The PMAY Urban 2.0 fund will boost the construction of affordable housing

The government’s decision to double the allocation of funds to Rs 10 lakh crore for providing financial benefits under the Pradhan Mantri Awas Yojana (PMAY) The Urban 2.0 plan for the next five years is expected to boost the affordable housing segment, which enables those who migrate to cities to earn a living to obtain reasonable accommodation.

PMAY-U is one of the major flagship schemes being implemented by the government to provide all-weather pucca houses to all eligible beneficiaries in urban areas. Under PMAY-U, over 11.8 million houses have been approved and nearly 9 million houses have already been constructed and handed over to the beneficiaries.

“The nature of the housing plan “The housing system has changed in its new form. The government is using a wider mix of schemes ranging from interest subsidy to credit guarantee. While the quantum of interest subsidy per beneficiary has been reduced, the capital support from the government will help a broader base of the needy population. The government aims to do both – improve its capital productivity and accelerate the timeline of ‘Housing for All’,” said Vivek Rathi, National Director of Research, Gentleman Frank India.

In addition to addressing the current housing shortage, the initiative also sets a new benchmark for the future. urban development.

“The decision not only promises to improve the quality of life of millions of people, but also catalyzes the growth of the real estate sector“PMAY-U 2.0 promotes job creation and economic resilience, and by providing financial assistance across states, union territories and public lending institutions, strengthens the framework for collaboration between the government and the private sector, which is essential to achieve the goal of inclusive urban development,” said Prashant Sharma, Chairman, NAREDCO Maharashtra.

The multiple incentives and support measures proposed under the urban PMAY 2.0 category will boost both development and participation. “The expansion of the MIG category to include units up to 120 sq m is expected to improve unit supply absorption and increase participation of developers from urban areas. Also, the introduction of an interest subsidy scheme, similar to the credit-linked subsidy scheme (CLSS), will provide relief amid the current high lending rates of 8.5% to 9%,” said Jash Panchamia, partner, Suraksha Group. According to him, the increase in the equity pool under the Credit Risk Guarantee Fund Trust (CRGFT) from Rs1,000 crore to Rs3,000 crore is likely to encourage more lending institutions to participate, especially those traditionally reluctant to lend in the affordable housing sector.

The government has halved the annual income limit for MIG households, from 12-18 crore to 6-9 lakhs. NAREDCO’s Sharma believes the focus on affordability and accessibility ensures that urban housing is within reach of those who need it most.

Panchamia believes that the new direct subsidy mechanism through Redeemable Housing Vouchers could introduce complexities, particularly in cases of defaults or cancellations.

“This system, which links grants to beneficiary codes, can streamline administrative processes involving multiple government agencies. The previous method of crediting grants directly to developers offered a more streamlined approach with clear accountability,” he said.

According to Sharma, it will be crucial to ensure that the implementation of this scheme is expedited and that the benefits reach the intended beneficiaries in a timely manner.