In June 2015, Prime Minister Narendra Modi launched a flagship scheme to tackle urban homelessness. “Housing for all” by 2022, the government said, repackaging the emotive appeal of the ‘roti, kapda, makaan’ slogan from the Indira Gandhi years. 

But the Pradhan Mantri Awas Yojana-Urban was set for major hurdles. It had promised homes for 1.18 crore families by December 2024, but has managed to meet just 67.45 percent of its target so far. 

And even if it meets the deadline, there are other discomforting figures. 

For example, the most conservative estimate of housing demand suggested by government figures implies that the government has addressed a mere 25.15 percent of the housing shortage so far, as against the 67.45 on paper. Additionally, more than half of these houses are part of a vertical where the government role is limited to cost-sharing with beneficiaries.

Moreover, an overwhelming majority of homes – about 83 percent – that are to be constructed under the PMAY-U do not target the landless urban poor at all. This is despite affordable housing for weaker sections remaining a no-go zone for private real estate developers in metropolitan India.

There is a regional distortion to the numbers too. Bihar, Andhra Pradesh, Manipur, Mizoram, Meghalaya, Sikkim, Andaman and Nicobar, and Jammu and Kashmir have completion rates of less than 50 percent, with the northeastern states having the lowest numbers.

A reality check of a ‘guarantee’

The number of homes constructed and/or renovated under PMAY-U is impressive – around 1.18 crore homes have been sanctioned, out of which over 80 lakh are already complete. These are the headline numbers that are often mentioned by government representatives when discussing the success of PMAY-U. These are numbers that should indeed be celebrated because they represent many families who have enjoyed a boost in their quality of life. 

But a huge chunk of the urban poor are still being left out. An overwhelming majority of the homes (about 83 percent) constructed under the PMAY-U are for families that have access to capital or land. The slum rehabilitation scheme within PMAY-U has sanctioned only 2.96 lakh homes, around 20 percent of the estimated demand. This constitutes just about 2.5 percent of the total beneficiaries of PMAY-U. 

The other troubling reality of the housing situation in urban India is that despite the gains made under PMAY-U, demand outpaces supply. Using the most conservative estimates, the PMAY-U has addressed a mere 25.15 percent of the housing shortage by delivering 80 lakh homes. Even when the remaining houses sanctioned under the scheme are constructed by the end of 2024, it would have addressed just about 37 percent of the real need. Almost 2.4 crore households will still be without a proper roof.

Housing as an economic good

The importance of housing to a society or a nation cannot be overstated. The Supreme Court of India has repeatedly held that the right to adequate housing is a fundamental right protected by Article 21 of the Constitution of India. Research from Habitat for Humanity notes that “families with safe, stable, and affordable housing show fewer health problems, improved school performance, less psychological stress, and more self-assured parents”.  

Other than humanitarian grounds, there is also a strong economic argument for ensuring proper housing for all. Poor housing infrastructure diminishes the quality and productivity of human capital. Furthermore, at a macroeconomic level, the real estate sector is responsible for about 50 percent of the economic output in the country. In fact, as per the Ministry of Statistics, more than one-third of all gross fixed capital formation in 2021-22 was attributable to construction of housing and other buildings.

Hernando de Soto, the famous Peruvian economist, in his seminal work – ​​The Mystery of Capital – highlights the importance of securing land rights and the poor’s access to home ownership as a crucial means of unlocking access to credit, entrepreneurship, and economic growth. Home ownership followed by collateralisation is an evidence-based strategy for escaping poverty.

However, beyond the world of numbers, there is also a cultural logic to the government’s push for “housing for all” – it is the emotive ‘roti, kapda, makaan’ trinity with all its token in our society.

The Government of India first intervened in home ownership in 1985 with the launch of the Indira Awas Yojna. For the first two decades, the government focused on rural housing. In early to mid 2000s, GoI recognised the need for an intervention in urban areas by articulating the notion of “affordable housing for all” in the National Urban Housing and Habitat Policy (NUHHP) in 2007. 

