The government is set to reduce the income threshold for middle-income group (MIG) beneficiaries in the next phase of the Pradhan Mantri Awas Yojana (PMAY) for urban areas. The new cap will be reduced from Rs 18 lakh to Rs 10 lakh to better target the scheme, while also distributing the subsidy over five years instead of a one-time payment, ensuring improved monitoring.
Officials have remained tight-lipped about the interest subsidy for MIG beneficiaries, but sources indicate it may be around Rs 2.6 lakh, similar to the last phase of the scheme. The financial allocation for PMAY (Urban) 2.0 is expected to be included in the upcoming budget.
Previously, the MIG was divided into two categories: households with an annual income of Rs 6 lakh to Rs 12 lakh, and those with an annual income of Rs 12 lakh to Rs 18 lakh. Now, there may be only one category for MIG beneficiaries.
The proposed changes aim to ensure that only deserving borrowers benefit from the scheme, according to officials. The detailed scheme, including financial implications, is likely to be presented to the Cabinet soon, following a recent presentation to Prime Minister, Narendra Modi.
The scheme redesign takes into account the Prime Minister’s announcement from the Red Fort last year, where he promised substantial relief in bank loan interest for families living in rented houses, unauthorized colonies, and shanties in cities, enabling them to build their own homes. Officials told that several new provisions have been introduced based on learnings from the earlier scheme to prevent exploitation of the system.
In its first Cabinet meeting, the government approved the second phase of PMAY to provide financial assistance for three crore houses—two crore in rural areas and one crore in urban areas—over the next five years. However, the cost of this initiative still needs approval.
Similar to the last phase, PMAY (Urban) 2.0 will include four components: beneficiary-led construction, in-situ slum rehabilitation, and the credit-linked subsidy scheme (CLSS). Except for CLSS beneficiaries, those in other categories will receive up to Rs 1.5 lakh assistance under the scheme.
