Anticipating a Boost in Affordable Housing: What to Expect from India's Interim Budget 2024

Pradhan Mantri Awas Yojana - Urban (PMAY-U), an affordable housing program launched in 2015, promised a concrete home for all eligible urban households, including slum dwellers and economically weaker sections by 2022. Due to pandemic disruptions the deadline was extended to 2025. As the government approaches the final year of this ambitious target, expectations are high that the upcoming Interim Budget on 1 February will take steps to support affordable housing.

Budget Speculations

Industry experts are speculating on potential tax incentives for home buyers, particularly in the affordable housing segment. Last year, the Union Budget increased the allocation for PMAY by 66%, reaching ₹79,000 crore, with ₹25,103 crore earmarked for PMAY-U. There are now talks that Finance Minister Nirmala Sitharaman may further boost low-cost housing by 15%, raising the allocation to ₹1 lakh crore for the fiscal year 2024-25.

Incentives Overview

Currently, PMAY offers various incentives under four verticals: in-situ slum redevelopment, affordable housing in partnership, beneficiary-led individual house construction/enhancement, and the credit-linked subsidy scheme (CLSS).

•    Slum Redevelopment: ₹1 lakh central assistance per house for eligible slum dwellers with private developer participation.

•    Affordable Housing in Partnership: ₹1.5 lakh central assistance for each house built for economically weaker sections, low-income, and middle-income segments.

•    Beneficiary-led Individual House Construction/Enhancement: Central assistance up to ₹1.5 lakh per economically weaker section (EWS) house.

•    Credit-Linked Subsidy Scheme (CLSS): Interest-cost subsidy ranging from ₹1 lakh to ₹2.67 lakh for EWS, LIG, and MIG segments availing housing loans.

Expectations for Homebuyers

An increase in PMAY allocation could lead to higher limits under the interest subsidy scheme, making homes more affordable for buyers. There's also anticipation for a potential redefinition of affordable homes. Currently capped at ₹45 lakh with a carpet area of 60 square meters, industry voices, including the Confederation of Real Estate Developers' Associations of India (CREDAI), are urging a revision. CREDAI suggests defining affordable housing as a unit with a 90 square meter RERA carpet area in metro cities and a 120 square meter RERA carpet area in non-metros, without a cost cap.

Final Words

With over 3 crore affordable housing units needed across rural and urban India, the industry is closely watching to see if the government addresses these demands in the upcoming budget or allows another promise to fade away quietly. The nation awaits crucial steps to fulfill the housing aspirations of millions as the government navigates the final stretch toward its ambitious 2025 target.