However, that policy lacked concrete specifications. The 2008 Parekh Committee report became the blueprint for early urban housing interventions such as the Rajiv Awas Yojana (RAY) and Rajiv Rinn Yojana (RRY). When PMAY-U was launched in 2015, it subsumed all previous programmes for affordable urban housing and expanded their scale and scope significantly. 

The need 

As per the 2011 census, 31 percent of the population or 37.7 crore Indians lived in urban areas. Urbanisation trends have increased in the decade since, and current estimates peg the urban population to be over 50 crores. This rate is set to accelerate further and about 40 percent of Indians will live in urban areas by 2030. Indian cities are getting increasingly crowded and this is placing a tremendous strain on the already precarious housing availability for the urban poor. 

The Government of India classifies urban households based on annual income. Families making less than Rs 3 lakh belong to the Economically Weaker Sections (EWS). Those making between Rs 3 lakh and Rs 6 lakh annually, belong to the Low Income Group (LIG), and those making between Rs 6 lakh and Rs 18 lakh annually belong to the Middle Income Group (MIG). 

Most of the housing supply created by private real estate developers across metropolitan India is out of the price range of the EWS and LIG households, leading to homelessness and inhumane living conditions. It is in this context that PMAY-U’s intervention is much desired.

Four main verticals, one more launched amid Covid

The scheme consists of four main verticals. 

First is In-situ Slum Redevelopment. This vertical aims to redevelop slums by using land on which the slums are built as a resource. Under this vertical, eligible slum households are identified for redevelopment and rehabilitation with the participation of private developers. Each beneficiary household is provided with a grant of Rs 1 lakh from the central government. An equivalent amount is often provided by state governments, and in some cases, an additional amount may also be given by the Urban Local Bodies (ULBs). 

The idea is that if the cost of a new home is negligible (after the combined financial assistance), beneficiaries will agree to vacate occupied slums which can then be developed by private developers. Private developers get concessions such as an extra floor space index or land at under-market value to offset the cost of providing subsidised homes to slum-dwellers. The monetary assistance provided by the central (and local) government is to ensure that the beneficiaries of this vertical do not have to pay much. The ISSR process requires coordination between many stakeholders, including government authorities, private landowners, private developers, and slum dwellers’ associations, making it the most complex among all the verticals – a fact that is borne out by scheme adoption statistics that will be discussed later.

The Credit Linked Subsidy Scheme (CLSS) is the second vertical. Its objective is to expand institutional credit flow to the housing needs of the urban poor by offering a subsidy on home loan interest rates. The interest subsidy is credited upfront to the loan account of beneficiaries resulting in reduced effective housing loan and Equated Monthly Instalment (EMI). The Net Present Value (NPV) of the interest subsidy is calculated at a discount rate of 9 percent.

As seen in the table above, households qualify for an interest subsidy of 6.5 percent, 4 percent, and 3 percent on loan amounts up to Rs 6 lakh, Rs 12 lakh, and Rs 18 lakh based on their income category. The credit-linked subsidy will be available only for these loan amounts, and additional loans beyond these limits, if any, are at a non-subsidised rate. Credit-linked subsidy is available for housing loans availed for new construction and additions to existing dwellings. 

Here’s an example illustration of the material impact of these concessions.

Let’s say a family falling in the MIG-II category (annual income around Rs 12-18 lakh) wishes to buy a house for Rs 20 lakh with a 20 percent down payment i.e. Rs 4 lakh. The typical loan amount would be Rs 16 lakh. But if CLSS kicks in, Rs 12 lakh of this loan would be eligible for a 3 percent subsidy, which when credited upfront results in the loan amount being reduced by Rs 2,30,156 and a saving of around Rs 2,200 per month.

