Giving a huge boost to affordable housing, the Union Budget presented on February 1 increased the allocation for the PM Awas Yojana (PMAY) by 66%. Finance Minister Nirmala Sitharaman also announced an Urban Infrastructure Development Fund (UIDF) which will be used to create urban infrastructure in Tier 2 and Tier 3 cities.
PMAY was allocated over ₹79,000 crore this fiscal as compared to last year’s ₹48,000 crore. The scheme was launched in 2015 with the objective of providing affordable housing to all citizens. The scheme was created to assist the middle-income community, economically disadvantaged groups (EWS) and low-income groups (LIG).
This Credit Linked Subsidy Scheme (CLSS) is aimed to provide its beneficiaries with an interest subsidy to avail loans to purchase or build a house.
The Finance Minister said in her Budget speech that states and cities will be encouraged to undertake urban planning reforms and actions to transform cities into “sustainable cities of tomorrow.”
“This means efficient use of land resources, adequate resources for urban infrastructure, transit-oriented development, enhanced availability and affordability of urban land, and opportunities for all,” she said.
Ms. Sitharaman said that the Urban Infrastructure Development Fund will be established through the use of priority sector lending shortfall. This will be managed by the National Housing Bank, and will be used by public agencies to create urban infrastructure in Tier 2 and Tier 3 cities. The Centre will spend ₹Rs 10,000 crore per year for the fund.
“Like the Rural Infrastructure Development Fund, an Urban Infrastructure Development Fund will be established through the use of priority sector lending shortfall,” she said.
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Ms. Sitharaman also announced that cities will be incentivised to improve their credit worthiness for municipal bonds. “This will be done through property tax governance reforms and ring-fencing user charges on urban infrastructure.”
All cities and towns will be enabled for 100% mechanical desludging of septic tanks and sewers to transition from manhole to machine-hole mode, she said adding that increased focus will be provided for scientific management of dry and wet waste.
Industry bodies welcomed the increase in allocation for PMAY.
“Incremental PMAY allocation upto ₹79,000 crore will give impetus to affordable housing and benefit a wide segment of homebuyers,” said Dr. Niranjan Hiranandani, M.D., Hiranandani group and National Vice Chairman National Real Estate Development Council (NAREDCO).