What is Affordable Housing Scheme?
Affordable housing refers to those housing units that are affordable for those people who have income below the average household income. In India, affordable housing is provided to lower income group (also known as LIG), people with middle income and economically weaker sections (also known as EWS) who have considerably low levels of income in urban areas.
Affordable housing is a major issue in developing countries like India where majority of the population is not able to buy houses because if the high market prices in real estate.
- Initiatives for affordable housing scheme in India
Recognising the importance of providing housing to the Lower Income Group and Economical Weaker Section , government has initiated a group of measures over the last 15 years. As a beginning, the National Urban Housing and Habitat Policy (NUHHP), 2007 has set the objective of Affordable Housing for All as a main focus.
Later, the government has set 2022 as the target year to realize this objective by making specific initiatives for the promotion of affordable housing scheme. Two components under Pradhan Mantri Awas Yojana – the PMAY (Urban) and PMAY (Rural) were launched by the government for achieving housing for all by 2022.
Pradhan Mantri Aavas Yojana (Urban): affordable housing for the urban poor
Pradhan Mantri Aavas Yojana launched in June 2015 for the urban poor, the government target is to construct 20 million houses by March 31, 2022 under Pradhan Mantri Awas Yojana for the urban poor.
The scheme gives financial assistance to States/Union Territories (UTs) in to support housing requirements of three income categories:
- Economically Weaker Sections (EWS),
- Lower Income Group (LIG),
- Middle-Income Group (MIG) in urban areas.
According to the Ministry of Housing and Urban Affairs, as on January 2019, around 69 lakh houses were approved while 13.58 lakh of these were constructed and completed.
Pradhan Mantri Aavas Yojana (Rural): affordable housing for the rural poor
The Pradhan Mantri Aavas Yojana – Gramin was launched in 2016 to construct affordable houses in rural areas and complete it by 2022 (the date was extended later). As on end January 2019, nearly 1.26 crore houses were constructed under Pradhan Mantri Aavas Yojana scheme.
Construction of affordable housing under the both programme goes well and the government has constructed around 1.52 crore houses under the two schemes of urban and rural PMAY programmes as on end January 2019.
Reduction in GST rates for Affordable Housing
The GST Council has reduced tax rates for affordable housing, the rate has been brought down from 8% to just 1%.
The Council also enhanced the ceiling value of affordable housing to Rs 45 lakh. Implication is that houses below Rs 45 lakh will be exchanged with a GST rate of 1%.
Limit of new carpet area
In non-metropolitan cities the carpet area is defined as 90 square metre and in metropolitan cities the carpet area is 60 square metre with the value of 45 lakh for both.