Let’s move on to the third vertical, which is the Affordable Housing in Partnership with Public or Private sector, or AHP. This vertical is a supply-side intervention in which the government incentivises building affordable housing. An assistance of Rs 1.5 lakh per EWS house is provided by the central government in projects where at least 35 percent of the homes are built for EWS. An average assistance of Rs 3 lakh is borne by the state governments and ULBs together, though that contribution varies across and within states. The sale price of homes sold to EWS buyers is capped by the state government which they can tweak based on the total financial assistance available to keep units affordable.

Beneficiary-led individual house construction or enhancement (BLC) is the fourth vertical. It is targeted at those who already have land or a home that needs to be upgraded. Central assistance of Rs 1.5 lakh is available to individual eligible families belonging to EWS categories. States and ULBs contribute another Rs 1 lakh, on average, to this kitty.

The scheme mandates that all houses built, acquired, or purchased under PMAY-U have basic amenities like a kitchen, water supply, electricity, and a toilet. 

Consider an example to illustrate how the BLC vertical works in practice. A family lives in a kutcha house that it owns and wants to convert it into a pucca dwelling. The estimated cost of renovation is Rs 10 lakh. If eligible, the beneficiary can avail of the BLC vertical to reduce their cost by at least Rs 1.5 lakh (central assistance). Plus, if their state or ULB provides more BLC assistance, their final out-of-pocket expense is reduced further. 

A fifth vertical of the scheme, namely Affordable Rental Housing Complexes (ARHCs), was added in 2020 due to Covid to provide “sustainable and inclusive affordable rental housing avenues for urban migrants/poor”. This vertical utilises two models.

The first is converting existing government-funded vacant houses into ARHCs. Under this model, no additional funding has been earmarked by the Centre. The implementing agencies are encouraged to recover the investment made through rental income generated over the next 25 years. States and ULBs are broadly responsible for mobilising other resources, as needed.

The second model is construction, operation and maintenance of ARHCs by public or private entities on their own available vacant land. Here too, the Centre has not earmarked any additional funding. The implementing agencies are responsible for recovering their investment through generating rental income. However, for the construction of new ARHCs that utilise “innovative & alternate technology”, the MoHUA has earmarked assistance of Rs 20,000 per dormitory bed, Rs 60,000 per dwelling unit (up to 30 sqm carpet area), and Rs 1,00,000 per dwelling unit in case of a double bedroom (up to 60 sqm carpet area).

The BLC, CLSS, and AHP target low-income households that have a relatively secure and regular flow of income, making them economically better off than the bottom-of-the-pyramid population. In contrast, the ISSR and ARHC target very poor households unable to access housing through formal housing markets.

The timeline and funding

The duration of the PMAY-U was initially seven years, from FY 2015-16 to FY 2021-22. It has now been extended up to December 31, 2024 – with all verticals except CLSS – to complete houses sanctioned up to March 31, 2022. MoHUA has confirmed that during the extended period, no additional houses will be sanctioned.

Two interrelated aspects of PMAY-U warrant special mention.

First, this scheme (other than the AHP vertical and the very limited ARHC vertical) adopts a demand-driven approach wherein the housing shortage is decided based on demand assessment by states/Union territories (UTs). This means that that PMAY-U only lays out the eligibility and assistance framework under the various verticals, but ultimately whether a home is sanctioned is jointly determined by whether prospective families decide to avail of the scheme and whether they are deemed eligible by the ULBs. 

It is important to note that the PMAY-U only eases the financial burden via the lump sum monetary assistance or interest subsidy. For many families without enough resources (land, capital, or slum dwelling), despite the push given by the scheme, affordability remains out of reach. This explains the gap in projected housing needs and actual PMAY-U allocation which we will discuss in a later section.

Second, while the PMAY-U is a central scheme, ultimately its adoption depends on many stakeholders. Most of the implementation is delegated to states and ULBs, which is only natural given that housing is a state subject under the Indian Constitution. 

