Inadequate Grants, Little Slum Redevelopment: CSEP Report on PMAY | Latest News India

Incidentally, the Union government led by Prime Minister Narendra Modi approved the details of PMAY-U 2.0 only on Friday. Another 10 million houses will be built under the scheme, considered the prime minister’s flagship project. Under PMAY, 11.8 million houses have been approved, while over 8.55 million houses have already been delivered to beneficiaries since 2015, making it one of the largest housing schemes in the world.

In an article titled “Pradhan Mantri Awas Yojana Urban (PMAY-U)—What do the Numbers Say?”, CSEP, a New Delhi-based nonprofit think tank, cited surveys conducted as part of earlier studies in Kerala, Odisha and Tamil Nadu to find that while 80% of beneficiaries had to borrow their share of construction funds, only a third of them did so from banks or other financial institutions. That meant borrowing from friends and family or from moneylenders or landlords. In the latter case, interest rates could be as high as 60%.

However, MoHUA representatives did not comment on the findings of the article.

The paper’s authors, Debarpita Roy and Rashmi Kundu, note that the challenges of land ownership in large cities, especially in slum areas, have meant that the program has been successful primarily in smaller towns rather than in larger cities with populations of over a million people. They also point out that the ongoing implementation of the program is unprecedented in both scale and scope.

Roy said that as a remedy, “for the recently announced PMAY-U 2.0 scheme to be more effective, especially in the million-plus cities of India, it is crucial to address the myriad land-related challenges and increase access of the urban poor to institutional housing loans on a missionary basis as well.”

Initially, the scheme had four verticals or sub-schemes, namely Beneficiary Led Construction/Enhancing (BLC), Affordable Housing in Partnership (AHP), In-Situ Slum Redevelopment (ISSR) and Credit Linked Subsidy Scheme (CLSS). BLC is a key factor in the scale of the scheme, accounting for 62% of the total sanctions, the newspaper said. Of the rest, 15% of the sanctioned houses fall under the AHP category and 2% under the ISSR category, as per January 2024 data. In 2020, in the wake of the pandemic, the government announced another vertical called Assisted Rental Housing Complex (ARHC), which is still in its initial phase at 0.2%. The CLSS sub-scheme, which was withdrawn in 2022, will now be replaced by the newly introduced vertical ISS (Interest Subsidy Scheme), and the government has withdrawn the ISSR sub-scheme.

It is to be noted that in the CLSS vertical, there is no government involvement or oversight in the completion of houses. The sub-scheme accounts for 21% (the second largest) of the total approved houses. The researchers found that most of the beneficiaries were from the middle and low income groups, with only 21% from the economically weaker category.

Delays and cancellations

As of May 2024, 30% (3.6 million) of the homes targeted by BLC, AHP and ISSR sanctions were still under construction, while construction of another 0.4 million had only just started.

Despite this, 22% of approved BLC homes were cancelled; of the remaining 29% of homes were handed over late, meaning they could not be completed within the required 18-month sanction period, the newspaper reported.

On the subject of delays, researchers noted that while they are a regular occurrence in the Indian real estate sector, delays in a programme that is meant to help the most needy make them even more worrying.

The Role of State Governments

While the scheme was implemented in different states, nine major states (accounting for 68% of India’s urban population as per the 2011 census) accounted for 80% of the PMAY-U sanctions. The document noted that there was disparity even within different verticals of the scheme. For example, 44% of the sanctions under BLC came from two states, Andhra Pradesh and Uttar Pradesh.

This reflected the active involvement of state governments, even though PMAY-U is a central government programme, the authors noted. Interestingly, even in the CLSS sub-programme, where there was no direct role of the state government, the involvement of the Gujarat government through setting up a committee and regular monitoring ensured strikingly better results, the study found.

The authors found that the timing of subsidy payments makes it difficult for beneficiaries to accumulate the funds they are entitled to.

Even then, the newspaper said the role of state governments mattered, noting that the Uttar Pradesh government had spent Rs 50,000 crore of the Rs 1 lakh state grant at the time of approval to overcome the problem. Uttar Pradesh has the highest number and percentage of completed houses under the BLC sub-scheme, suggesting that some of the subsidy was likely to have had a positive impact.