The interim budget 2024, presented by Union finance minister Nirmala Sitharaman on February 1, has brought some cheer to the rural and middle-class home buyers. The budget has proposed to increase the assistance for rural housing under the Pradhan Mantri Awas Yojana – Gramin (PMAY-G) scheme by 66 per cent, from Rs 1.2 lakh to Rs 2 lakh per unit. The budget has also announced a new housing scheme for the middle class, which will provide an interest subsidy of up to Rs 2.5 lakh on home loans taken for affordable housing projects.
Rural housing largesse
The PMAY-G scheme, launched in 2016, aims to provide pucca houses with basic amenities to all eligible rural households by 2022. The scheme has supported the construction of 2.54 crore homes across the country till the end of this fiscal. The budget has allocated Rs 19,000 crore for the scheme in 2024-25, and has set a target of building another 2 crore pucca houses over the next five years starting from 2024-25.
The hike in the assistance for rural housing is expected to boost the demand for low-cost housing materials and generate employment opportunities in the rural areas. The increased assistance will also help in bridging the gap between the actual cost of construction and the existing subsidy amount, which varies across states depending on the cost-sharing ratio between the Centre and the states. In plain areas, the cost-sharing ratio is 60:40, providing Rs 1.2 lakh assistance for each unit. In Himalayan states, northeastern states, and the Union Territory (UT) of Jammu & Kashmir, the ratio is 90:10, offering assistance of up to Rs 1.3 lakh for each unit. With the hike in the assistance, the beneficiaries will now get Rs 2 lakh and Rs 2.17 lakh respectively.
Housing scheme for the middle class
The other good news for home buyers is the announcement of a new housing scheme for the middle class, which will provide an interest subsidy of up to Rs 2.5 lakh on home loans taken for affordable housing projects under the Pradhan Mantri Awas Yojana – Urban (PMAY-U) scheme. The scheme will be applicable for loans sanctioned between April 1, 2024 and March 31, 2025, and will benefit about 12 lakh home buyers. The interest subsidy will be available for loans up to Rs 35 lakh for houses with a carpet area of up to 60 square metres (645 square feet).
The new scheme is expected to boost the demand for affordable housing in urban areas, especially in tier-II and tier-III cities. The scheme will also complement the existing Credit Linked Subsidy Scheme (CLSS) under PMAY-U, which provides interest subsidy of up to Rs 2.67 lakh on home loans taken by eligible beneficiaries belonging to economically weaker sections (EWS), low income groups (LIG) and middle income groups (MIG). The CLSS scheme has been extended till March 31, 2025.
The budget has also allocated Rs 8,000 crore for PMAY-U in 2024-25, and has set a target of building another 1 crore urban houses over the next five years starting from 2024-25.
Conclusion
The interim budget 2024 has clearly put a focus on rural homes and homes for the middle class, as part of its vision to provide ‘Housing for All’ by 2022. The budget has also shown its commitment to boost infrastructure spending and fiscal consolidation, which are expected to have a positive impact on the overall economy and the real estate sector .