Right from the initial demand survey which entails going out into local communities to ascertain demand and identifying eligible beneficiaries, to the multiple regulatory steps that are part of building homes, to the final inspection of scheme-compliant homes, states and ULBs drive the execution of this scheme. Other than these local and state bodies, banks and financial institutions that finance most of these houses are a key stakeholder. And ultimately, it is the participant families that are assuming the financial responsibility for their homes. The responsibility of how this initiative fares rests on many shoulders.

In that vein, it is worth noting that the Centre’s contribution to the overall investment expenditure under this scheme is just about 25 percent, or Rs 2.03 lakh crore. The bulk of the money is shelled out by the beneficiary households themselves and is to the tune of 60 percent or a hefty Rs 4.95 lakh crore. State governments (together with ULBs) spend a non-trivial Rs 1.33 lakh crore on the scheme as well.

Not for the landless poor

Now, let us try to make sense of the physical progress on the ground. 

As discussed earlier, the scheme has four main verticals, including ISSR for slum redevelopment, CLSS for offering interest subsidies, AHP for construction of affordable housing, and BLC where beneficiaries are responsible for building or repairing on their own while the government pays a part of the cost.

The progress tracker on the PMAY-U website, as seen on January 29, shows 80.02 lakh completed homes, but 3.41 lakh were sanctioned under the Congress government’s scheme – the Jawaharlal Nehru Urban Renewal Mission. 

There are other curious facts. For one, over 62 percent of the houses sanctioned come under the BLC vertical where the government’s role is limited to just cost-sharing with the beneficiaries. The government, whether at the central or at the state level, has no implementation role when it comes to land provision, construction, or on-the-ground resource mobilisation. 

Similarly, CLSS, the second-most popular vertical with the participation of over 21 percent beneficiaries, has a limited government role with only interest subsidy provision, or cost-sharing with beneficiaries. 

In other words, an overwhelming majority of homes only target those who already have land or have the means to procure it by qualifying for loans from financial institutions. 

Slum-dwelling families that are to be rehabilitated in pucca homes under ISSR make up just about 2.5 percent of the total beneficiaries. Similarly, EWS families that are to benefit under the AHP make up about 13.5 percent only. 

The scale of the problem

Curiously, ISSR and AHP are also the only two verticals where the number of homes sanctioned is lower than the initial demand. 

To illustrate the extent of the problem – the initial demand surveys by states estimated a need for 14.35 lakh homes under the ISSR vertical. However, the scheme sanctioned only 2.96 lakh homes, that is 20.62 percent of the overall demand. Similarly, the AHP vertical saw a sanction rate of 47.25 percent against an initial demand of 33.82 lakh homes. On the other hand, the sanction rates for BLC and CLSS verticals are 165 percent and 131 percent, respectively. 

More importantly, between March 2023 (when the MoHUA was deposed before the Standing Committee on Housing and Urban Affairs) and now, the total homes sanctioned under the PMAY-U have gone down by about 4 lakh from 1.22 crore to 1.18 crore. 

Why? The answer is within the AHP vertical. 

From about 21 lakh homes sanctioned under it till less than a year ago, the scheme has now revised its sanction down to 16 lakh homes. Ministry officials point to the availability and procurement of land, land disputes, other land or location related issues, and delays in regulatory approvals as the main bottlenecks scuttling progress. 

It is largely the state governments and ULBs that are responsible for land provision under this vertical; as such, the implementation issues under this vertical are theirs to solve. 

The ministry officials note further that the popularity of the BLC and CLSS verticals, in large part, is explained by the fact that states/ULBs do not have to procure land for them. The states find it convenient to work with those beneficiaries who have their land. Particularly, in the case of ISSR, the officials remarked that the states and ULBs find it tough to win the trust of slum-dwellers for rehabilitation programs that often relocate them.

