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Pradhan Mantri Awaas Yojana (PMAY Urban & Rural)

In 2015, the Indian government introduced the Pradhan Mantri Awas Yojana (PMAY) to provide affordable housing to all citizens by 2022. Through this credit linked subsidy scheme (CLSS), the government aimed to provide its beneficiaries an interest subsidy to avail loans to purchase or build a house. The scheme was launched to aid the middle-income community, economically weaker sections (EWS) and low-income groups (LIG). Depending on the areas it serves, the scheme is divided into two sections, Pradhan Mantri Awas Yojana-Urban (PMAY-U) and Pradhan Mantri Awas Yojana Gramin (Pradhan Mantri Awas Yojana Rural).

  • Introduced in 2016, PMAY-U aimed to provide ‘Housing for All by 2022’ by establishing 1.12 crore houses for urban poor across the country over the next seven years (between 2015 and 2022).
  • Launched in November 2016, PMAY-G was designed to support ‘Housing for All by 2022 by building 2.95 crore houses for rural poor across the country by 2022.

Need for PMAY
Over the past few decades, the significant rise in Indian population and income has resulted in higher housing demands. Despite the government’s efforts to meet the rising demand by introducing numerous public housing programmes (e.g., Jawaharlal Nehru National Urban Renewal Mission, 2005), there has been a shortage in housing. As per the Socio Economic and Caste Census (SECC), 2011, ~40 million Indian households were estimated as homeless or living in inadequate or congested housing or without basic facilities and with shortage of housing. Further, between 2012 and 2019, the average real housing prices increased faster than GDP per capita, hampering housing affordability, especially for low-income households.

To ensure affordable housing is available to all, in 2015, the government set a target to build affordable houses under the Pradhan Mantri Awas Yojana (PMJAY) and achieve ‘housing for all’ by 2022.

The government also integrated other central and state/UT schemes for the overall welfare of households by providing LPG connections under the Pradhan Mantri Ujjwala Scheme; electricity connections and safe drinking water access under the Jal Jeevan Mission; support unskilled labour wages under Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), etc.

Therefore, the government’s continuous efforts are driving the overall development of the scheme and helping households avail affordable housing with ease.

Key Beneficiaries and Initiatives
Key beneficiaries under the PMAY initiative are as follows:



Economically Weaker Sections (EWS)

  • Includes people with annual household income under Rs. 3 lakh (US$ 3.99 thousand)

Low-Income Groups (LIG)

  • Comprises people with annual household income between Rs. 3 lakh (US$ 3.99 thousand) and Rs. 6 lakh (US$ 7.99 thousand)

Middle-Income Groups (MIG)

  • MIG I: People with annual household income under Rs. 12 lakh (US$ 15.98 thousand)
  • MIG II: People with annual household between Rs. 12 lakh (US$ 15.98 thousand) and Rs. 18 lakh (US$ 23.97 thousand)


  • Includes candidates who qualify for this scheme as per the criteria required by the SECC. For example, scheduled castes (SC) and scheduled tribes (ST); minorities and non-SC/ST people living below the poverty line; next of kin and widows of paramilitary forces; freed bonded labourers; ex-servicemen and widows; and those killed in action and those on a retirement plan.

Key initiatives

Key initiatives under PMAY-U and PMAY-G are as follows:

  1. Pradhan Mantri Awas Yojana-Urban (PMAY-U)

The following three key schemes under PMAY-U are:

Key Schemes



Credit Linked Subsidy Scheme (CLSS)

Create affordable housing for EWS and LIG

A loan of up to Rs. 9 lakh (US$ 11.94 thousand) at 4% discount rate or a loan of up to Rs. 12 lakh (US$ 15.92 thousand) at 3% discount rate

Affordable Housing Projects (AHP/PDD)

Collaborate with a private or public developer to develop affordable housing systems

Rs. 2.50 lakh (US$ 3.32 thousand)

Beneficiary-Led Construction (BLC)

Grant loans to individuals under EWS to build a house

Rs. 2.50 lakh (US$ 3.32 thousand)


  • To benefit 2.5 lakh middle-income families in FY21, in May 2020, the government extended CLSS for MIG under PMAY-U, leading to an investment of >Rs. 70,000 crore (US$ 9.32 billion) in the housing sector.


