Finance Minister Nirmala Sitharaman on Tuesday announced the second phase of the Pradhan Mantri Awas Yojana (PMAY) Urban - a housing-for-all scheme - covering one crore middle and lower–middle class segments in cities. The scheme, PMAY Urban 2.0, has a proposed investment of ₹10 lakh crore and a “central assistance” -- credit-linked interest subsidy of ₹2.2 lakh crore.

The housing needs of one crore urban poor and middle-class families will be addressed with an investment of ₹10 lakh crore.

“Under the PM Awas Yojana Urban 2.0, the housing needs of 1 crore urban poor and middle-class families will be addressed with an investment of ₹10 lakh crore. This will include a central assistance of ₹2.2 lakh crore in the next five years. A provision for interest subsidy to facilitate loans at affordable rates is also envisaged,” the Budget document reads.

Launched in 2015, the PMAY aims to set up homes in both rural and urban areas, with a credit-linked interest subsidy component supporting the middle and lower-middle class. The financial assistance scheme was divided into two components – one targeting the urban populace, and the second targeting the rural.

“....enabling policies and regulations for efficient and transparent rental housing markets with enhanced availability will also be put in place,” FM Sitharaman said in her Budget speech.

One of the first Cabinet decisions that the Modi 3.0 government took after coming to power was announce the construction of 3 crore additional houses under the PMAY scheme. Of this, 2 crore homes would be under the PMAY (Grameen) scheme in the rural areas.

The interim Budget tabled in February allocated ₹80,671 crore for the PMAY.

In 2023-24, the Budget Estimates under PMAY (Urban) were pegged at ₹25,103.03 crore, against actual spending of ₹22,103.03 crore. The allocation for FY25, Budget Estimate is pegged at ₹30,170 crore, up 20 per cent over last year’s BE.

In case of the PMAY (Rural), the BE for FY24 was ₹54,487 crore, against actuals at ₹32,000 crore and an additional ₹12,000 crore transferred from the Agriculture Infrastructure and Development Fund. The BE for FY25 was ₹54,500 crore – at similar levels as last year’s BE.

According to Dhruv Dhruv Agarwala, Group CEO, Housing.com & PropTiger.com, there is a distinct push towards promoting homeownership by encouraging states to reduce stamp duty rates, particularly for women.

“This could significantly reduce the cost of property acquisition in India where stamp duty rates are one of the highest in the world,” he said, adding that an increase in standard deduction under the New Tax Regime and rationalisation of the tax structure could leave India’s salaried class with more disposable income, consequently boosting housing demand.

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