Overall, the scheme has so far completed 80.02 lakh homes against its revised target of providing 1.18 crore homes by December 2024. That’s a completion rate of 67.45 percent. But even if all the sanctioned homes are completed by the deadline, will PMAY-U have solved the home ownership problem in urban India? Is it on track to achieve “Housing for all” by the end of this year? 

Let us look at some numbers. 

A technical group (TG-12) constituted by MoHUA in 2012 assessed the housing shortage in urban areas to be 1.88 crore. This number is corroborated by a back-of-the-envelope calculation using the 2011 census data which identified 1.4 crore slum households in the country, and the number of migrants to cities from rural areas to be 0.44 crore. This adds up to about 1.84 crore and is close to the technical group’s estimation. 

Going by MoHUA’s multiplier for slum decadal growth rate of 34 percent, India’s slum population would have increased to 2.42 crore by now. Assuming a similar growth rate for migration to cities would throw up 0.76 crore migrant households in India’s cities that need housing. This adds up to 3.18 crore households in urban areas in need of housing by 2024.

A report by ICRIER, which uses the same methodology as TG-12, estimates that the urban housing shortage in India would have increased to about 5 crore by 2018. This number factors in homeless households, non-slum households living in physically inadequate houses, and slum households. Keep in mind that these estimates are till 2018 only. 

A third estimate from KPMG puts the urban housing shortage in India by 2022 to be somewhere between 4.4 crore and 4.8 crore units. Assuming the same structural composition of demand as in 2012, over 95 percent of this shortage is to be from EWS and LIG households. 

To summarise, the estimated urban housing shortage in India right now must range anywhere from 3.18 crore to 5 crore. Even taking the most conservative estimate of 3.18 crore that is derived from the government’s numbers, the PMAY-U has addressed a mere 25.15 percent of the housing shortage by delivering 80 lakh homes. Even if it were to finish the remaining homes by the deadline of 2024, it would have addressed just about 37 percent of the real need. Almost 2.4 crore households will still be without a proper roof. 

The newest vertical of this scheme, which seeks to provide Affordable Rental Housing Complexes (ARHCs) across major cities in India, has had limited success too. 

Under the first model of the vertical, out of the 75,000 existing government-funded vacant houses that were to be converted to ARHCs, only 5,648 such houses were made ready by March 2023. That is a completion rate of 7.5 percent. The second model, under which new ARHCs were to be constructed, has seen a better completion rate of about 35.6 percent whereby 29,265 units out of the proposed 82,273 units have already been constructed. 

Performance across states

The decentralised nature of the scheme allows for significant differences in state-level outcomes based on local governance. State performance can be assessed along two dimensions. Coverage, which is a measure of how much of the urban housing shortage was addressed by the scheme, and completion, which tracks the completion of the homes that were approved under the scheme.

Let’s begin with coverage, with the graphic below comparing the projected shortage of urban houses per state in 2012 to the homes sanctioned in each state under PMAY-U.

It’s clear that progress has been uneven and lopsided. 

States like Tripura, Mizoram, Andhra Pradesh, and Gujarat have surpassed the shortage estimated in 2012. Of course, as discussed earlier, the demand for urban housing has grown considerably since 2012, so this is not to suggest that these states have solved the urban home ownership problem. 

Tripura’s supply figures being thrice the demand in 2012 could point to some possible mismanagement concerning initial demand assessment.

Some states with big populations, Madhya Pradesh, Maharashtra, and Chattisgarh have encouraging figures – greater than 70 percent coverage for the 2012 baseline demand. 

Assam, Uttar Pradesh, Karnataka, Tamil Nadu, West Bengal, and Odisha have middling numbers – somewhere around 50 percent. 

Meanwhile, states like Rajasthan, Bihar, Kerala, Himachal Pradesh, Punjab and Haryana along with the urban hubs of Delhi and Chandigarh have a lot of work left to do. It is surprising to find Kerala in this category of worst-performing states given its generally superior social indicators.

