PMAY: How ambitious and effective is the ‘Housing for All scheme’?


The current population of our country is at 1.37 billion and according to a UN report, it is expected to reach an alarmingly high of 1.5 billion by 2030 that will eventually surpass China in its population. This rapid urbanization gives growth to the infrastructure and housing market but at the same time, it also calls for affordability. It is estimated that currently, India faces a shortage for 20 million homes along with water scarcity, lack of waste disposal and proper transport infrastructure. Smart city mission was launched with the objective of providing a more livable infrastructure and at the same a progressive city that diminishes the problems of water scarcity, waste disposal, transport in an attempt it makes it a wholistic city. For the housing shortage, Pradhan Mantri Awas Yojana (PMAY) was launched that was there to tackle housing problems in both, urban and rural sector. Under this scheme, 20 million houses are expected to be built by 2022, but the number keeps revising according to the demand of the country.

PMAY, in order to address the problem of affordability in urban areas, has 4 verticals to the scheme. The first component is in-situ slum redevelopment which allows private developers to build houses under the scheme given that the plot of land that they have to built on has 35% houses reserved under the ‘Housing for All’ scheme. Also upon fulfillment of certain conditions and completion of the houses they can avail subsidies for each house built. The second component is to acquire subsidy to build a house on private land. The third component is the credit-linked subsidy which was looked over by the National Housing Bank but now will be managed by Reserve Bank of India. According to credit-linked subsidy scheme, the interest subsidy is given on the basis of income of the beneficiary along with the area of the house that is to be built. Economically Weaker Sections and Low-Income Groups(LIG)who are seeking for housing loans from financial institutions and banks will be eligible for an interest subsidy of 6.5% for a period of 20 years or for the tenure of the loans, whichever is lower.

LIG according to the scheme are beneficiaries that belong to the income group of 3-6 lakhs with a carpet area from 30sqmt-60sqmt. Middle-income group(MIG) are the beneficiaries that belong to the income group of 9-12 lakhs and a carpet area of 120-150 sqmt. The interest subsidy benefit on Home Loans of around Rs.2.60 lakh has been extended by the central government to March 2019. The fourth component is affordable housing units built by the government on its land or land owned by local urban bodies.

PMAY in the rural areas is to address the homelessness and the dilapidated condition of houses. The beneficiaries are selected through an objective process with the help of the Gram Sabha and data from the Socio-Economic and Caste Census. The government provides an assistance of Rs 1.20 lakhs in plain areas and Rs 1.30 lakhs in hilly areas to selected beneficiaries.

The scheme has now gained momentum and as of June, 30,90 lakh houses have been built under PMAY rural. The latest target is to build around 2.95 crore rural houses by 2022. Around 60 lakh new homes are expected to be completed by June 2020, taking the total to 1.5 crore houses. The government is expected to deliver 70 lakh houses each year between 2020 and 2022. The government had aimed to complete 1 crore urban houses by March 2019 but had approved only 72,65,763 houses for construction under the PMAY scheme as of January 31. It is not the lack of funds in most cases but the delay in the approval process that hampers the process. According to reports, it takes four to six months to get a project approved under the public-private model. The second problem is the availability of affordable housing projects within city limits, especially in large metro cities like Mumbai. Most of the affordable projects have come up in the outskirts of the city, which are far from workplaces. Maybe the criteria of what is considered to be affordable needs to be amended with respect to metro cities as the cost of land are extremely high. Forum for people’s collective efforts, a non-profit organization for protecting home-buyers in a recent meeting with Nirmala Sitharaman suggested that upper limit of 45 lakhs to be amended as the definition of what could be termed affordable and the area restriction according to that changes from tier-I city to tier-II and tier-III city.

Of the 72,65,763 housing units approved, only 14,42,796 were completed, while 37,54,871 had been grounded for construction. The scheme has been largely successful, especially the rural component, due to sufficient allocation of funds by the government. The PMAY-Rural has been allotted Rs 19,000 crore for 2019-20 in the Union Budget 2019, a slight dip from Rs 19,900 crore in the previous year. On the other hand, the PMAY-Urban has been allocated Rs 6,853 crore for 2019-20, a tad more than Rs 6,505 allotted in 2018-19. The government has done a commendable job by converging the Pradhan Mantri Awas Yojana with other schemes that provide electricity, toilet and LPG gas connections to achieve the idea of holistic living and improving the livability index.

Even though the implementation of PMAY has remained largely transparent and the progress has been satisfactory there is an absence of a tracking mechanism and a grievance redressal system. Both the systems were supposed to be part of the scheme from the start but are still to be implemented. With these key areas to improve upon, the government could definitely change the way us citizens are looking at the idea of urbanization and it not being attached to ideas of poverty, homelessness and unhealthy living.

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