Access to affordable housing is crucial for achieving a number of other policy objectives, including poverty reduction, equality of opportunity and more inclusive and sustainable growth.

The first NDA government of Prime Minister Narendra Modi within six months of its office promised that by 2022 – India’s 75th year of independence – every Indian would have a brick and cement house with gas, water, electricity, and a toilet.

The scheme at the foundation of this promise is the Pradhan Mantri Awas Yojana, which provides subsidies for building low-cost houses in both rural and urban areas. The PMAY covers the mid-income group, along with the primary audience of the economically weaker sections (EWS) and low-income groups (LIG).  

Through the scheme, the government aims to subsidize the construction of 2.95 crore rural houses and 1.2 urban houses by 2022.

The story as of now

After a slow start in the initial years, the scheme has gained momentum in the past couple of years. 

By January 2018, only 8.5 percent of the planned houses had been completed. But, as the government increased focus on the completion of sanctioned houses, the rate of completion increased to 31 per-cent by June 2019.

Status of PMAY (U) (as of 15th February 2021)
Source: PMAY (Urban) website

Till Feb 2021, under the PMAY scheme for urban centers, out of the total 1.12 crores affordable houses proposed by the government, sanctions were given to nearly 98% of these projects. But the total number of projects completed is only 37.8%.

This number is slightly better for the PMAY scheme designed for rural India.

Out of the proposed 2.22 houses under the PMAY-Gramin, where the sanctioned projects stand only at 85% but the total projects completed is at 58.25%.

As per the experience of project execution under PMAY, the house completion takes an average of two or three years. According to this in order to have “Housing for All” by 2022, the government had to finish sanctioning all homes by 2020, but now we have entered 2021.

The urban scheme of PMAY

PMAY (Urban) is implemented by the Ministry of Housing and Urban Affairs.

The progress seen in the states with the highest number of projects sanctioned (Maharashtra: 12.94 lakhs; Andhra Pradesh: 20.27 lakhs; U.P.:17.70 lakhs) is quite alarming. For Andhra Pradesh (which has the highest projects sanctioned: 20,27,271), the number of houses constructed is at 17.65%.

The scheme offers cash subsidies of Rs 1.3 lakh to Rs 2.6 lakh to eligible beneficiaries in urban areas through four sub-schemes, namely:

  • Beneficiary-led housing construction (BLC): Those who want to construct their own homes on private land in urban areas can apply for subsidies.
  • Affordable housing by the government (AHP): In housing projects built on government land, eligible first-time homebuyers can avail of a subsidy of Rs 2.5 lakh per unit.
  • In-situ slum rehabilitation (ISR): Private builders can take up a slum redevelopment project and avail of PMAY subsidies for each housing unit.
  • Credit-linked subsidy scheme (CLSS): First-time urban home buyers with an annual household income of less than Rs 18 lakh per year can apply for subsidies after their home loan application is approved.
Source: PMAY (Urban) website

The data clearly indicates that the most popular scheme of the PMAY (Urban) is the Beneficiary-led housing construction, whereas the least popular being the In-situ slum rehabilitation. Despite the burgeoning slums in metropolitan cities, the latter scheme has not been popular among builders.

The high demand for BLC, especially in small cities and towns, is because of the comparative flexibility it offers to beneficiaries to construct stand-alone houses on their own plot. 

The rural scheme of PMAY

Pradhan Mantri Awas Yojana (Rural)

report by Accountability Initiative at the Centre for Policy Research notes that the construction of rural houses is taking much longer than the 12 months prescribed by the scheme’s guidelines. Thirty-five percent of the houses were not complete even after two years of being sanctioned.

PMAY (Rural) may be effective for landowners without pucca houses, but most landless beneficiaries have been at a major disadvantage. State governments have not been able to free up adequate public land for the landless. 

The core challenges

The biggest challenge is the availability of land. The CRISIL report estimates at least 30,000 acres of urban land is needed to build 1 crore houses. Finding such land is “next to impossible” in metro cities.

That explains why most public-private housing projects under PMAY are located on the outskirts of cities, far away from most people’s places of work.

The Economic Survey 2020, states that the decline in household investment in dwellings, other buildings, and structures, since a six-year span over 2011-12 to 2017-18 is a reflection of slower growth in the purchase of houses by households. The ongoing headwinds in India’s real estate sector i.e. demand slowdown, high land prices, rising cost pressures, expensive capital, difficult regulatory scenario and wafer-thin margins in the affordable housing segment, will hold back private developer’s participation.

According to the 2011 Census, 11.09 million houses in urban areas were lying vacant. One should work towards developing a framework to integrate a part of this under the PMAY (Urban). This would save time, money, resources and help in achieving the goal of “Housing for All”.

Inadequate access to formal sources of finance for the rural population has been an issue in the rural housing sector. Lack of proper documentation/ steady source of income for rural population has been a hindrance in securing formal finance.

There is a continuous tussle for land for agriculture, agro-based industries, and housing in the rural areas, which is a severe constraint to meet the housing demands of the rural population. 

With more delay, this number would be on a continual rise and with all the complex challenges, the “housing for all” will still remain a distant dream.

PPIN Staff

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