Next, let us look at scheme completion across the states, with data as of January 29, 2024.

The data above suggests some interesting insights.

• Much like coverage, completion is highly uneven across states.

• Goa, Gujarat, Himachal Pradesh, Tamil Nadu, Telangana, Arunachal Pradesh and Tripura are the states that have high completion rates, along with the union territories of Diu/Daman, Delhi, Chandigarh, and Pondicherry.

• Bihar, Andhra Pradesh, Manipur, Mizoram, Meghalaya, Sikkim, Andaman and Nicobar, and Jammu and Kashmir have completion rates of less than 50 percent, with the northeastern states having the lowest numbers.

The government has acknowledged the slow completion rate in most northeastern states. The reasons for this include higher cost of construction due to geography, poor state finances especially after Covid, and a lesser emphasis on this scheme by states since most northeastern states have either zero or minimal state contribution to financing the scheme.

The situation in Andhra Pradesh merits more scrutiny. As the data shows, the percentage of completed homes is only 42 percent, but both coverage rates and grounding rates are among the highest. This dichotomy can be explained by the particular focus of the Jagan Reddy government on housing the poor since it came to power in 2019.

It is a political and policy agenda that was important enough for the state to even rebrand the scheme and lock horns with the Modi government (discussed later). The key takeaway from this is that political will at the state level is a key determinant of high-volume scheme participation and successful execution.

The money trail

Now, let us look at how PMAY-U funds are spent, with the table below.

The funding-split across verticals reflects the relative uptake of verticals by beneficiaries and the centre’s promised share. 

As expected, CLSS and BLC attract the maximum share. Even though BLC beneficiaries are nearly thrice as many as the CLSS beneficiaries, since the centre’s expenditure per beneficiary is more than twice under CLSS, the cumulative cost burden of CLSS is much higher. 

AHP and ISSR get the lowest contribution reflecting their fewer numbers in the scheme.

States and ULBs are spending a whopping 1.33 lakh crore out of their budget under the housing scheme. But the amount of funding available via local governments varies across states. 

To get a sense of cost variations over regions, consider an EWS house constructed under PMAY-U. The average cost of such a house, at the national level, is around Rs 6.5 lakh. However, when we zoom in, the cost of the same EWS house comes out to be Rs 13.34 lakh, Rs 10.34 lakh, Rs 8.98 lakh and Rs 8.55 lakh in metropolitan cities, non-metropolitan cities, hilly terrains, and northeastern states, respectively. Given these cost variations, the centre expects state governments and ULBs to adjust their contributions to keep housing affordable. 

The table above shows the average contribution of states and ULBs in PMAY verticals. Since CLSS scheme is a central sector scheme, meaning it is completely funded by the centre, there is no state or ULB component. For ISSR and AHP, the state contributions actually outnumber the central contribution.

Note that the state and ULB contributions in the table are averaged across the country, but the city-to-city and state-to-state variations can be quite large.

Some states like West Bengal and Kerala exceed these average numbers, while others like Nagaland, Manipur, Mizoram, Meghalaya, and Rajasthan provide no state contribution under the scheme. Similarly, the state assistance for the AHP vertical in Mumbai, Chennai, and Kolkata is Rs 1 lakh/unit, Rs 7 lakh/unit, and Rs 2.49 lakh/unit respectively. 

The variable portion of state funding in PMAY-U brings up an interesting federalism tussle.

The Centre is keen to brand the scheme as a Prime Minister Modi scheme to benefit from the goodwill it would presumably generate. But states like West Bengal and Andhra Pradesh have chief ministers who want to claim credit for this scheme, especially since their state contribution is sometimes more than the central assistance.

In Andhra Pradesh, Jagan Reddy renamed the scheme to PMAY-YSR which has led to a stand-off with the center over the release of funds. A similar incident happened in 2022 with Mamata Banerjee, albeit over the rural component of PMAY.

