By Arjun Kumar, Soumyadip Chattopadhyay*
The COVID-19 pandemic has foregrounded the crucial link between adequate housing, human settlements and peoples’ ability to lead a healthy life. The lockdown induced work from home scenario has also highlighted differential kinds of housing demand and usage. Of late, the emerging densification of Indian cities underscores the need for planned human settlements and sustainable housing in the future, as also highlighted in the recent economic survey through geo-spatial maps.
Following the pandemic outbreak and lessons learnt, while the housing industry as a whole showcases sight of recovery and the housing pricing going north, the issue of affordable housing for the poor and supply of social housing for the vulnerable requires special attention.
In India, about 63.8 per cent of the urban households had their own dwelling units, around 96 percent were living in pucca houses and average floor area of the dwelling unit was about 46 square meters (sqm) during 2018 (NSSO, 2019). The Technical Group on Urban Housing Shortage for the 12th Plan (TG-12), Ministry of Housing and Urban Affairs (MoHUA), estimated the urban housing shortage during 2012-2017 at 187.8 lakh, mostly (around 150 lakh) on account of congestion (Kumar, 2015).
The Pradhan Mantri Awas Yojana Urban (PMAY-U) – a flagship Mission of Government of India was launched in June 2015 to provide affordable housing for all by 2022. PMAY-U seeks to address the housing requirements of all sections of urban poor including homeless population, slum dwellers through four programme verticals.
Under the In-situ Slum Rehabilitation (ISSR) component, slums are redeveloped involving the private developers and slum community. The Affordable Housing in Partnership (AHP) component has the provision for reserving 35 percent of the houses within the project for the poor. The central government provides subsidies (Rs 1 lakh for ISSR and Rs. 1.5 lakh for AHP) coupled with other benefits like Floor Area Ratio (FAR) to incentivize the private developers. Poor households having legal land entitlement are eligible to receive a central government subsidy of Rs. 1.5 lakh under the Beneficiary-led individual house construction/enhancement (BLC) component.
The Credit Linked Subsidy Scheme (CLSS), a central sector scheme, categorizes the beneficiaries on the basis of income and housing units’ size. However, the States/UTs have the flexibility to redefine the annual income and house size criteria as per local needs. The CLSS-I includes economically weaker section (EWS) household with income upto Rs. 3 lakh and housing unit size of 30 sqm and lower income groups (LIG) household with income from Rs. 3-6 lakh and housing unit size of 60 sqm. Middle income groups (MIG) with MIG-I & MIG-II being categorized as having annual household income slabs of Rs. 6-12 lakh and Rs. 12-18 lakh respectively are covered under the CLSS-II vertical.
The central assistance involved in the mission verticals per house are- highest for CLSS (upto Rs. 2.67 lakh), followed by BLC (Rs. 1.5 Lakh), AHP (Rs. 1.5 Lakh), and lowest for ISSR (Rs. 1 lakh). The average cost of per house sanctioned under the mission is around Rs. 5.4 lakh, and it comes out to be Rs. 3.6, 7.4, 6.24 and 10.7 lakh for BLC, AHP, ISSR and CLSS, respectively (Kundu & Kumar, 2017 & Kundu & Kumar, 2020).
Moreover, the Affordable Rental Housing Complexes (ARHCs) scheme has been introduced, as a sub-scheme under the PMAY-U, to arrange rental housing for the urban migrants/ poor.
Apart from the financial benefits, several other structural and technological measures have been devised to facilitate the scheme implementation. A technology sub-mission aims to promote cost effective and modern building materials and construction technologies. Urban land mapping is also being promoted in line with PM Swamitva yojana mission. The Global Housing Technology Challenge – India (GHTC-India) aims to identify and mainstream a basket of innovative housing construction technologies that are sustainable, eco-friendly and disaster-resilient.
