PMAY Scheme – Does it Really Benefit The Homeless?

Launched in 2015, Pradhan Mantri Awas Yojana is a government-aided scheme with the objective to provide 2 crore affordable housing by 31^st March 2022. As the deadline to achieve this objective of “housing for all” draws closer, the demand for affordable housing stood at 1.12 in 2020. 

The Union Budget 2021 also saw the introduction of low-cost rental housing for migrant workers, whose implementation is yet to be seen. Have a look at the eligibility categories and requirements to judge how beneficial this Pradhan Mantri Awas Yojana is for the homeless.

PMAY eligibility criteria

PMAY beneficiaries are broadly classified into the following 3 categories, depending on their annual income.

1. Economically weaker sections (EWS): Maximum Rs.3 lakh.
2. Lower-income group (LIG): Between Rs.3 lakh and Rs.6 lakh.
3. Middle-income group I (MIG I): Between Rs.6 lakh and Rs.12 lakh.
4. Middle-income group II (MIG II): Between Rs.12 lakh and Rs.18 lakh.

The home loan eligibility of applicants under any of these categories is decided based on the following parameters.

• The potential beneficiary or any family member must not hold a pucca house anywhere across India.
• The concerned family should not have availed benefits under any other government-aided scheme previously.
• Married couples can apply for either joint ownership or single subsidy, valid for up to one subsidy.
• These benefits cannot be availed upon already built houses.

The above guidelines might seem to be fair and advantageous for individuals and families without proper housing. However, the effectiveness of the prime minister housing scheme lacks elsewhere.

Shortcomings of Pradhan Mantri Yojana

1. Documentation

Besides meeting housing loan eligibility, applicants are required to submit the following documents to qualify as a beneficiary.

• Identity proof: Aadhaar card, PAN card, driving license, voter ID, passport, or an authorisation letter confirming the applicant’s identity with a photograph.
• Address proof: Any of the ID proof besides address certificate and rent agreement.
• Income proof: Salary slips, bank statements, and ITR documents.
• Documents related to property purchase: Property registration certificate, purchase agreement, sale deed, and payment receipt of purchase.

Although the last requirement is optional, many potential beneficiaries may not be able to produce even the preceding documents. The problem here is that most homeless individuals in India often do not possess credible documentation for identity proof. Failing to meet this required documentation disqualifies several real beneficiaries under Pradhan Mantri Yojana.

2. Beneficiary selection

The eligible categories under this housing loan scheme are decided based on a 2011 socio-economic caste survey, which reportedly had several discrepancies. Individuals registered under the BPL category actually had access to advanced amenities, while the real beneficiaries were left out. A re-verification in 2015 revealed more than 50% of candidates under BPL to be ineligible. Although the ACD, BDO, and ACCD later conducted a non-SEC survey to enlist economically weaker families, the percolation of PMAY benefits is yet to be seen among them. 

Besides the economically backward, salaried, or self-employed individuals looking for financial aid with a residential purchase may also not benefit from this scheme if their annual income exceeds Rs.18 lakh. A viable alternative for them can be credit from housing finance companies.

Benefits of getting a home loan from HFCs

Besides the flexible requirements for home loan eligibility and documents, the following are some of the prominent benefits of this financial product.

• Individuals can use online home loan calculators to plan their beforehand for effective financial management.
• Borrowers can transfer existing funds to a new lender for better offers.
• Leading HFCs offer top-up loans for additional fund requirements.

Note that eligible individuals under Pradhan Mantri Yojana can apply for such housing loan through the scheme to avail of up to 6.5% interest subsidy. Additionally, borrowers can enjoy tax exemptions on home loan interest rates under Section 24(b) of the Income Tax Act.