The Union Cabinet chaired by Prime Minister Narendra Modi on Thursday cleared a proposal to increase the carpet area of houses eligible for interest subsidy under the credit-linked subsidy scheme for the Middle Income Group (MIG) under the Pradhan Mantri Awas Yojana (Urban).
Now, the carpet area of an MIG-I will be increased from 90 square metre to up to 120 square metre and in MIG-II category it will be increased from 110 square metre to up to 150 square metres, Law and Justice Minister Ravi Shankar Prasad told reporters after the Cabinet meeting.
"The change will be effective from January 1, 2017," he added.
The increase would give buyers in MIG category a wider choice in developers' projects and boost the sale of ready flats in the affordable housing segment, Prasad added.
"The limit of 120 square metre and 150 square metre is seen as a reasonable enhancement and would cater to the market generally scouted by the MIG belonging to the two income categories specified in the scheme," a government statement said.
It said the credit-linked subsidy scheme (CLSS) for MIG was a pro-active step in meeting the challenges of urban housing shortage and that it was also a pioneering step to enable the middle income group to access the benefits of an interest subsidy scheme.
"The CLSS for middle income group covers two income segments, Rs 600,001 to Rs 1,200,000 for MIG-I and Rs 1,200,001 to Rs 1,800,000 for MIG-II per annum. In the MIG-1, an interest subsidy of 4 per cent has been provided for loan amounts up to Rs 9 lakh, while in MIG-2, an interest subsidy of 3 per cent has been provided for loan amount of Rs 12 lakh. The interest subsidy will be calculated at 9 per cent NPV (Net Present Value) over a maximum loan tenure of 20 years or the actual tenure, whichever is lesser. Housing loans above Rs 9 lakh and Rs 12 lakh will be at non-subsidised rates," the statement said.
It further said that CLSS for MIG would be effective up to March 31, 2019.