The Pradhan Mantri Awas Yojana (PMAY) and affordable housing for the urban sector was approved by the Union Cabinet in June 2015. Almost three years from then, what is the ground reality today?

The Pradhan Mantri Awas Yojana is a programe by Government of India to ensure "Housing for all by 2022'' and thereby aims to provide homes to 18 million households in urban India and nearly 30 million households in rural India. Under PMAY, there is a Credit Linked Subsidy Scheme on home loans for properties in urban market belonging to Economically Weaker Section (EWS), Low Income Group (LIG) and Middle Income Group 1 and 2 (MIG). The scheme can be availed for new or resale purchase of home, construction, or for extension or improvement of rooms.

The subsidy offered is dependent upon the loan amount and the income group one falls in. Applicants with income up to ₹6 Lacs, can avail a maximum subsidy of ₹2.67 Lacs, while applicants with income up to ₹12 Lacs, can avail a maximum subsidy of ₹2.35 Lacs and applicants with income up to ₹18 Lacs, can avail a maximum subsidy of ₹2.30 Lacs.

The Prime Minister Awas Yojana has ambitious targets. According to its website, these are:

• Affordable homes with water connection, toilet facilities, 24x7 electricity supply
• Two crore houses to be built across the nation
• Targeting the Lower Income Groups and Economically Weaker Section of society, basically the urban poor, by the year 2022
• Two million non-slum urban poor households are proposed to be covered under the mission

Sriram Kalyanaraman, MD, and CEO of the National Housing Bank (NHB), spoke at a conference held earlier this month and said that the NHB has disbursed ₹3,018 crore against 140,943 units under the urban Pradhan Mantri Awas Yojana (PMAY), Credit Linked Subsidy Scheme. Giving further classification, he said that the disbursement was divided as ₹2436 crore against 113,081 units under the economically weaker section (EWS) and low-income group (LIG) scheme and ₹582 crore against 27,862 units under the middle-income group (MIG) scheme.

He described the amount sanctioned so far as "by far the highest in any scheme in independent India." He also said out of the 44.35 lac houses sanctioned by the housing ministry for urban areas under PMAY, work has started on 22 lac houses.

But there are many challenges that such an ambitious project would face. A KPMG report titled, 'Decoding housing for all by 2022' talks about the key considerations for the central government to provide an enabling framework for housing development.

• Absence of an effective policy framework for Economically Weaker Section (EWS) and Lower Income Group (LIG) housing, which is compounded with rising land and construction costs, and inadequate availability and reach of micro-finance measures.
• Long gestation period of six to eight years of housing projects, accentuated by multiple approvals to be obtained from multiple authorities in a two to three-year time period.
• Inadequate long-term funding across the project life cycle necessitating multiple rounds of funding for the same project increasing the cost of capital and time.
• Multiple fees and taxes across project stages which inflates construction cost by 30-35 percent
• Reassessment of development norms such as low FAR/FSI, density norms, parking norms, and ground coverage, especially from the EWS housing development perspective.
• High urbanization rate, coupled with high rate of migration from rural areas is stressing the limited urban infrastructure; sub-optimal usage of urban land (low FAR/FSI) has resulted in raising the cost per unit of built-up area.

The Ministry of Housing estimated a housing shortage of 18.78 million houses during the 12^th plan period, with 99% in the economically weaker section (EWS) and lower income groups (LIG). Further, the country's total urban housing shortage is projected to be about 30 million by 2022.

Land is scarce, therefore making it difficult to build millions of new housing units. The challenge is to in-situ upgrade the existing housing. The Government has made efforts to unlock this land potential by providing Transfer of Development Rights (TDR) to incentivise developers to in-situ rehabilitate slums. Experts believe that while this has proven effective in Mumbai, the economics breaks down in smaller cities where land values are not as high and developers are unable to recover their costs.

PMAY provides for the interest subsidy on a home loan and the direct subsidy for individual house construction or enhancement. However, a requirement to avail either subsidy is title documents to the property, which are often very poorly maintained. Many people living in ancestral homes, whose title deeds may be in the name of deceased grandparents and slum dwellers, who are arguably the target beneficiaries under PMAY are unlikely to have title documents.

Land records are governed by the State's revenue department, while housing is a separate agency. This makes it difficult for the citizens to obtain their property documents, who end up getting locked out of the scheme's benefits.

To make the required impact, the PMAY scheme needs to not just construct more houses but also work on clearing the impediments on road to its success.