MoHUA has also launched the CLSS Awas Portal (CLAP) to monitor and integrate all stakeholders in real time environment. The PMAY-U also integrates Swachh Bharat Mission, Jal Jeevan Mission, etc. Importantly, the PMAY-U promotes the beneficiaries to be women member of the households. Moreover, with the home ownership, formal credit availability based on the same eases the financial burden of housing constructions and future credit availability.
PMAY Progress and Issues
The houses sanctioned during 2015-2022 has demonstrated exponential growth and the progress towards achieving the revised target has been phenomenal, especially in the recent years. As per official reports, 4302 cities have been included in the PMAY-U, with a total of 469 Class-I cities.
As on February 7, 2022, around 114.04 lakh houses have been sanctioned, of which- 93.17 lakh houses has been grounded for construction and 54.55 lakh houses are completed (June 2015 onwards). Around 16 lakh houses are being constructed using new technologies. The total investments in projects stands at around Rs. 7.52 lakh crores, and the central assistance sanctioned is around Rs. 1.87 lakh crore.
Out of the total 114.04 lakh houses sanctioned, among the PMAY-U program verticals, the composition of sanctioned houses was 4.51, 70.70, 21.13, and 17.69 lakhs for ISSR, BLC, AHP, and CLSS respectively[6]. In CLSS, the houses sanctioned under CLSS I (EWS/LIG) and CLSS II (MIG) was 11.54 and 6.15 lakh, respectively. The total interest subsidy released under CLSS was Rs. 42,405 crores, out of which Rs. 29,470 crore was for EWS/LIG and Rs. 12,935 crores for MIG. It demonstrates significant acceleration in sanctions of houses, especially on the account of BLC and AHP verticals.
Out of the total 114.04 lakh houses sanctioned, among the PMAY-U program verticals, the composition of sanctioned houses was 4.51, 70.70, 21.13, and 17.69 lakhs for ISSR, BLC, AHP, and CLSS respectively[6]. In CLSS, the houses sanctioned under CLSS I (EWS/LIG) and CLSS II (MIG) was 11.54 and 6.15 lakh, respectively. The total interest subsidy released under CLSS was Rs. 42,405 crores, out of which Rs. 29,470 crore was for EWS/LIG and Rs. 12,935 crores for MIG. It demonstrates significant acceleration in sanctions of houses, especially on the account of BLC and AHP verticals.
In terms of number of houses sanctioned, the PMAY-U scheme has performed better compared to the previous centrally sponsored housing schemes. However, the non-completion of those units has seriously hamstrung the scheme’s potential to achieve the goal of slum free cities and housing for all within the stipulated time.
Secondly, affordability still remains a major concern for those actually suffering from housing inadequacies as the interest rate subvention on housing loan borrowed by the EWS is grossly insufficient to match the housing costs and prices, especially in the bigger Indian cities.
Thirdly, majority of projects for the EWS are inconveniently located and lack access to basic urban services which, in turn, have serious implications for both livability and livelihoods aspects. There is evidence of emergence of ‘new urban slums’ or ‘vertical slums’ in the relocated newer sites and redeveloped premises.
Fourthly, limited access to suitable land has also hamstrung the project implementation. Near absence of proper urban planning coupled with outdated land development regulation has contributed to the inadequate supply of land and high land prices. Convoluted and cost intensive processes of land purchase/land conversion (e.g., acquiring multiple ‘No Objection Certificate’, payment of disparate fees including stamp duty, registration fees, real estate agents’ fees etc.) have only increased the prices of affordable housing.
Fifthly, the private players have not shown enough interests in the PMAY-U verticals. Even the incentives like increasing Floor Space Index (FSI) are hardly useful as FSIs in Indian cities, as compared to other major world cities, remain low and invariant to the increasing housing demand. Also, the private players’ intrinsic purport of equating access to affordable housing to people’ ability to pay practically has excluded majority of the urban poor.
Sixthly, lack of local capacity and technical expertise has led to underutilization of funds under the PMAY-U scheme. Little attempts have been made to adopt modern low-cost technologies for housing construction and to respond to the specific housing needs of the urban poor. Addressing these deep-rooted problems is key to unlock the full potential of the PMAY-U.
