India on Tuesday announced a 66 per cent hike in allocation towards its flagship universal housing scheme, the Pradhan Mantri Awas Yojana (PMAY), to ₹79,590 crore.

The boost towards ‘affordable housing for all’ scheme was announced in the Union Budget 2023-24.

Finance Minister Nirmala Sitharaman in her Budget speech said, “The outlay for PM Awas Yojana is being enhanced by 66 percent to over ₹79,000 crore” while adding that this increased capital outlay is for the third year running. A ₹9,000 crore credit guarantee scheme for MSMEs was also announced.

Push for Rural Housing

Interestingly, the push in affordable homes came through the rural housing scheme (Pradhan Mantri Awas Yojana – Rural) which saw a massive allocation of ₹54,487 crore; an over 170 per cent jump over Budget Estimates(BE) of FY23, where the allocation was ₹20,000 crore.

The revised expenditure in FY23 however more than doubled over the BE and stood at ₹48,422 crore.

The PMAY – Rural scheme began in November 2016, some one year later after the PMAY – Urban scheme was launched. In the rural programme, the government gives ₹1,20,000 – 1,30,000 to build a house. Up to 90 days of work under the job guarantee scheme MGNREGS is permitted for constructing a house.

According to the rural development ministry data, 21.2 million houses have been constructed and another 8.3 million houses need to be built by March 2024.

Urban housing and development

Budget allocation under the PMAY – Urban scheme was however reduced by 10 per cent to ₹25,103 core in FY24. Budget estimate in FY23 was ₹28,000 crore; against which the actual spending was ₹28,708 crore.

According to Niranjan Hiranandani, National Vice Chairman, NAREDCO, the incremental PMAY allocation of upto ₹79,000 crore will give an impetus to affordable housing and benefit a wide segment of homebuyers. As Anuj Puri, Chairman, Anarock Group, points out: The revamped credit guarantee for MSMEs and special tax benefits and deductions will provide impetus to overall industrial development, and this can have a rub-off effect on the real estate sector since the pandemic slowed down demand for affordable housing in 2021 and 2022

“Resultantly, new supply in this segment also reduced,” he said adding that as per ANAROCK Research, 2022 saw a trend reversal with the share of new supply in the affordable housing category (less than Rs 40 lakh) dipping to 20 per cent of total 3.58 lakh units launched in top 7 cities from 40 per cent of 2.37 lakh units launched in 2019.

Also announced in the Budget was the establishment of an urban infrastructure development fund (UDIF) that will look into lending shortfalls during the financing of infrastructure projects. This will be managed by the National Housing Bank and will be used by public agencies.

Around ₹10,000 crore per annum is to be made available under the fund.

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