The Government of India, last year, launched its ambitious flagship schemes, Smart Cities Mission, AMRUT (Atal Mission for Rejuvenation and Urban Transformation), and Housing For All aka PMAY (Pradhan Mantri Awas Yojana). If you have been looking forward to these projects, then the following information will be useful for you.
- Smart Cities Mission: It’s an urban renewal and retrofitting initiative by GOI, which plans to develop 100 smart cities all over India. The cities have been selected on the basis of nominations filed by their respective state and union territory governments.
- Housing for all Scheme: This project was initiated with the intention of providing housing for people belonging to the poorer section of the society. It aims at providing 20 million houses to EWS (economically weaker section) and LIG (lower income group) category of people, by 2022.
- AMRUT: This initiative was launched keeping urban infrastructure in mind, and to enhance the water supplies and sewerage system of urban cities.
Reduction of EMI under housing for all scheme
People with an annual income ranging from Rs.60,000 to Rs.1.2 lakh will be majorly benefitted by this scheme. This plan also aims to provide Home Loans at an interest rate of 6.5%; the current market interest rate for housing loans is 10.5%. Needless to say, this will drastically reduce your monthly EMIs if you fall in that income bracket.
Let’s consider the following example for a better understanding of the scheme.
Let’s assume, a person takes a loan of Rs.6 lakh at the current market rate (10.5%) for a tenure of 15 years. Now, they will be shelling out an amount of Rs.6,632 per month. Whereas, if a person takes loan under PMAY, they’ll will be paying an EMI of Rs. 4050 a month. Therefore, this scheme will allow the borrower to save approximately Rs.2,000 per month. With this initiative, buying a house can become a reality now, even for people who fall under the low-income group.
One of the major benefits of PMAY is its credit-linked subsidy scheme. Apart from the already mentioned subsidised EMI, there are some other points to keep in mind:
- If you want to enjoy the subsidised rate of interest, your Home Loan should not exceed Rs.6 lakh. If you’re unsure of your repayment capability, you can check your Home Loan eligibility with the lender.
- Suppose, if someone plans to take a loan above Rs.6 lakh, then they have to shell out EMIs at the current rate of interest for Home Loans (10.5%).
- This loan is not just intended to buy property under PMAY. In fact, people belonging to EWS or LIG category can avail it to renovate their existing houses too.
Most Related News : First list of 20 Smart Cities in India announced by PM Modi Govt
The potential of smart cities scheme
Smart cities will have all contemporary amenities like 24×7 electricity, internet, gas, and water. They will be known for their extensive use of technology to make life easier for the residents. These cities will also be equipped with smart homes, better medical facilities, improved transportation, wifi connectivity, and responsible resource management.
Why invest in Smart Cities Projects in India ?
If you’re planning to invest in real estate in India, then you can expect to gain high returns from Smart Cities projects. Some of the cities like Pune and Ahmedabad are about to witness a massive price appreciation in a few years, thanks to the Smart Cities mission. Currently, the property prices in these cities are reasonable, but they are expected to skyrocket once the project begins to take shape. So, if you’re investing with a long-term plan, then you’re in for a win-win situation.
Kakkanad, a district in Cochin, has seen massive land deals and high-rise apartments come up within a few years. This led to a surge in property prices. And once it’s converted to a Smart City, the properties in this city will witness a steady price appreciation. Considering all these factors, a price rise of 30-40% is expected in the next three to four years.
Alleviating poverty from a grassroots level and providing top-notch infrastructure in urban areas should be the aim of every government. The three initiatives launched by the government are designed to do just that. If you’re planning to invest in a property in any one of these smart cities, now is the right time to do so. Additionally, the GOI plans to make housing for all affordable by relaxing Home Loan terms and conditions and making Home Loan prepayment fees negligible. This should further encourage people to go property shopping in their favourite smart city.