Seventhly, in general, the EWS and LIG households remain excluded from the housing market due to lack of access to credit and affordability as they are mainly engaged in the informal sector employment or are self-employed. In this aspect, there has not been much movement from the newly announced ARHC scheme. However, for migrant workers, there was a major push under National Urban Livelihood Mission – Shelter for Urban Homeless (NULM-SUH) for homeless persons, especially during the pandemic.
Eighthly, selection of beneficiaries, legal documentations and allotment of housing units as well as post-project completion, delivery and post-occupancy issues have remained opaque under political manipulations, resulting in exclusion of persons suffering from genuine housing inadequacies.
The Actual Expenditure (AE) under PMAY-U for FY 2020-21 was 20,990 Crore (BE was Rs 8,000 crores). During the FY 2021-22, the BE was Rs 8,000 crores which has been revised to whopping Revised Estimates (RE) of Rs 27,000 crores. In terms of number, urban housing for poor has come out to be the biggest thrust and achievement in recent budgets.
For FY 2020-21, the AE for CLSS I and II was Rs 3,750 and 3,000 crores respectively. The BE for CLSS for FY 2021-22 had allocations only for CLSS I, which was Rs 1,000 crore, however, the RE stood at Rs 12,000 crore. Subsequently, there has been discontinuation of the CLSS in FY 2022-23 and no provision has been made under the same.
For other three verticals of PMAY-U, which are centrally sponsored schemes, the RE for FY 2021-22 is Rs 15,000 and the BE for FY 2022-23 has been estimated at Rs 28,000. This is indicative of renewed government focus on housing for the poor targets to be met by 2022.
Apart from financial provisions, this year’s budget entails some key structural reforms which, if implemented properly, would address some of the deep-rooted problems in the housing sector. Acknowledging the importance of efficient uses of land resources, provisions for Unique Land Parcel Identification Number for facilitating IT-based management of records; facility for transliteration of land records across any of the Schedule VIII languages; adoption or linkage with National Generic Document Registration System (NGDRS) with the ‘One-Nation One-Registration Software’ for standardizing registration process of deeds & documents from anywhere; and intergovernmental coordination for reduction of time required for all land and construction related approvals are expected to infuse the much needed transparency in the land record management.
This, in turn, would smoothen up the supply of affordable land at suitable locations. Moreover, the provisions for modernization of building byelaws, town-planning schemes and transit-oriented development (TOD), energy efficiency in buildings and infrastructure could incentivize the private sector to provide affordable housing that are responsive the needs and priorities of the urban poor.
The proposal of PM Gati Shakti National Master Plan, push for AatmaNirbhar Bharat, and the National Infrastructure Pipeline (NIP), and initiatives for shortening the distance between peoples’ living and workplaces are likely to better integrate the people with their cities. Encouragement for leveraging of central government assistance under mass transit schemes and Atal Mission For Rejuvenation And Urban Transformation (AMRUT) scheme is a welcome step to improve urban mobility. Similarly, integration of other schemes for provisioning of urban basic services with the PMAY-U can address the service deficiency problems in affordable housing projects.
Importantly, the announcements of a high-level committee of reputed urban experts and designating five institutions as centres of excellence with an allocation of Rs 250 crore each for “India-specific urban knowledge” are expected to address the problem of low capacity and capability and to help the cities in formulating actionable policies.
Although the ARHC scheme was announced in 2020 amidst the migrant crisis during lockdown, this scheme did not see much push in the last two year’s budget. Given the importance of rental housing in the affordable housing framework, such budgetary indifference is a cause for concern. Recently, the Model Tenancy Act, 2021 has been passed to strengthen the rental housing market through provisions for greater transparency in rental arrangements, minimizing the incidence of litigations and disputes and speedy conflict resolution.
Similarly, the Real Estate (Regulation and Development) Act, 2016 (RERA) came into effect on May, 2017 to ensure and encourage greater transparency, citizen centricity, accountability and financial discipline in the real estate sector. Streamlining the proper implementation of these Acts as well as instituting grievance redressal mechanism is urgently needed to create an effective housing marketplace including the rental options for augmenting adequate supply of affordable and quality housing.
