Interim Budget: Govt to launch new housing scheme for middle class


The government is likely to launch a new housing scheme aimed at providing better housing to India’s middle-class homebuyers, finance minister Nirmala Sitharaman said in her Interim Budget 2024-25 Speech. The scheme will replace the discontinued Credit Linked Subsidy Scheme (CLSS).

“Our government will launch a scheme to help deserving sections of the middle-class living in rented houses or slums or chawls and unathorised colonies to buy or build their own houses,” said Sitharaman.

The announcement by the FM reiterates the commitment made by prime minister Narendra Modi in his Independence Day Speech on August 15 in 2023.

“The weaker sections who live in the cities face a lot of problems. Middle-class families are dreaming of buying their own houses. We are coming up with a new scheme in the coming years that will benefit those families that live in cities but are living in rented houses or slums or chawls and unauthorised colonies. If they want to build their own houses, we will assist them with a relief in interest rates and loans from banks that will help them save lakhs of rupees,” Modi said in his speech.

Providing details of the plan, minister of housing and urban affairs Hardeep Singh Puri on January 12 said the government was giving finals touches to the new home loan interest subsidy scheme.

“A lot of work has gone into the formulation of the scheme. There has been deliberation on the nuances. It is in the final stages. We should be going to the Cabinet (for this) soon,” Puri told media.

Recall here that the government is already supporting construction of house in urban areas under its Pradhan Mantri Awas Yojana-Urban (PMAY-U) component.  The housing ministry is implementing the scheme since June 25, 2015, to provide pucca house with basic amenities to all eligible urban beneficiaries across the country. The scheme is implemented through four verticals ─ beneficiary-led construction (BLC), affordable housing in partnership (AHP), in-situ slum redevelopment (ISSR) and the credit-linked subsidy scheme (CLSS) ─ based on eligibility criteria as per scheme guidelines.

Under the now discontinued Credit-Linked Subsidy Scheme (CLSS), the government provided Central subsidy on home loans of between Rs 6 lakh and Rs 12 lakh at lower rates of interest for the construction of new homes or renovation of existing homes. The CLSS for the EWS and LIG segments was operational till March 31, 2022. For the middle-income group, the CLSS was effective from January 1, 2017, and was operational up to March 31, 2021.

How will the move impact real estate?

According to sector experts, the move will act as a major boost to housing and housing finance sectors in India.

“The announcement on the housing scheme for the middle-income group and the construction of 20 million homes in rural areas is also positive news for the real estate and allied sectors while spurring the housing-for-all
agenda even further,” said Samantak Das, chief economist and head of research & REIS, India, JLL.

According to Harsh Parikh, partner at Khaitan & Co, the vision of the Central government to implement a housing scheme for the middle
class and the ones living in the slums across India is a big opportunity for
real estate players to partner with the government for futuristic sustainable

A M Karthik, senior vice-president & co-group head, financial sector ratings, ICRA, says that the proposed launch of the housing scheme to the middle class would boost demand for affordable housing units.

“This augurs well for housing finance companies, which have been a key driver of credit to these segments in the recent past. While liquidity at this juncture looks tight, a lower GOI borrowing programme in the next fiscal could temper the funding cost increase of these lenders”.

Also Read: Over 2 crore houses to be constructed under PMAY-G in next 5 years