Affordable Housing In India

Affordable housing in India is rapidly occupying the center stage in India’s top agenda. Safe, affordable housing is a basic necessity. Hence, the government is looking out to encourage it for different society sections. The government has introduced various affordable housing schemes keeping those in mind with low income, middle income, and economically weaker sections. 

Housing, especially, is high-priced, and those who live hand-to-mouth and cannot afford to buy houses have no choice but to put up in slums and shanties. However, to overcome this issue, India’s government launched “Pradhan Mantri Awas Yojana,” offering people affordable housing with the aim of “Housing for All by the year 2022′. 
Further to this, Credit Linked Subsidy Scheme was also launched for PMAY beneficiaries as they stand eligible to get interest subsidy if they take a loan to buy a house under this scheme.

Government initiatives to boost affordable housing in India

The government promotes and encourage affordable housing schemes; the government takes various measures. Their main objective is to have affordable housing for all rural and urban people by 2022. To do that, the government has allowed tax exemption for affordable housing for migrant workers. 

Here are a few schemes launched for affordable housing by the government of India:

  • Pradhan Mantri Awas Yojana (PMAY)

The scheme was launched in 2015 to provide houses to the homeless. Citizens in all UTs and states can avail of this scheme. The scheme also offers interest subsidies for home loans for first-time buyers, especially in urban areas.

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  • Rajiv Awas Yojana

The scheme is to bring all illegal constructions in uniformity and encourage a slum-free India. Under this affordable housing scheme in India, the govt approves the Affordable Housing scheme in Partnership (AMP).

affordable housing schemes
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  • DDA Housing Scheme

DDA is one of the most popular schemes by the government. Delhi Development Authority Housing Scheme offers apartments for all income groups, from high-income to middle-income, and low-income groups can use this scheme. The scheme also has some reservations for the economically weaker sections.

affordable housing schemes
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  • Mhada Lottery Scheme

Launched by the Maharashtra government, the Mhada Lottery Scheme occurs every year. The scheme is available for all income groups; however, it has a significant chunk reserved for the low section.

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  • Pradhan Mantri Gramin Yojana

This particular scheme focuses on providing affordable housing to homeless and low-income groups and providing them with pucca houses and basic amenities. Under this scheme, the government offers financial assistance and shares the construction cost. 

affordable housing schemes
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How is the government extending support to developers in the affordable housing sector?

The government has introduced several measures for those who dream of buying their own house and the developers in the affordable housing in India. Following are the measures introduced by the government:

  1. In July 2019 budget, the government had announced an additional deduction of interest amounting to Rs. 1.5 lakh for the home loan taken to buy an affordable house. FM has announced in Union Budget 2021 to extend the current relief of Rs.1.5 Lakhs on home loans for affordable housing till March 31, 2022. The cap on the definition of affordable housing remains at Rs 45 Lakhs. This extension has also applicable for developers offering affordable housing projects. 
  2. Further, to keep up the Affordable Rental Housing supply, several incentives, such as subsidies, tax benefits, and institutional funding, were provided.
  3. Housing Fund (AHF) in National Housing Bank was formed by the government and is funded from priority sectors that India’s government authorizes.

Minimized GST rates for affordable housing projects

The GST council decreased the rates on affordable housing projects from an effective 8% to 1%.

The Council has also enhanced the ceiling value of affordable housing; the houses priced below 45 lakh will be exchanged with a 1% GST rate.

Carpet Area limit

The limit of carpet area for affordable houses is set as 90 sq.m in the non-metropolitan cities and 60 sq.m in metropolitan cities with a ceiling value of 45 lakh in both cases.

Affordable Housing Loan and efforts by the RBI

According to RBI incentive measures, an affordable residential property price must be lesser than Rs.65 lakhs in metropolitan cities and Rs.50 lakhs in non-metropolitan regions. 

The Reserve Bank of India also provides loan assistance under priority sector lending for affordable housing projects in India. RBI allowed banks to issue a minimum of 7 years of maturity to finance affordable housing loans

Bottom Line

Affordable housing is one of the most critical and unconventional changes undertaken by the realty sector in the last few years. With the Union Budget 2021, the government aims to provide low-cost houses to India’s citizens, focusing on the economically weaker and migrant workers. With new initiatives and financial assistance, the government tries its best to support affordable housing schemes