The Prime Minister, on August 15, 2023, announced a 'new' scheme for the otherwise forgotten- urban middle class, aimed at ameliorating the strenuous process of acquiring and constructing a home of their own.
The Prime Minister, on the occasion of the country’s 77th Independence Day teased about a “new scheme” for the urban middle class living in rented accommodations. The scheme directs at enabling these families gain a roof over their head, have a house of their own. The “new scheme” Modi promised will be brought in “very soon”.
The erstwhile forgotten, ‘middle class’ was addressed by the Prime Minister, from the stands at the Red Fort, “The middle-class families are dreaming of buying their own houses. We are coming up with a new scheme in the coming years that will benefit those families that live in cities but are living in rented houses, slums, chawls, and unauthorised colonies. If they want to build their own houses, we will help them with relief in interest rates and loans from banks that make them save lakhs of rupees." The announcement apparently came after oberving a growing ‘disillusionment’ among the aforementioned section of the society who believed the government to only favour either the poor or the wealthy- oftentimes alleged by the NCP leader, Rahul Gandhi.
This shift in popular opinion had been taken note of when the Union Finance Minister, Nirmala Sitharaman presented a budget, allocating 45 trillion rupees, this year. Sitharaman proposed to raise the rebate limit to Rs 7,00,000 under personal income taxes which was to directly benefit the middle class.
What Does the New Scheme entail?
The Union Housing and Urban Affairs Ministry is already underway with the implementation of the Pradhan Mantri Awas Yojana (Urban), originally launched in 2015. The scheme aims to build affordable houses in Urban India. And of the four legs involved in the scheme: Beneficiary Led Construction/ Enhancement (BLC), Affordable Housing in Partnership (AHP), In-situ Slum Redevelopment (ISSR) and Credit Linked Subsidy Scheme (CLSS).
The credit-linked subsidy scheme, in the PMAY-U vertical allowed beneficiaries an interest subsidy on home loans. In August 2022, the Union Cabinet approved continuation of PMAY-U up to 31st December 2024 with all verticals, except CLSS, for the completion of already sanctioned houses till 31st March 2022.
Houses constructed under the PMAY-U scheme will house basic amenities like toilet, water, supply, electricity and kitchen. It also promotes women empowerment by endorsing ownership of houses in the name of female member or as a joint head.
Differently abled persons, senior citizens, SCs, STs, OBCs, Minority, Single Women, transgenders and other vulnerable sections of the society have been given preference. The scheme has incorporated an approach to cater to the individual needs of people, based on their geographical conditions, topography, economic conditions, availability of land, infrastructure etc. Hence, the division of the schemes into the four divisions.
As per the Credit Linked Subsidy Scheme, beneficiaries of economically weaker sections or low income and middle income groups seeking housing loans from banks or related institutions to build or acquire a new house, are deemed eligible for an interest subsidy of 6.5%, 4%, 3% on a loan amount upto Rs 6Lakh, 9Lakh, and 12Lakh respectively. The Ministry has ordained- Housing and Urban Development Corporation (HUDCO), National Housing Bank (NHB) and State Bank of India (SBI) as Central Nodal Agencies (CNAs) to equip the beneficiaries with the subsidy through lending institutions and monitor the progress of the same.
Now, the presiding confusion both in the government as well as among members of BJP is about the PM’s promise on August 15, if it was in consonance and an extension to the discontinued vertical, or an absolutely ‘new scheme’ as suggested by the PM. When reached out by media, officials of both the Ministry of Housing and Urban Affairs as well as spokespersons of BJP sought no clarity on the situation.
Other verticals include -‘In-situ Slum Redevelopment (ISSR), aimed at providing financial assistance of Rs 1 Lakh per house for eligible slum dwellers. While Affordable Housing in Partnership (AHP) aids central assistance of Rs 1.5 Lakh to each EWS house. An affordable housing project can be a mix of houses for different categories but it will be considered eligible for Central Assistance, if 35% of the houses in the project fall under the EWS category. Lastly, the Beneficiary-led Individual House Construction/ Enhancement (BLC-N/ BLC-E) scheme aims at directing same amount of Rs1.5 lakh rupees to eligible families belonging to EWS categories for individual house construction/ enhancement.
A PMAY-U house ensures dignified living along with sense of security and pride of ownership to the beneficiaries. As many as 1,18,90,000 houses have been sanctioned by the PMAY- Urban scheme till date, and around 76,25,000 houses have been completed, most of which were allotted to the urban poor or middle class. Urban Housing scheme coupled with income tax relief will help the urban middle class breathe a sigh of relief.