Housing for all is slowly picking up pace

by India Inc. Staff
Housing for all is slowly picking up pace

The Indian Prime Minister’s Housing for All initiative has got off to a slow start but latest trends provide hope for a rapid ramp-up.

Of all the flagship schemes undertaken by the Narendra Modi government, the Housing for All programme, which envisages providing pucca (brick and mortar) houses for 20 million Indians by 2022, is, arguably, the most evocative and the one most likely to make a dramatic difference to the lives of millions of poor Indians.

After a relatively slow start, India’s Ministry of Housing and Urban Affairs recently sanctioned about 218,000 new houses under the Pradhan Mantri Awas Yojana (PMAY), as the scheme is called, in six states, taking the total number of houses sanctioned under the scheme to a little more than 2.61 million.

Newly-appointed Housing and Urban Affairs Minister, Hardeep Puri, a former Indian Foreign Service officer who had served as India’s Permanent Representative to the United Nations earlier, has his work cut out to fulfil the Prime Minister’s dream of providing affordable housing to every Indian by the deadline.

Massive shortage

India faced a massive shortage of almost 19 million houses in 2012-13, according to the Technical Group on Urban Housing Shortage. Bridging this gap in the next five years will not be easy. Thus far, only a little over 100,000 houses, of the 2.61 million sanctioned, have been built under the scheme.

Obviously, the pace of sanctioning new houses as well as building them on the ground needs to be speeded up by a factor of several times. Here, the example of former Power Minister Piyush Goyal’s stupendous success in rapidly ramping up the country’s solar power capacity and Roads and Highway’s Minister Nitin Gadkari’s achievement of turning around the moribund ministry he took charge of in 2014 offer two templates that can be emulated.

PMAY fine print

The Pradhan Mantri Awas Yojana envisages providing government assistance of $31 billion to build houses for the urban poor, categorised as Economically Weaker Sections (EWS) and Low Income Groups (LIG).

The scheme has four parts:

  1. In-situ slum redevelopment with private sector participation using land as a resource
  2. Affordable Housing through credit linked subsidy
  • Affordable Housing in partnership with private and public sector
  1. Beneficiary-led house construction/enhancement.

Beneficiaries under these schemes will get central assistance ranging from $1,600 to $3,600.

Eligibility criteria

In keeping with the Prime Minister’s stated goal of improving the lot of women in India, PMAY mandates that houses built or improved under this scheme should be owned fully or partly by women.

The other criteria that applicants have to fulfil are they must be less than 70 years old and must be from the EWS (annual income of less than Rs 3 lakh or $4,700) or LIG (annual income between Rs 3 lakh and Rs 6 lakh or $4,700-9,400). Another condition is that the beneficiary or any of his family members should not own another house anywhere in India.

The challenges

Building so many houses for so many people across such a vast and diverse country like India is undoubtedly a very challenging proposition. The problems of managing the logistics of such a humungous project apart, there are also several structural problems that are holding up the rapid rollout of this scheme.

Availability of land: The first and obvious problem is the one relating to the scarcity of land, especially in urban areas. With the revamped Land Acquisition Bill stuck in Parliamentary limbo and the existing one, enacted by the previous Congress-led UPA government making it all but impossible to acquire any land for any purposes whatsoever, overcoming this challenge calls for out-of-the-box thinking and innovative solutions.

One way out could be to encourage people, who are currently occupying existing houses in highly congested localities to upgrade their houses and add floors which can then be sold or leased to people currently without houses.

This has been attempted with some success in redeveloping a few slum areas in Mumbai but has not made much progress in other parts of the country. Efforts are on in the government to take this template to other cities.

Incomplete property records:  Under PMAY, individuals availing of the scheme get a subsidy on the interest they pay on home loans as well as a direct subsidy for construction and/or home enhancement. The challenge here is that most potential applicants do not have proper titles to the properties they are occupying.

In some cases, the property may be in the names of deceased ancestors. In other cases, most slum dwellers, who make up a large proportion of targeted beneficiaries under PMAY, do not have any title at all and hold only possession rights.


In Ahmedabad, the Slum Networking Program has circumvented this problem by providing people without title rights with security of tenure. This no-eviction-guarantee has encouraged slum dwellers to invest their own money to upgrade houses and benefit from PMAY.

Some states such as Andhra Pradesh and Gujarat have fully computerised and digitised property records and made it easier for individuals to search titles, effect transfers and get certified copies of their land records, making them eligible for benefits under PMAY. But most states are lagging in this regard.

Vacant houses: The 2011 Census recorded 10 million vacant homes. That is enough to bridge half the shortfall in urban housing in India. But many house owners in India are wary of letting out their vacant properties on rent as India’s rental laws make it extremely difficult to evict tenants. So, rather than lose their valuable properties to recalcitrant tenants, house owners prefer to keep them vacant.

It is common in cities such as Mumbai and Kolkata to find tenants occupying large properties in prime areas but paying a pittance of only a few hundred rupees as rent. The laws are heavily skewed against landlords and repossessing a property from a tenant often takes decades.

Housing Minister Puri will have to find a way to convince state governments to enact progressive legislation that balances the interests of both home owners and tenants to facilitate the growth of a vibrant rental market for residential properties in India.

Addressing these challenges will make it easier for the government to meet its Housing for All goal.

Picking up pace

As mentioned at the beginning of this report, the government has so far sanctioned 2.61 million houses, or about 13 per cent of the target. These houses will entail an investment of about $22 billion, of which about $6 billion will be in the form of central assistance in the form of direct subsidy as well as interest subvention.

Leaders and laggards

Andhra Pradesh is clearly the leader in PMAY, with more than a fifth of all houses sanctioned under the programme falling in the state.

But Gujarat leads in construction, with about 23.5 per cent of all houses constructed under the scheme. In second place is Karnataka, with about 12.5 per cent, followed by Tamil Nadu (12 per cent), Rajasthan (8 per cent) and Maharashtra and West Bengal (7.3 per cent each).

The worst performers are Punjab (336 units), Kerala (595 units), Telangana (843 units) Haryana (1,070 units) and Orissa (1,643 units).

Collateral benefits

The construction industry is the largest employer in India after agriculture and textiles. A pick up in the speed of implementation will also help generate millions of jobs and help the government fulfil its election promise of creating new employment opportunities.

Then, major industries such as steel and cement, which are facing poor or moderate offtake, will also benefit from PMAY. Since the housing and construction sector has forward and backward linkages with more than 250 feeder and downstream industry, the expected boom in the affordable housing sector will also facilitate a revival in the private sector investment cycle, which has so far stubbornly refused to yield to several incentives.

Faster implementation

‘India Investment Journal’ has learnt that the Ministry of Housing and Urban Affairs has instructed the states to hasten the identification of projects and submit proposals so that fresh building activity can start early. The government has allocated $6.8 billion for this.

“Now, states have started coming forward with projects and the Centre has so far approved construction of 26.13 lakhs houses in many states,” a senior official in the ministry was quoted in the media as saying.

The agenda for the new housing minister, Hardeep Puri, is clear. Now, he has to ensure delivery.

Housing for all Turning a dream into reality

Housing for all Turning a dream into reality

2018-12-31T12:08:49+00:00September 18th, 2017|2018/2017, Flagship Scheme, India Investment Journal September Edition, Year|

About the Author: India Inc. Staff