With rapid urbanization, the problem of housing shortages in Indian cities ~ especially for low income households ~ is expected to exacerbate. Based on 2011 census data, the Technical Group on Urban Housing Shortage, Ministry of Housing and Urban Affairs (MoHUA), estimated the urban housing shortage during 2012- 2017 at 18.78 million. The Indian Council for Research on International Economic Relations (ICRIER) Report of 2020 indicated an increase in urban housing shortages of 54 per cent amounting to 29 million in 2018.

One of the key takeaways of the Interim Budget 2024-25, having implications for the ‘Housing for All’ agenda, is the thrust on launching “a scheme to help deserving sections of the middle class living in rented houses, or slums, or chawls and unauthorized colonies to buy or build their own houses”. The PMAY–Urban, flagship central scheme for urban housing, has been allocated Rs 26,170 crore in the Interim Budget, equivalent to an increase of 18 per cent over the budgetary figure of Rs 22,103 crore (revised estimates) of the last financial year. Moreover, there has been an increase in allocation for improving urban infrastructure especially in tier 2 and tier 3 cities and a push towards Metro Rail and NaMo Bharat with the aim of improving inter-connectivity across larger and smaller towns and driving economic growth. The push towards urban housing seems to be based on better performance of the PMAY-U scheme as compared to the previous centrally sponsored housing schemes.

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As of 29 January 2024, around 118.63 lakh houses have been sanctioned, of which 114.01 lakh houses have been grounded for construction and 80.02 lakh houses are completed. Since the inception of PMAY (U) in 2015, a total of 1.19 crores houses have been sanctioned. The PMAY comprises four verticals: In situ re-development of slums (ISSR); Credit-linked subsidy for housing (CLSS); Affordable housing in partnership (AHP), and Enhancement and construction of beneficiary houses (BLC).

Out of the total 118.63 lakh houses sanctioned, among the PMAY-U programme verticals, the composition of sanctioned houses was 2.96, 74.64, 15.98, and 25.05 lakh for ISSR, BLC, AHP, and CLSS respectively. The total interest subsidy released under CLSS was Rs 58,868 crore, out of which Rs. 45,984 crore was for EWS/LIG and Rs. 12,885 crore for MIG. In spite of the physical progress of the PMAY (U), there are a couple of factors seriously constraining the scheme’s potential to achieve the goal of slum-free cities and housing for all within the stipulated time.

First, among the four programme verticals, the ISSR entails huge potential for addressing housing shortages of the slum dwellers. However, the number of housing units sanctioned under the ISSR is only about 3 lakh. This can be attributed to the problems related to legislative and administrative difficulties in providing land title to slum dwellers, limited private sector participation and civil society involvement at the implementation stages. Second, the interest rate subvention on housing loans borrowed by the EWS is grossly insufficient to match the housing costs and prices, especially in the bigger Indian cities. Moreover, the EWS and LIG households remain excluded from the housing market due to lack of access to credit as these sections are mainly engaged in informal sector employment or are selfemployed.

So, affordability still remains a major concern for people experiencing higher incidence of housing inadequacies. Third, a majority of projects for the EWS are inconveniently located and lack access to basic urban services. This has serious implications for both livability and livelihood aspects of the poor people. There is evidence of emergence of ‘new urban slums’ in the relocated newer sites and redeveloped premises. Fourth, housing units are supplied in ‘top down’ fashion. Neither the developers possess knowledge about the needs of low-income households nor do these households find opportunities to get involved in different stages of housing projects. So, the urban poor are fated to accept what is offered in contrast to what is required. Fifth, absence of proper urban planning coupled with outdated land development regulation has contributed to the inadequate supply of land and high land prices in the cities.

Complicated processes of land purchase/land conversion (e.g., acquiring multiple ‘No Objection Certificates’, payment of disparate fees including stamp duty, registration fees, real estate agents’ fees etc.) have only increased the cost of land and thus, the prices of affordable housing. Sixth, the private players’ interest in the PMAY-U verticals has been lukewarm. Even incentives such as 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 a majority of the urban poor. Seventh, lack of local capacity and technical expertise has led to underutilization of funds under the PMAY-U scheme. Little attempt has been made to adopt modern low-cost technologies for housing construction and to respond to the specific housing needs of the urban poor. Finally, selection of beneficiaries, legal documentation and allotment of housing units as well as post-project completion, delivery and post-occupancy issues have remained opaque under political manipulation, resulting in exclusion of persons suffering from genuine housing inadequacies.

Addressing these deep-rooted problems is the key to unlock the full potential of the PMAY-U. Through increased yearly budgetary allocations, the government has intended to address the longstanding challenge of urban housing shortages. The total benefit accruing to our 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 to ease the supply of land with special focus on slums redevelopment and informal settlements. There is an urgent need for renewed thrust and upward revision of the subsidy amount provided, which is abysmally low under the ISSR vertical. The beneficiaries of the scheme should be provided an opportunity to flag their housing needs and priorities so that a meaningful participatory approach can be developed and followed for scheme implementation. Collaborating with the financial sector regulators is another area of policy intervention to ease the process of access to capital along with reduction in the cost of intermediation for the PMAY–U scheme beneficiaries.

Equally important is to ensure planned supply of affordable ownership housing by the private sector. Overall, the complexities pertaining to redevelopment of slums and unplanned settlement and planned supply of affordable housing requires a thrust from all the stakeholders. So, it is important to reflect on the learning from the past to understand how to better house the growing urban population, especially the poor, and in what ways such understanding can be integrated into existing policy.

The writer is Associate Professor, Department of Economics and Politics, Visva Bharati University, Santiniketan