FM gives a boost to homebuyers on a budget

The announcement on Thursday is in line with the government’s larger ‘Housing for All’ mission, which includes the Pradhan Mantri Awas Yojana (PMAY)-Urban and the Pradhan Mantri Awas Yojana-Rural or Grameen schemes.

While details are awaited, the scheme—targeted at those living in sub-standard accommodation—comes at a time when India’s residential sector has seen a sharp turnaround. With property prices on the rise and developers in large cities focusing on premium housing, homebuyers on a budget have been left out in the cold.

It also signals a drive to free up encroached land, industry experts said.

“This is likely to free encroachment areas like slums for easier redevelopment," said Anuj Puri, chairman, Anarock Group.

Sitharaman also said that the target of 30 million houses being built under the PMAY-Rural scheme is close to being achieved, despite many pandemic-led challenges. Another 20 million houses will be taken up in the next five years, to meet the housing demand arising from an increase in the number of families, she said. An amount of ₹80,671 crore has been budgeted for PMAY in FY25.

Last year, the allocation for PMAY was increased by 66% to ₹79,590 crore. Of this, ₹25,103 crore was allocated to PMAY Urban and the remaining was for PMAY-Rural scheme.

The PMAY-Rural scheme was launched in 2016 to ensure every rural family has a house of their own. The deadline to complete building the nearly 30 million houses was December 2023.

The PMAY-Urban scheme was launched a year before in 2015 to provide pucca houses to all eligible urban beneficiaries.

WEB

The implementation period of the PMAY-Urban scheme has been extended to 31 December, 2024, to complete the houses that were sanctioned till 31 March, 2022.

Both the middle-class housing scheme and PMAY-Rural initiative announced in the budget are expected to propel demand for affordable housing.

“…This augurs well for housing finance companies, who have been a key driver of credit to these segments in the recent past. While liquidity at this juncture looks tight, a lower government borrowing programme in the next fiscal could temper the funding cost increase of these lenders," said A.M. Karthik, senior vice-president and co-group head, financial sector ratings at ICRA Ltd.

Real estate developers said the announcements would boost affordable and rural housing.

“The commitment to the PM Awas Yojana Grameen, with the target of constructing 2 crore additional houses, continues the government’s focus on rural development. By facilitating home ownership with the new housing scheme for the middle-class, the government is not only looking to improve living standards but also to stimulate the real estate sector and associated industries. The success of these initiatives, of course, will depend on effective implementation and the government’s ability to meet these ambitious targets," said Sandeep Runwal, president, Naredo Maharashtra, a real estate industry body.

However, Anarock’s Puri said boosting allocation for PMAY (Urban) to improve affordability and encourage new projects in this segment was a key expectation. Similarly, tax incentives for homebuyers, such as increasing the deduction limit on home loan interest, were not addressed in the budget.