benefit from this urban housing scheme. The urban poor can also go to a Common Service Centre (CSC) in their city and apply for this scheme in person. People can check their name on Pradhan Mantri Awas Yojana (PMAY) List.