The government of India has been focusing on the rapidly growing real-estate sector to bolster the economy in the near future. With schemes, plans, subsidies, the Ministry of Housing & Urban affairs is shaking up the housing industry which in turn can have a ripple effect across various other sectors.
Their main focus over the past few years, however, has been on affordable housing with an aim to provide a roof over the head of every citizen by 2020. The Pradhan Mantri Awas Yojana and the Credit Linked Subsidy Scheme (CLSS) are two pillars that the ministry is trying to use as the foundation of that plan. A recent development in this area is supposed to provide a much-needed thrust and potentially increase the number of homeowners rapidly.
According to the revised norms of the Ministry of Housing & Urban affairs, the carpet area of houses eligible for subsidy under CLSS for MIG has been increased to 160 sq meter or 1,722 sq ft for MIG -I and 200 sq meter or 2,153 sq ft for category MIG-II. The previous carpet area was fixed at 120 sq meter or 1,291 sq ft and 150 sq meter or 1,614 sq ft for MIG I and MIG II respectively. This move can be a big step for the construction sector by increasing activity on the demand side, thus enhancing economic activity on the supply side.
As per the new norms, individuals with an annual income between Rs 6 lakh and Rs 12 lakh will qualify for MIG I category, while MIG II is for families whose annual income falls between Rs 12 lakh and Rs 18 lakh. Interest subsidy will be 4% for MIG I and 3% for MIG II under the revised scheme, for maximum loan tenure of 20 years.
The scheme was initially approved for implementation in 2017 but has been extended till 2019. In a recent press release, the ministry has mentioned that a total of Rs. 736.79 crore has been disbursed to 365,204 beneficiaries in the MIG category.
This change has breathed new life into the industry that had been nearing saturation over the past few months, which could have led to a huge setback to the nations GDP in the coming years. However, this new inflow of revenue has turned the situation upside down not just for the real estate market, but also for the allied sector such as cement, steel, consultancy etc. It has also created jobs for skilled as well as unskilled workers in and around the areas.
All-in-all it is safe to assume that this move has done its part in providing a new lease of life to the country’s economy and will help strengthen it over the coming years.