Urban

How the PM's Affordable Housing Scheme Went From Promising to Dysfunctional

The Pradhan Mantri Awas Yojana was once a promising decentralised scheme expected to solve India’s ‘housing shortage’, but since a majority of the urban slum households did not own land, they were automatically excluded from availing its benefits.

This is the first article of a four-part series on India’s urban schemes.

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.

Also read: How Feasible Are Visions of Congress and BJP for India’s Urbanisation?

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.

Also read: What the Last Five Years of Urban Policies Reveal About Our Cities

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.

An opportunity lost?

This is not the first time that a housing project is being implemented by the central government. Similar attempts were made by past governments as well. From Indira Awas Yojana (IAY) launched in 1990 to Rajiv Awas Yojana (RAY) in 2009 and a host of different housing schemes in between this period, attempts were made by successive governments to improve basic services, provide tenure security, upgrade existing infrastructure and create new housing units with a vision of creating a ‘Slum Free India’.

Although similar in vision, the PMAY(U) adopted a much more decentralised system in financing the construction and development of housing. This generated a hope that the PMAY(U) would overcome the challenges of previous schemes and would introduce new ways of providing ‘affordable houses’.

However, data depicts that PMAY(U) has performed sluggishly across the four years of implementation. It has failed to take practical challenges into account. As a YUVA and IHF report ‘Housing Needs of the Urban Poor in Nagpur‘ discovered, ‘there is a glaring gap between people’s aspirations, their capabilities and state imagination of housing provision’. Therefore, there is a mismatch between the people’s needs and what the housing mission has to offer.

The other issue is that in spite of the availability of flexible and low-interest housing loans, people are not coming forward for housing projects due to the high costs of land, particularly in urban areas. In addition, as ownership of land is a prerequisite for availing two of the four options (BLC and CLSS), a majority of the urban slum households that do not own land are automatically excluded from availing the benefits under the scheme. According to the report, in Nagpur only 8.8% of the surveyed households had property tax receipts, thereby making access to upgradation under the PMAY an impossibility.

Moreover, the report revealed that ‘to access certain verticals (BLC and CLSS) of the PMAY it is essential to possess a host of identity documents. While the Aadhaar card is a document which almost all individuals possess, there is a variance in the possession of other required documents to access housing.’

Also read: India’s Unplanned Urbanisation Is Far from ‘Smart’

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.

Recommendations for the way forward

As the election season proceeds and tall claims of providing Housing for All by 2022 are again inserted in party manifestos, it is imperative that political parties learn from their previous experiences and look beyond just creating new infrastructure under the garb of housing, and people drive advocacy measures for inclusive habitats with a knowledge-based approach.

A civil society memorandum submitted to MoHUA in 2018 highlighted suggestions for making the Mission effective for ‘all’. Some of the major points are presented below:

Upgrade existing slums as a financially viable model 

The upgrading  of existing slums by providing them with basic amenities and improving physical and social infrastructure such as roads, sewage and drainage systems, parks, waste disposal and management, hospitals, schools, etc. is critical as it would be the most economically viable option to improve the living conditions of over one crore households living in slums. This will also avoid their displacement to far-off locations.

Encourage and promote the provision of land tenure rights among state governments 

State governments should promote the provision of land tenure rights. In Nagpur, select cities in Odisha, Guwahati and Vishakhapatnam, the state government has provided or is in the process of providing land tenure rights or pattas to individuals living in slums.

The ownership of land in these areas has led to higher human development indices and better quality of life for the poor (Durand-Lasserve & Selod, 2007). People who are safe from eviction, with a sense of long-term stability – whether they own the land or not – are much more likely to invest in their housing or community.

Therefore, different types of tenure should be explored so that the beneficiaries can take advantage of the BLC and CLSS verticals as well, since these require the ownership of land. Most importantly tenure rights should preferably be given in the name of the women in the family to promote women’s empowerment.

Also Read: Does Data Tell Us the Truth About Urban Informal Settlements?

Enhance people’s participation and implementation of the 74th Amendment Act 

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.

Strengthen BLC by upgrading the overall settlement 

Households across the country are demanding support for self-construction and overall upgradation of the settlement. A fifth vertical for in-situ upgradation should be detailed outlining BLC with upgradation and provision of basic services such as water supply, sanitation, sewage, various social amenities etc. Along with this, BLC should be allowed for individual households. Currently, the scheme guidelines prohibit individual applications for BLC.

A man rides his cycle rickshaw past newly-constructed residential buildings on the outskirts of Kolkata December 29, 2010. Credit: Reuters/Rupak De Chowdhuri

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.

Also read: When it Comes to Urban Planning, India Suffers From a Poverty of Imagination

Similarly, as there are multiple land-owing agencies in the country, true and complete convergence will be realised when there is a coordination between state governments and central authorities – railways, defence, forests and ports – to use their resources and reach the Housing For All goal together

Monitor qualitative aspects of new housing construction, not just the number of units constructed 

The current data available on the scheme is limited to the number of constructed and under-construction projects in different states. The government must ensure the monitoring of qualitative indicators of housing such as material quality assessment, adequacy, accessibility, etc. In addition, there is a need for real-time data on location, vertical, targeted population and funding, which will enable transparency and accountability. It will also ensure cooperation and participation from the wider civil society.

Develop a shift in perspective 

Lastly, the government’s perspective of seeing ‘land locked under slums’ as an unused asset that needs to be ‘monetised’ needs to shift towards ‘land availability to provide housing’, else the real beneficiaries will be builders who buy land at concessional prices under the scheme and use a major chunk of the land to build houses for middle and high-income groups and make gigantic profits under the garb of these schemes.

It is imperative that we find more viable and creative solutions that address specific local needs to reduce the scale of the housing crisis in the country, strengthen monitoring mechanisms and encourage the participation of citizens in decisions considering their housing.

Shaguna Kanwar works with Youth for Unity and Voluntary Action (YUVA) as a Project Coordinator – National Programmes. Among other things, she works on data analyses of parliamentary sessions and advocacy with MPs on issues of urban poverty and informal labour.

YUVA has conducted an in-depth analysis of the questions raised in the Indian parliament during the Budget Session 2018 and you can read the complete report here. The article highlights the current state of each scheme in brief.

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