Further, this year’s budget has emphasized on collaborating with the financial sector regulators to ease the process of access to capital along with reduction in cost of intermediation for the PMAY-U scheme beneficiaries and to infuse affordable housing supply.
The central and state level authorities must take immediate steps to overcome the legislative hindrances and bureaucratic delays and to upscale the interventions with regard to slums redevelopment and informal settlements and affordable housing.
There is an urgent need for renewed thrust and upward revision of the subsidy amount provided, which is abysmally low under the ISSR vertical. Greater thrust is also required in the area of planned supply of affordable ownership housing by private sector and providing affordable and adequate planned non-ownership (rental) housing, workers housing, hostels, dormitories and so on, especially for migrant and marginalized families and citizens in cities.
Overall, the complex and challenging issues, pertaining to redevelopment of slums and unplanned settlement (eg. land, community mobilization, private sector participation, identification of beneficiaries) and planned supply of affordable housing requires thrust from all the stakeholders. For this, the active role of state government and urban local bodies as well as communities is of paramount importance, learning from the best practices and bad experiences.
Understandably, the pace and performance of the PMAY-U Mission and its overall success sets the stage for the achieving the goal of $ 5 trillion economy and providing ease of living to each citizen in Indian cities in the future.
Issues in Urban Housing
Firstly, with only about 4.6 lakh houses sanctioned so far, the ISSR vertical has clearly not kicked off at a pace that was expected. This has been attributed to the problems related to legislative and administrative difficulties in providing land title to slum dwellers, private sector participation, civil society involvement, the absence of agencies coordination dealing with land and such projects at city and state levels, etc.Secondly, affordability still remains a major concern for those actually suffering from housing inadequacies as the interest rate subvention on housing loan borrowed by the EWS is grossly insufficient to match the housing costs and prices, especially in the bigger Indian cities.
Thirdly, majority of projects for the EWS are inconveniently located and lack access to basic urban services which, in turn, have serious implications for both livability and livelihoods aspects. There is evidence of emergence of ‘new urban slums’ or ‘vertical slums’ in the relocated newer sites and redeveloped premises.
Fourthly, limited access to suitable land has also hamstrung the project implementation. Near absence of proper urban planning coupled with outdated land development regulation has contributed to the inadequate supply of land and high land prices. Convoluted and cost intensive processes of land purchase/land conversion (e.g., acquiring multiple ‘No Objection Certificate’, payment of disparate fees including stamp duty, registration fees, real estate agents’ fees etc.) have only increased the prices of affordable housing.
Fifthly, the private players have not shown enough interests in the PMAY-U verticals. Even the incentives like increasing Floor Space Index (FSI) are hardly useful as FSIs in Indian cities, as compared to other major world cities, remain low and invariant to the increasing housing demand. Also, the private players’ intrinsic purport of equating access to affordable housing to people’ ability to pay practically has excluded majority of the urban poor.
Sixthly, lack of local capacity and technical expertise has led to underutilization of funds under the PMAY-U scheme. Little attempts have been made to adopt modern low-cost technologies for housing construction and to respond to the specific housing needs of the urban poor. Addressing these deep-rooted problems is key to unlock the full potential of the PMAY-U.
Seventhly, in general, the EWS and LIG households remain excluded from the housing market due to lack of access to credit and affordability as they are mainly engaged in the informal sector employment or are self-employed. In this aspect, there has not been much movement from the newly announced ARHC scheme. However, for migrant workers, there was a major push under National Urban Livelihood Mission – Shelter for Urban Homeless (NULM-SUH) for homeless persons, especially during the pandemic.
Eighthly, selection of beneficiaries, legal documentations and allotment of housing units as well as post-project completion, delivery and post-occupancy issues have remained opaque under political manipulations, resulting in exclusion of persons suffering from genuine housing inadequacies.