  1. Pradhan Mantri Awas Yojana Gramin (Pradhan Mantri Awas Yojana Rural)
  • Under this scheme, each beneficiary living in plain areas will receive a 100% grant of Rs. 1.20 lakh (US$ 1.60 thousand), while each beneficiary located in hilly states, North Eastern states, Jammu & Kashmir and Ladakh will receive a 100% grant of Rs. 1.30 lakh (US$ 1.73 thousand).
  • In January 2021, under the Pradhan Mantri Awas Yojana, the government authorised construction of >1.68 lakh (168,000) houses in urban areas, bringing the total number of approved houses to 1.1 crore (11 million).
  • In January 2021, under the PMAY-G, Prime Minister Mr. Narendra Modi announced to provide financial assistance worth Rs. 2,691 crore (US$ 358.31 million) to 6.1 lakh beneficiaries in Uttar Pradesh.
  • As of April 2021, 1.37 crore houses have been built across the country under the scheme.

Progress of PMAY:

  1. Pradhan Mantri Awas Yojana-Urban (PMAY-U)

Construction of Houses

As of March, 2021


112.24 lakh


112.52 lakh


80.20 lakh


48.02 lakh

Investment Approved

Rs. 7.35 lakh crore (US$ 98.28 billion)


  1. Pradhan Mantri Awas Yojana Gramin (Pradhan Mantri Awas Yojana Rural)

Construction of Houses

As of April, 2021

MoRD Target








Fund transferred

Rs. 196,702.88 crore (US$ 26.30 billion)


Budget allocation & highlights

In the Union Budget 2021-22, the government allocated funds worth Rs. 8,000 crore (US$ 1.07 billion) to the Pradhan Mantri Awas Yojana - Urban (PMAY-U). From the total amount, the government reserved funds for the following initiatives:

Pradhan Mantri Awas Yojana - Urban (PMAY-U)

Budget 2021-2022, Rs. crore

Interest Payment against loan raised through EBR

4,720 (US$ 628.47 million)

Central assistance to states/UTs

1,542 (US$ 205.32 million)


1,000 (US$ 133.15 million)


0.1 (US$ 13.31 thousand)


738 (US$ 98.26 million)


8,000 (US$ 1.07 billion)


Key developments:

  • To increase the number of green buildings in affordable housing projects in India, the Green Rating for Integrated Habitat Assessment (GRIHA) Council, in March 2021, collaborated with Housing Finance Limited (IFL-HFL) to establish an ecosystem for green affordable housing projects.
  • To boost the affordable housing and rental housing segment, in the Union Budget 2021-22, the government extended the duration for extra deductions of Rs. 1.5 lakh (US$ 2 thousand) available for loans until March 31, 2022.
    • Tax deductions will go a long way in allowing developers to accomplish ongoing projects (affordable housing) and thereby, ease the liquidity crunch.
    • Further, one-year extension of tax deductions for affordable housing developments will help bring in new supply in the sector.
  • In February 2021, the Delhi Development Authority (DDA) announced plans to complete 7,500 houses for EWS under the PMAY-U by December 2021. This land-owning agency is planning to redevelop 376 clusters through a public-private partnership (PPP).
  • In January 2021, the Greater Noida Industrial Development Authority (GNIDA) announced to build 10,000 affordable homes for EWS and LIG. These houses will be constructed through a public-private partnership (PPP) model under the PMAY.
  • In December 2020, Fincare Small Finance Bank (FSFB) signed a memorandum of understanding (MoU) with the National Housing Bank to promote credit linked subsidies for qualifying borrowers.

The Road Ahead…
The Pradhan Mantri Awas Yojana has made significant progress since its launch in 2015. The Economic Survey 2020-21 indicated that the Indian government is getting closer to achieve its housing goals for all by 2022; further highlighted that 90% urban households and ~78% rural households possess homes that were constructed with simple building materials (e.g., wood, cement, metals, bricks, concrete, etc.).

The scheme has had a tremendous influence on other sectors of the economy, resulting in a multiplier effect in terms of generating employment in ~30 occupational categories (e.g., plumbing, masonry, carpentry, etc.). In addition, PMAY-U’s forward and backward linkages created employment for ~1.65 million people in 2020.

The government is also undertaking several other initiatives to support the affordable housing mission. For example, in May 2020, an affordable rental housing complexes (ARHCs) scheme (a sub-scheme under PMAY) was launched to provide ease of living to urban migrants/poor from EWS/LIG groups, such as labours, urban poor (street seller, rickshaw puller, other service providers, etc.), factory workers and educational/ healthcare workers.

To further develop the mission, in the budgeted outlay for capital expenditure in FY22, the government increased the capex by 34.5% YoY, with a particular focus on railways, highways, urban transportation, electricity, telecom, textiles and affordable housing. With the government’s continuous effort to establish affordable houses, along with integrating PMAY with other schemes (e.g., Jal Jeevan Mission, MGNREGS, etc.), India is progressing well on its path to enable ‘affordable housing for all’.