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Government approves revision of carpet area of houses eligible for interest subsidy under PMAY-U

Jun 13, 2018 12:28 IST
Government approves revision of carpet area of houses eligible for interest subsidy under PMAY-U

The Union Ministry of Housing & Urban Affairs has approved a 33-per cent increase in the carpet area of houses eligible for interest subsidy under the Credit Linked Subsidy Scheme (CLSS) for the Middle-Income Group (MIG) under Pradhan Mantri Awas Yojana (Urban) (PMAY-U) to boost affordable housing.

With the revision, the carpet area of a house for Middle Income Group-I (MIG-I) has been increased from 120 sqm to 160 sqm and for MIG II, the area has been increased from 150 sqm to 200 sqm.

The new rules will be effective from January 1, 2017, the date on which the scheme became operational.


 Government approves revision of carpet area of houses eligible for interest subsidy under PMAY-U

The decision to increase the carpet area for MIG section was done after inputs from various stakeholders.

The Credit Linked Subsidy scheme mainly aims to support the dream of every family in owning a house.

Hence, one of the key issues was the denial of the scheme’s benefit to potential beneficiaries, just because they were buying flats or houses or constructing houses, where the carpet area exceeded the cap of either 120 sqm or 150 sqm, thus rendering them ineligible for the interest subsidy under MIG segment.

Key Benefits

The decision is a big step to boost the construction sector that contributes to increased activity on the supply side.

The initiative is expected to result in enhanced economic activity that would contribute to improvement in the demand side.

These enhancements will enable more MIG customers to qualify for the subsidy and avail the benefits provided under the ambitious flagship mission of Pradhan Mantri Awas Yojana (Urban).

Further, besides increasing the number of beneficiaries, the revision in carpet area will improve the construction activity and assist in moving the housing sector forward.

Besides, the decision also bodes well with the policy of the Reserve Bank of India to revise the housing loan limits for Priority Sector lending (PSL) eligibility.

Under RBI’s policy, it was decided that the housing loan limits for PSL eligibility will be revised from the existing ₹28 lakh to ₹35 lakh in metropolitan centres and from existing ₹20 lakh to ₹25 lakh in other centres, provided the overall cost of the dwelling unit in the metropolitan centre and at other centres does not exceed ₹45 lakh and ₹30 lakh, respectively.

S. No.






Household Income (Rs. p.a.)

From 6,00,001 up to 12,00,000

From 12,00,001 up to 18,00,000


Interest Subsidy (% p.a.)




Maximum Loan Tenure




Eligible Housing Loan Amount for Interest for Interest Subsidy (Rs)




Dwelling Unit Carpet Area (up to)**

160 sq.m.

200 sq.m.


Discounted Rate for Net Present Value (NPV) calculation for interest subsidy




Upfront Amount for Subsidy (Rs.)




The increased construction activity in the housing sector has a cascading effect on core sectors like cement, steel, machinery and other allied sectors.

Hence, more construction activity in the urban areas would result in the creation of more jobs for both skilled and unskilled workers.

Overall, the move will be a big boost to the economy.

 Government approves revision of carpet area of houses eligible for interest subsidy under PMAY-U

 Government approves revision of carpet area of houses eligible for interest subsidy under PMAY-U


The scope of Credit Linked Subsidy Scheme was expanded to MIG category with the approval of the Union Cabinet on February 1, 2017.

The scheme, which was approved initially for implementation for the year 2017, was extended up to March 31, 2019.

Under the scheme, each beneficiary can avail subsidy up to Rs 2.35 lakh on purchase of a house under the scheme.

Under MIG-I, 4 per cent interest subsidy is available on loan up to Rs 9 lakh for people with an annual income between Rs 6-12 lakh, while 3 per cent interest subsidy is given on loan up to Rs 12 lakh to people with income between Rs 12-18 lakh per annum.

As on June 11, 2018, an amount worth Rs 736.79 crore has been disbursed to 35,204 beneficiaries belonging to the MIG category.

About MIG Segment

The MIG segment comprises an aspirational class of citizens, which is upwardly mobile.

The role of the hardworking citizens belonging to the MIG segment, who play a significant role in the economy of the country, has been acknowledged by the government time and again.


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