Affordable Urban Housing and Budget 2022-23
The union budget 2022-23 has given thrust to the cities and the budgetary estimate for MoHUPA over the last year has seen a jump of around 40 percent (Chattopadhyay & Kumar, 2022). The flagship PMAY-U mission has received record high allotment of Rs 28,000 crore in Budget Estimate (BE) for Financial Year (FY) 2022-23. This has been following the incredible success in the affordable housing push and budgetary realization in previous two FYs, also financed from Central Road and Infrastructure Fund (CRIE).The Actual Expenditure (AE) under PMAY-U for FY 2020-21 was 20,990 Crore (BE was Rs 8,000 crores). During the FY 2021-22, the BE was Rs 8,000 crores which has been revised to whopping Revised Estimates (RE) of Rs 27,000 crores. In terms of number, urban housing for poor has come out to be the biggest thrust and achievement in recent budgets.
For FY 2020-21, the AE for CLSS I and II was Rs 3,750 and 3,000 crores respectively. The BE for CLSS for FY 2021-22 had allocations only for CLSS I, which was Rs 1,000 crore, however, the RE stood at Rs 12,000 crore. Subsequently, there has been discontinuation of the CLSS in FY 2022-23 and no provision has been made under the same.
For other three verticals of PMAY-U, which are centrally sponsored schemes, the RE for FY 2021-22 is Rs 15,000 and the BE for FY 2022-23 has been estimated at Rs 28,000. This is indicative of renewed government focus on housing for the poor targets to be met by 2022.
Apart from financial provisions, this year’s budget entails some key structural reforms which, if implemented properly, would address some of the deep-rooted problems in the housing sector. Acknowledging the importance of efficient uses of land resources, provisions for Unique Land Parcel Identification Number for facilitating IT-based management of records; facility for transliteration of land records across any of the Schedule VIII languages; adoption or linkage with National Generic Document Registration System (NGDRS) with the ‘One-Nation One-Registration Software’ for standardizing registration process of deeds & documents from anywhere; and intergovernmental coordination for reduction of time required for all land and construction related approvals are expected to infuse the much needed transparency in the land record management.
This, in turn, would smoothen up the supply of affordable land at suitable locations. Moreover, the provisions for modernization of building byelaws, town-planning schemes and transit-oriented development (TOD), energy efficiency in buildings and infrastructure could incentivize the private sector to provide affordable housing that are responsive the needs and priorities of the urban poor.
The proposal of PM Gati Shakti National Master Plan, push for AatmaNirbhar Bharat, and the National Infrastructure Pipeline (NIP), and initiatives for shortening the distance between peoples’ living and workplaces are likely to better integrate the people with their cities. Encouragement for leveraging of central government assistance under mass transit schemes and Atal Mission For Rejuvenation And Urban Transformation (AMRUT) scheme is a welcome step to improve urban mobility. Similarly, integration of other schemes for provisioning of urban basic services with the PMAY-U can address the service deficiency problems in affordable housing projects.
Importantly, the announcements of a high-level committee of reputed urban experts and designating five institutions as centres of excellence with an allocation of Rs 250 crore each for “India-specific urban knowledge” are expected to address the problem of low capacity and capability and to help the cities in formulating actionable policies.
Although the ARHC scheme was announced in 2020 amidst the migrant crisis during lockdown, this scheme did not see much push in the last two year’s budget. Given the importance of rental housing in the affordable housing framework, such budgetary indifference is a cause for concern. Recently, the Model Tenancy Act, 2021 has been passed to strengthen the rental housing market through provisions for greater transparency in rental arrangements, minimizing the incidence of litigations and disputes and speedy conflict resolution.
Similarly, the Real Estate (Regulation and Development) Act, 2016 (RERA) came into effect on May, 2017 to ensure and encourage greater transparency, citizen centricity, accountability and financial discipline in the real estate sector. Streamlining the proper implementation of these Acts as well as instituting grievance redressal mechanism is urgently needed to create an effective housing marketplace including the rental options for augmenting adequate supply of affordable and quality housing.
