In a major decision to bolster affordable housing and construction sector leading to enhanced economic activity, the government has increased the carpet area of houses eligible for interest subsidy under the Credit Linked Subsidy Scheme (CLSS) for the Middle-Income Group (MIG) under Pradhan Mantri Awas Yojana (Urban).
As per the revised norms, the Ministry of Housing & Urban Affairs has enhanced the carpet Area of houses eligible for subsidy under CLSS for MIG to 160 sq meter or 1,722 sq ft for MIG -I and 200 sq meter or 2,153 sq ft for category MIG-II.
Earlier the carpet area for these houses under MIG I and MIG II category was fixed at 120 sq meter or 1,291 sq ft and 150 sq meter or 1,614 sq ft.
The decision is another big step to boost the construction sector that contributes to increased activity on the supply side. This initiative is expected to result in enhanced economic activity that would contribute to improvement in the demand side.
These enhancements will now enable more MIG customers to qualify for subsidy and avail the benefits provided under the ambitious flagship Mission of Pradhan Mantri Awas Yojana (Urban).
Apart from increasing the number of beneficiaries, the increase in carpet area will improve the construction activity and will assist in moving the housing sector forward.
“The increase in carpet area for MIG under CLSS to 200 square meters will prove to be a big push for urban housing in tier II and III cities and towns. This will not only give a boost to Housing for All but also help bolster the economy,” said Jaxay Shah, President of realty developers’ body CREDAI National.
Under the revised norms, individuals with annual household Income from Rs 6 lakh to Rs 12 lakh would qualify for MIG I category, while MIG II for income above Rs 12 lakh up to Rs 18 lakh. Interest Subsidy for MIG I and II will be 4% and 3%, respectively for maximum loan tenure of 20 years.
The eligible housing loan amount for interest for subsidy would be Rs 9 lakh and 12 lakh for MIG I and MIG II category, respectively. Loan quantum beyond this limit will be at non-subsidised rates.
This also augurs well with the Reserve Bank of India’s recent decision to revise the housing loan limits for Priority Sector lending (PSL) eligibility where it has been decided to revise the housing loan limits for PSL eligibility from existing Rs 28 lakh to Rs 35 lakh in metropolitan centres (with population of 10 lakh and above), and from existing Rs 20 lakh to Rs 25 lakh in other centres, provided the overall cost of the dwelling unit in the metropolitan centre and at other centres does not exceed Rs 45 lakh and Rs 30 lakh, respectively.
The increased construction activity in housing sector is expected to have cascading effect on core sectors like cement, steel, machinery and other allied sectors. More construction activity in the urban areas would result in creation of more jobs for both skilled and unskilled workers.
The scope of the CLSS was expanded to MIG category with the approval of the cabinet In February 2017. This scheme initially approved for implementation for the year 2017 has been extended up to March 2019. The CLSS for MIG scheme has gained momentum in the last couple of quarters and the off-take has picked up significantly. As on 11.06.2018, an amount of Rs.736.79 crore has been disbursed to 35,204 beneficiaries belonging to the MIG category, the ministry said in a release.