Population in India is growing at an alarming rate. The country could surpass China to become the most populous nation in the world anytime between 2025 and 2027. According to a UN report, the population in India is likely to touch 1.5 billion by 2030. A large and rapidly growing population could aggravate existing challenges such as unplanned urbanisation, water scarcity and housing shortage. It is estimated that currently there is a shortage of 20 million homes in India.
Successive governments have tried to address the issue with different schemes. One of the boldest steps to solve the housing crisis in India was announced in 2015 in the form of Pradhan Mantri Awas Yojana. To provide housing to all by 2022, nearly 20 million affordable houses are slated to be built under the PM Awas Yojana. The PMAY scheme has two componentsurban and rural.
PMAY (Urban)
A population boom fuelled by rapid migration has led to widespread homelessness in Indian cities. The urban component of the PM Awas Yojana aims to curb the shortage of affordable houses in urban areas. The urban component has four verticals. The first is the in-situ slum redevelopment, which ropes in private developers to construct affordable homes in slum areas, and on fulfilment of certain conditions, avail subsidies from the state government for each housing unit. The other vertical of PMAY offers subsidies to people who want to build their houses on private land.
The most popular vertical of the scheme is the credit-linked subsidy. The interest subsidy is dependent on the income of the borrower and the size of the house to be built. First-time house owners in the lower-income group, with an annual income between Rs 3 lakh and Rs 6 lakhs, can get a maximum interest subsidy of 6.5% on a maximum loan amount of Rs 6 lakhs. To avail the subsidy, the carpet area of the house should not exceed 60 sq m.
Similarly, people in the middle-income groups can avail interest subsidies of 4% and 3%, depending on the annual income and size of the house. The fourth vertical is affordable housing units built by the government on its land or land owned by local urban bodies. The PM Awas Yojana provides a subsidy of Rs 2.5 lakh to eligible first-time buyers for a housing unit in such a housing project.
PMAY (Rural)
As the name suggests, the rural component of the mission aims to provide proper houses to all homeless and also those living in dilapidated houses in rural areas of the country. 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.
Progress of Pradhan Mantri Awas Yojana
After a slow start in the initial years, the scheme has gained momentum in the past couple of years. The government has come out with different numbers at different points of time. As of June 30, around 90 lakh rural houses have been built under PMAY. The target of the total number of houses to be delivered under the scheme is revised according to the progress. 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 likely to deliver 70 lakh houses each year between 2020 and 2022. The rural component of the scheme has a better track record when the completion of houses is taken into account.
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. When the number of completed houses is taken into consideration, the performance is dismal. 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.
Conclusion
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. The implementation of PMAY has remained largely transparent and the progress has been satisfactory. However, the government may have to take care of certain issues with the urban component of the PM Awas Yojana. There are two major drawbacks with the scheme. The first is the approval time required for a project. 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. Another issue with PMAY-Urban is the 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.