Govt. improves carpet area for middle-class apartments qualifying for interest subsidy CLSS

The govt. has been increased the carpet area of the houses eligible for interest subsidy under the Credit Linked Subsidy Scheme (CLSS) for the Middle-Income Group (MIG) under Pradhan Mantri Awas Yojana (Urban) in the major decision of to bolster affordable housing & construction leading to increased economic activity.

According to the updated requirements, the Ministry of Housing or Urban Affairs has increased to 160 sq meters or 1,722 sq ft for MIG — I and 200 sq meters or 2,153 sq ft for category MIG-II the carpet region of houses eligible for subsidy under CLSS.


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Previously, the carpet area for these houses in the categories MIG I or MIG II was set at 120 sqm or 1,291 sqm and 150 sqm or 1,614 sq ft.

The announcement is another major step in improving the construction industry which is leading to increased supply-side operation. This program is expected to result in increased tax revenue which would lead to demand-side change.

Such reforms will now allow more MIG customers to apply for the subsidy and take advantage of the benefits offered under Pradhan Mantri Awas Yojana’s (Urban) ambitious flagship project.

In addition to increasing the number of benefactors, the rise in the carpet area will improve the development activity and help move the housing sector forward.

The rise of MIG’s carpet area within CLSS to 200 square meters may prove to be a big push for urban housing in towns in Tier II and III. Its rise of carpet area for MIG under CLSS to 200 square meters may prove to be a huge push for urban housing in cities and towns of Tier II and III.

Under the new criteria, persons with annual household income from Rs 6 lakh to Rs 12 lakh will qualify for category MIG I, while MIG II for income over Rs 12 lakh would qualify for category Rs 18 lakh. Interest Subsidy for MIG I and II will be 4% and 3% for the full 20-year loan term, respectively.

The amount of qualified housing loan for subsidy interest would be Rs 9 lakh and 12 lakh for groups MIG I and MIG II, respectively. Loan quantity beyond that limit will be at rates that are not subsidized.


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It also augurs well with the recent decisions by the Reserve Bank of India to amend housing loan limits for eligibility for priority sector lending (PSL) where it was agreed to revise housing loan limits for PSL eligibility from current Rs 28 lakh to Rs 35 lakh in metropolitan centers. Given that the total cost of the residential unit in the Metropolitan Center as well as in other centers does not surpass Rs 45 lakh & Rs 30 lakh.

The growing construction activity in the housing/apartment sector is project to have a cascading effect on key businesses such as cement, steel, machinery, and other related industries. More development activities in urban areas will create more jobs in both skilled and unskilled workers.

CLSS scope was expanded to group MIG with cabinet approval in February 2017. It scheme, which was initially approved for operation for 2017, has been extended until March 2019. In the last couple of quarters, the CLSS for the MIG scheme has gained momentum and the off-take has picked up considerably. As of 11/06/2018, 35,204 beneficiaries belonging to the group MIG have disbursed a sum of Rs.736.79 crore, the ministry said in a release.


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