Further, this year’s budget has emphasized on collaborating with the financial sector regulators to ease the process of access to capital along with reduction in cost of intermediation for the PMAY-U scheme beneficiaries and to infuse affordable housing supply.
The Way Forward
In essence, moving beyond the housing numbers and yearly budgetary allocations, it is imperative to understand actual needs of the urban housing beneficiaries and to address the ground level bottlenecks. The government has showcased seriousness in achieving overall targets for housing shortage owing to human, social, economic and political considerations and the contribution of urbanization towards overall development. The total benefit accruing to the country attributable to PMAY-U would, however, depend not just on the total number of units constructed but on the nature of the verticals as well as the institutional structures through which this is achieved and have impact on the lives of urban citizens.The central and state level authorities must take immediate steps to overcome the legislative hindrances and bureaucratic delays and to upscale the interventions with regard to slums redevelopment and informal settlements and affordable housing.
There is an urgent need for renewed thrust and upward revision of the subsidy amount provided, which is abysmally low under the ISSR vertical. Greater thrust is also required in the area of planned supply of affordable ownership housing by private sector and providing affordable and adequate planned non-ownership (rental) housing, workers housing, hostels, dormitories and so on, especially for migrant and marginalized families and citizens in cities.
Overall, the complex and challenging issues, pertaining to redevelopment of slums and unplanned settlement (eg. land, community mobilization, private sector participation, identification of beneficiaries) and planned supply of affordable housing requires thrust from all the stakeholders. For this, the active role of state government and urban local bodies as well as communities is of paramount importance, learning from the best practices and bad experiences.
Understandably, the pace and performance of the PMAY-U Mission and its overall success sets the stage for the achieving the goal of $ 5 trillion economy and providing ease of living to each citizen in Indian cities in the future.
References
- Chattopadhyay, Soumyadip and Arjun Kumar. 2022. Cities and Budget 2022-23 towards India@100 in 2047. Insights. IMPRI Impact and Policy Research Institute, New Delhi. 08 February 2022. Available at: https://www.impriindia.com/insights/budget-cities-pandemic/
- Kumar, Arjun. 2015. Housing Shortages in Urban India and Socio-economic Facets. Journal of Infrastructure Development. Volume 7. Issue 1: pp 19-34. India Development Foundation. Available at: https://journals.sagepub.com/doi/abs/10.1177/0974930615578499
- Kundu, Amitabh and Arjun Kumar. 2017. Housing for the Urban Poor? Changes in Credit-linked Subsidy. Economic & Political Weekly. 52(52), pp.105-110. Available at: https://www.epw.in/journal/2017/52/notes/housing-urban-poor.html
- Kundu, Amitabh and Arjun Kumar. 2020. Assessing the Benefits and Costs of the Program Verticals of Pradhan Mantri Awas Yojana (Urban). Shelter Journal. Volume 21. Issue No. 1. HSMI, Housing and Urban Development Corporation Ltd (HUDCO). April-May 2020. Available at: https://www.hudco.org/writereaddata/shelter-apr20.pdf
- NSO. 2019. Drinking water, sanitation, hygiene and housing condition in India: NSS 76th Round. New Delhi: National Statistical Office (NSO), Ministry of Statistics and Programme Implementation, Government of India. Available at: https://mospi.gov.in/documents/213904/301563/Report_584_final_01609135120775.pdf/4ed4d92a-19d9-0df1-548d-0f75bc0fc665
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*Respectively: Arjun Kumar (arjun@impriindia.org), Director, IMPRI Impact and Policy Research Institute, New Delhi; Soumyadip Chattopadhyay, Associate Professor of Economics, Visva Bharti University, Santi Niketan and Visiting Senior Fellow at IMPRI
*Respectively: Arjun Kumar (arjun@impriindia.org), Director, IMPRI Impact and Policy Research Institute, New Delhi; Soumyadip Chattopadhyay, Associate Professor of Economics, Visva Bharti University, Santi Niketan and Visiting Senior Fellow at IMPRI
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