At the launch of the Pradhan Mantri Awas Yojana (Urban) [PMAY(U)] in June 2015, Prime Minister Narendra Modi said that a house is not just four walls and a physical structure but is also a means for social transformation as it provides aspirations for a better life.
He added that by 2022, when the nation celebrates its 75th year of Independence, the government will provide every houseless family with the means to own a house.
Amidst these promises, the PMAY(U) was launched as a unique scheme to solve India’s ‘housing shortage’ by offering four different housing options (verticals) for those belonging to the economically weaker section (EWS) and low-income groups (LIG). The scheme guidelines were amended in 2017 to include the middle-income group (MIG) as well.
The four verticals include:
- In-Situ Slum Redevelopment (ISSR) which means rehabilitation of slums by building houses through private participation for the eligible slum dwellers on the land under the slums.
- Affordable Housing in Partnership (AHP) with the extension of central assistance of INR 1,50,000 for affordable housing projects done by states, either through its agencies or in partnership with the private sector for the EWS.
- Beneficiary-led Individual House Construction/Enhancement (BLC) with the extension of direct central assistance of INR 1,50,000 to families belonging to EWS categories to either construct a new house or enhance the existing house on their own.
- Credit-Linked Subsidy (CLS), the provision of loans ranging from INR 6–12 lakh at lower rates of interest, to weaker and mid-income sections for the construction of new homes or renovation of existing homes.
Status so far: houses sanctioned and completed
In 2012, the Technical Group on Urban Housing Shortage (TG-12), constituted by the erstwhile ministry of housing and urban poverty alleviation (MoHUPA) stated that there was a shortage of 1.88 crore housing units over the period 2012–2017. Of these, the EWS alone accounts for 1.06 crore units or 56% of the total shortage.
The LIGs require 74.1 lakh housing units or 39.4% whereas middle and above income groups have a deficit of 8.2 lakhs or 4.4% of the total. The gap is mostly in the affordable sector, i.e., EWS and LIG segments.
The PMAY (U) initially set up a target of constructing 2 crore houses by 2022, which was later reduced to 1 crore (according to the demand survey conducted in different states). However, only 65 lakh houses had been sanctioned by the MoHUA by December 2018. The sanctioning of these 65 lakh houses is a recent development. Between 2015 and 2017, 32 lakh houses were sanctioned.
Of the total houses sanctioned, construction work had started in 54% (35,92,656) houses till December 2018. The construction of 12.5 lakh houses had been completed. Approximately 3.5 lakh houses were completed each year between 2014 and 2017. A sharp rise was seen between 2017 and 2019, adding almost 70% more houses.
The year-wise details of houses constructed are depicted in Graph 1. This includes the subsumed projects of the erstwhile housing scheme under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) implemented by the UPA government.
The data indicates, therefore, that four years into implementation there has been only a 12% completion rate against the target of building one crore houses, and 6% against the original target of two crore houses.
Houses sanctioned across verticals and states
Of the four verticals of the mission, the maximum number of houses (55%) were sanctioned under the BLC component (see Graph 2), which can be availed by fulfilling terms and conditions, including presenting proof of ownership of land and the means to bear the full cost of construction after availing government subsidy. Maximum houses have been sanctioned in Uttar Pradesh (17%) followed by Madhya Pradesh, Tamil Nadu and Andhra Pradesh (12% each) (see Table 1).
The AHP vertical has the second highest number of houses sanctioned (33%). The sale of these houses will eventually depend on the price of the housing unit and the buying capacity of the buyers. Till December 2018, the highest number of houses have been sanctioned in Andhra Pradesh, followed by Maharashtra, Gujarat and Karnataka. These four states account for 60% of the houses sanctioned under this component.
Table 1 Houses sanctioned under each component of PMAY(U), state-wise
The percentage share of the other two components, ISSR and CLS, is significantly low—these two components combined make only 12% share of the total houses sanctioned.
Under the ISSR vertical, state governments are considering only notified slums to be redeveloped. According to the Census of India, out of the total slums households, 36.1% are notified. Till December 2018, only 4,52,137 houses have been sanctioned under the ISSR component, out of which 49% of houses are sanctioned in Maharashtra alone, making its share the largest among all states.
Other states where a significant number of houses have been sanctioned under this component, include Gujarat, Karnataka and Rajasthan (see Table 1). Under CLS, certificate of ownership of land in addition to the creditworthiness of the beneficiary in the eyes of the lending bank is a prerequisite.
The total share of this component remains the lowest among the four components. CLSS could attract only 5% of the total demand of houses sanctioned. Gujarat, Maharashtra, Uttar Pradesh and Madhya Pradesh were among the top performing states under this component. These four states together account for 70% of the total demand under this component (see Table 1).
Scheme funds sanctioned and released
A total of Rs 100,271.38 crore has been sanctioned under the scheme, although only 33% was released over the last four years. Of the amount released, 62% was reported to be utilised by the states. In comparison to the total amount sanctioned, the utilisation rate is only 21%. Graph 3 shows the annual comparison between central assistance sanctioned and released.
Another major drawback of the scheme, especially the AHP component, is that in the bigger metros, it appears that affordable housing projects can only be built on the outskirts of the city, far away from people’s workplaces. If location is not taken into account, there will be very few takers for these houses as some of the biggest factors influencing people’s decision to purchase a home are based on travel time to workplace and affordability.
For example, in dense metropolises such as Mumbai and Delhi, where real estate is notoriously expensive, affordable housing projects under the scheme seem to be restricted to suburbs and satellite towns far from the city. Can PMAY(U) then really serve as a solution for metro cities?
An under construction slum relocation site for Pradhan Mantri Awas Yojana at Bhuri Tekri in Indore. Credit: Special Arrangement
Although affordable housing has been given infrastructure status (easing of governmental norms to promote the growth of infrastructural sector) in the National Budget of 2017, which gives housing developers additional benefits to boost their interest in these projects, the delivery of house construction has not moved at a fast pace as expected from these reforms. For a common man, the timely delivery of the house still remains a distant dream.
People’s participation in making an informed choice is pivotal, and under components such as ISSR it should be extended to ascertaining the design and size of the house as well. The participation of communities should be promoted by strengthening the implementation of the 74th Constitutional Amendment Act.
Explore alternative options such as social rental housing
Although the emphasis was on the construction of houses under PMAY(U), other potential housing solutions such as rental housing have not been included. In today’s times, with high rates of migration to urban areas for work, the concept of large-scale rental housing equipped with basic amenities can come to the rescue. Additionally, this also suits the income volatility and high-risk profile of low-income households working in the informal sector.
A man rides his cycle rickshaw past newly-constructed residential buildings on the outskirts of Kolkata December 29, 2010. Credit: Reuters/Rupak De Chowdhuri
Build greater synchronisation between MoHUA and other central ministries
Many urban development schemes such as Swachh Bharat Mission and Atal Mission for Rejuvenation and Urban Transformation (AMRUT) are not being implemented in majority slums as they are non-notified or untenable, although the primary goal of these schemes is to provide basic services and improve living conditions in slums. Therefore, urban schemes should work in synergy with each other.