Pradhan Mantri Awas Yojana sees Covid-led slowdown in urban areas, rural fares better

India’s flagship housing scheme, Pradhan Mantri Awas Yojana (PMAY), which aims at housing for all by 2022, is witnessing pandemic-induced hiccups with less than 50 per cent of the homes sanctioned being completed in the urban areas. The rural segment has fared better with a 65 per cent completion rate.

In the urban segment of the scheme (called PMAY-Urban or PMAYU), the disparity between homes sanctioned and completed is primarily due to the pandemic-led slowdown and income insecurities caused by job losses or reduced income, say developers. So far in FY22, less than 8 lakh homes have been completed; lesser than FY21 (14.56 lakh) and FY20 (8.40 lakh) numbers respectively.

As the Budget draws near, different developers call for enhancing outlay in metros – where urbanisation pace has picked pace – bringing back the credit linked subsidy schemes; and ensuring faster clearances to ensure completion of home construction.

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PMAY-Urban numbers

The PMAY-U scheme aims to provide permanent homes to the economically weaker sections and lower income families; and interest subsidy to mid-income groups.

Data from the Ministry and trade sources show PMAY-U, as on January 3, around 114.06 lakh homes have been already sanctioned by the government. But the number of actually completed homes is just 47 per cent of the sanctioned or the total or 53.42 lakh homes have been completed/delivered. Around 91.47 lakh homes have been grounded.

According to a response in the Lok Sabha in July 2021, the construction of a total of 45.7 lakh houses was complete under PMAY-U in the five-year period from 2016-17 to 2020-21. The scheme came into effect mid of 2015 onwards.

The project achievement sheet on the Ministry site says that there was a demand for 112.24 lakh homes. In terms of the financials, nearly ₹1,84,792 crore of central assistance has already been committed and ₹1,16,137 crore have been released. 

Anuj Puri, Chairman, ANAROCK Group, calls the progress “decent” and says, “PMAY must be made accessible to more people and there should be increased awareness.”

New construction technologies, which are adaptable, sustainable and low cost, can be used for creating large-scale affordable housing at rapid pace and reach out to a larger audience. Ministry data says 16 lakh homes have been constructed using “new technologies”.

“Alternately, the government can also try and remove the bottlenecks in property records. An important aspect of PMAY is interest subsidy on a home loan and the direct subsidy for individual house construction or enhancement. However, to avail these subsidies, title documents to the property are required. And therein lies the crux of the problem – our land and property records are not in the best of health,” he told BusinessLine.

PMAY – rural

The rural part of the scheme was supposed to achieve a target of 295 lakh homes. However, pandemic delayed completion, say sources.

In 2021, the Union Cabinet approved the extension of the Pradhan Mantri Awaas Yojana – Gramin (PMAY-G) till March 2024 (from March 2021), in order to achieve the total target of 2.95 crore rural houses. As on date, 170.30 lakh houses are have been completed that is 65 per cent of the total sanction 262.89 lakh units.

Budget wishlist

According to Niranjan Hiranandani, National Vice Chairman, NAREDCO – a self regulatory body under the aegis of the Union Ministry of Housing and Urban Affairs – PMAY as a scheme is progressing with additional outlay of ₹18,000 crore over and above ₹8,000 crore allocated in previous budget.

“We recommend the outlay to be enhanced up to ₹20,000 crore. The increase in allocation to PMAY scheme should be increased in the metro cities due to rapid urbanisation and job acceleration,” he said.

There is a large number of slum proliferation in metros which can be converted into affordable pucca houses under the PMAY scheme and extend subsidy benefits to a large number of homeowners. Hiranandani says extending PMAY-CLSS (credit link subsidy scheme) scheme for next three years up to March 2025 will give impetus to the affordable housing segment.

“Reintroduction of MIG -I \II under PMAY-CLSS will help cover a wide spectrum of middle-class home buyers accounts as the larger pie of the homebuyers segment,” he said, adding that Budget 2022 should provide tax benefits and incentives, enhanced subsidies, support for the PPP model and easy access to low cost funding to catalyze the growing innate demand for housing in wake of Covid.

PPPs in Affordable Rental Housing Complex

Realtors say there is a need for the government to expedite the affordable rental housing complex (ARHC) scheme under PMAY-U, launched in 2020. Under the ARHC scheme, government housing complexes lying vacant are to be converted into rental housing under PPP model and rented to urban migrants at concessional rates.

“Given that this buyer-class (EWS, LIG) was most impacted by the pandemic, many would have now deferred their home purchase decision. So, the best way to address their concerns would be if the government shifted gears of their Housing for All initiative and promote affordable rental housing under it,” Puri added.