UPA vs NDA

When assessing any government initiative, it is also instructive to compare performance with previous governments. So, how does the PMAY-U stack up with urban housing efforts under the UPA?

The Centre started seriously thinking about policy interventions to alleviate urban homelessness only around the mid-2000s. The Jawaharlal Nehru National Urban Renewal Mission (JNNURM) was launched in 2005 with the overall objective of modernizing Indian cities by providing adequate infrastructure. While it was not explicitly an urban housing program, parts of its ‘Basic Services to Urban Poor (BSUP)’ and ‘Integrated Housing and Slums Development Programme (IHSDP)’ sub-missions created a limited number of urban dwellings.

The Rajiv Awas Yojana (RAY) was UPA’s first big urban housing intervention and was launched in 2011 with a vision for a “slum-free India”. The actual implementation of RAY only began in 2013, and it was rebranded to PMAY-U under Modi (with some policy changes) shortly after that. Separately, an interest subsidy scheme named Rajiv Rinn Yojana was started in a pilot phase in 2008. By the UPA government’s own admission in 2013, the response to this scheme was tepid. Some of the recommendations to improve scheme response, especially increasing loan limits, were incorporated in the CLSS vertical of PMAY-U.

Going by raw numbers, as the table above indicates, PMAY-U is miles ahead of its predecessor schemes on every important factor including the number of homes sanctioned, the number of homes successfully built, and the number of beneficiaries targeted. While the UPA-era schemes sanctioned only about 15.8 lakh homes, PMAY-U sanctioned nearly eight times as many. Similarly, while the UPA could deliver only 8.2 lakh homes during its tenure, the NDA has delivered nearly ten times as many homes over a similar timeframe.

Of course, the nuance here is that the schemes launched under the UPA either had a much broader focus (JNNURM) or a very short run-time (RAY). How much allowance one gives to such nuances when forming an opinion is likely determined by whether they are pro-Modi or pro-Manmohan. 

A non-partisan line of argument would be that the GoI has shown considerable continuity when adapting the RAY and RRY to PMAY-U, which is a more integrated and scaled-up version of its predecessors.

That said, it is worth noting that during the UPA years, the GoI focused more on addressing rural home ownership through the Indira Awas Yojana. That urban housing was neglected and came too late on the UPA’s radar is an understatement.

Issues and challenges stalling ‘housing for all’

Unfortunately, no government scheme is without its fair share of alleged irregularities and malpractices. 

Across the board, from north to south, and across party lines, irregularities have been reported under the PMAY-U. In Puducherry and Karnataka, for instance, the CAG found that several ineligible beneficiaries were given benefits of the scheme.

However, not all that is wrong with progress under the scheme can be attributed to malfeasance. As with any intervention of this size, certain implementation hurdles have been slowing down progress and warrant mention.

For one, as discussed earlier, the low uptake of homes under ISSR and AHP verticals is a cause of great concern. As our analysis showed earlier, over-emphasis on BLC and CLSS verticals has meant that while those with existing land, or access to borrowing from financial institutions, were able to benefit from this scheme, the most vulnerable amongst all – the landless – were left behind. The government must go back to the drawing board and figure out a way ahead to address this. Adequate and timely land provision for new construction or rehabilitation seems to be a big challenge across states. State governments need to solve this puzzle post haste.

Further, as MoHUA officials noted during their deposition before the Standing Committee, the completion time of AHP and ISSR houses is generally 24 to 36 months, while CLSS or BLC homes come up much sooner. While it is understandable that the Centre has not set any hard deadlines for states to abide by given their unique challenges, there must be a renewed focus on the delivery of the remaining one-third of homes to meet the revised deadline of December 31, 2024.

What is more worrisome is that even completed homes are going unoccupied under the ISSR and AHP verticals due to inferior quality of construction, or non-provision of basic services. The Standing Committee report noted over 5.6 lakh such homes. 

