Term Of The Day: Middle Income Group
Middle income group is a group whose income falls in the middle of the range of the population.
PropTiger Explains Middle Income Group
Classifying families such as Low Income Group, Middle Income Group and High Income Group helps the government to estimate the type of homes (Classified according to cost, size, amenities, tenure and location) that they would demand. The government, of course, takes other parameters into account too. The size of the family, age demographics, and whether the family lives in a Tier-1, Tier-2 or Tier-3 city matters too influences the government's policy norms. For example, a middle income family would be able to afford a home of larger specifications in a small city, but not in a large city.
The government thinks that intervention is not needed to provide home for High Income Groups. But, middle income and lower income families typically spend more on their home than on anything else. Their home is also their most valuable asset. Governments across the world have many schemes to provide homes to middle income and lower income families. The Narendra Modi government, for instance, plans to increase the supply of affordable urban dwelling units. The government has promised homes for all by 2022.
According to the guidelines of the MHUPA, Government of India, Middle Income Group area is up to a maximum super built area of 1200 sq ft. The cost should not exceed five times the gross annual income of the family. The Equated Monthly Installment (EMI) or rent should not exceed 40% of the gross monthly income. In Mumbai, in 2014, the monthly family income for Middle Income Groups was Rs 40,001- 70,000, and the ideal cost of an affordable home, Rs 19.2- 33.6 lakhs.
According to the finance ministry's guidelines, apartments with dwelling units of 700 sq ft are classified as middle-income group (MIG) homes. Real estate developers who build apartment complexes for MIG families would be permitted to build 30 per cent more than what is currently allowed. This means that if the current FSI is 1, for developers who plan to build dwelling units for MIG families, the FSI would be 1.3.
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