States like Andhra Pradesh, Telangana, Maharashtra and Gujarat stand out as states with a large number of unoccupied AHPor ISSP homes.

This points to the need for not only superior quality control by implementing agencies (primarily, the ULBs) but also the need for better third-party monitoring and social audits. At the moment, the logistics of third-party monitoring fall under the realm of state governments and ULBs; this is a definitional conflict of interest since they are in charge of implementation. Centre or other independent agencies need to play a more active role in monitoring.

Another area of concern is that even the “new and speedy construction technologies” being experimented with under the scheme have not been able to help with speedier execution. As the Committee noted, “...as of 31.10.2022, only 5,95,261, i.e., 38.69 percent houses [out of 15.38 lakh homes to be constructed under the technology sub-mission of PMAY-U] have been completed. The committee believes that such delay in construction of projects where the focus is precisely on promotion of modern, rapid, resource-efficient, disaster resilient construction technologies, is unacceptable.”

Another weak area impacting implementation has been poor stakeholder engagement.

Local elected representatives should be engaged during the entire cycle of policy formulation as well as execution at the local level so that problems such as delayed land acquisition, poor participation of the community (for example, in the case of ISSR), and land disputes can be avoided. Identification of beneficiaries before construction, and consultation with them throughout the process can also improve the uptake under AHP and ISSR verticals. 

Most importantly, given that beneficiaries themselves are picking up the highest share of the cost burden, more needs to be done to make credit accessible to them. Financial institutions have shown a reluctance to lend to such beneficiaries because of their credit risk profile; the Centre should work with them to create an enabling framework that makes collateralisation of PMAY-U homes easier.

Distant dream

A few meta-observations warrant mentioning. 

First, the scheme has delivered 80 lakh homes while the urban housing shortage, using the most conservative estimates, would have risen to at least 3.18 crore units. Even if the scheme were to deliver the remaining 38 lakh homes on schedule, it would have addressed only 37 percent of the problem statement. 

However, the impact of PMAY-U in raw numbers is significantly better than the earlier initiatives. Put differently, the Modi government has done a lot more to alleviate urban homelessness and yet has more homelessness under its watch. Does this constitute a step forward or a step back? 

Secondly, while home ownership is a worthy policy goal to pursue, affordable renting could be another way to chip away at the problem of homelessness. There has been a belated realisation of this after Covid, but a lot more needs to be done than making 35,000-odd units available in a country as large as ours. Since affording EMIs is still a challenge for the poorest people despite interest subsidies under CLSS, perhaps affordable or subsidised renting in our cities can be a bridging pathway. This would allow the beneficiaries to build a career and a credit record to qualify for loans eventually. 

Thirdly, more needs to be done to make affordable housing projects attractive to private developers. Costs, fees, and taxes associated with property registration, development, and approvals need to be rationalised. There needs to be a focus on single-window clearances for the many approvals required. Average project timelines need to be condensed and governments at all levels should play their respective parts in making that happen without diluting safety or quality.

Most importantly, there needs to be a more intensive focus on city planning and planned urbanisation. Indian cities need to have a much higher Floor Area Ratio (FAR) or Floor Space Index (FSI) which is to say that we should build taller buildings. Artificial restrictions on building heights have led to avoidable urban sprawl and pushed land costs sky-high. Denser cities are easier to manage, more economically productive, and more affordable. 

This brings us to a broad ‘first principles’ question readers can be left with. 

Given that housing is a private good, should the government be spending public money on it at this scale? If so, should it also continue spending on other housing subsidies that have become a part of the political norm in India? These are the various utility subsidies such as water bills, electricity bills, property taxes, and so on. What does it mean for our fiscal deficit? What does it mean to spend on consumption versus investment or research and development? Would this money be better spent, for the same set of households, but on subjects like health, education, and skills? 

The answers could be found with an impartial cost-benefit analysis.