Cabinet Approves PMAY-Urban 2.0: Lessons From The Past Still Remain Unaddressed

With an ambitious plan to assist 1 crore families over the next five years, the government has committed an investment of Rs 10 lakh crore, with a subsidy of Rs 2.30 lakh crore dedicated to Economically Weaker Sections (EWS), Low-Income Groups (LIG), and Middle-Income Groups (MIG).

The scheme's launch follows the success of the original PMAY-U, which sanctioned 1.18 crore houses, with over 85.5 lakh homes already handed over to beneficiaries. The Cabinet’s recent approval, dated June 10, 2024, aligns with Prime Minister Modi’s vision of “Housing for All,” which he reiterated during his Independence Day speech in 2023.

The PMAY-U 2.0 is designed to cater to the additional 3 crore households across rural and urban areas, reaffirming the government's commitment to providing affordable housing to every Indian citizen.

Lessons From The Past: Addressing Earlier Shortcomings

While the original PMAY-U made significant strides, it was not without its challenges. Over the past nine years, there has been a noticeable absence of comprehensive evaluations, particularly qualitative assessments, of the scheme. The only significant review comes from the Ministry of Urban Affairs' standing committee report, which provided a critical analysis of PMAY both qualitatively and quantitatively.

Three primary issues have been consistently highlighted. The Secretariat has earlier written extensively on this. Firstly, despite the committee's findings, the PMAY has not undergone significant updates, leaving the standing committee's report as the only substantial assessment of the scheme.

Secondly, independent studies on PMAY(U) have been scarce, creating a gap in understanding the program's real-world impact and effectiveness. Thirdly, and perhaps most concerning, is the lack of any recent assessment of India's housing shortage since the TG12 report, which was based on the 2011 Census and published over a decade ago.

These concerns underscore the persistent implementation issues that have remained unaddressed, even in the wake of the pandemic, which underscored the urgent need for updated guidelines. Problems such as inadequate amenities, basic infrastructure deficits, unoccupied houses, and challenges faced by beneficiaries in accessing the scheme continue to plague the program.

The absence of new guidelines from both central and state governments to tackle these issues raises important questions about the tangible improvements PMAY-U 2.0 will bring.

Key Features Of PMAY-U 2.0: What’s New?

PMAY-U 2.0 introduces several key features designed to enhance the affordability and accessibility of housing. One of the notable changes is the expansion of the Credit Risk Guarantee Fund Trust (CRGFT) corpus from Rs 1,000 crore to Rs 3,000 crore.

This fund will provide credit risk guarantees on affordable housing loans offered by banks, housing finance companies, and primary lending institutions to EWS and LIG segments. The management of this fund will now fall under the National Credit Guarantee Company (NCGTC), taking over from the National Housing Bank (NHB).

While the scheme retains its inclusivity, targeting families across EWS, LIG, and MIG categories who do not own a pucca house anywhere in the country, the updated PMAY-U 2.0 also maintains its coverage of all statutory towns as per the 2011 Census and other notified planning areas, ensuring broad access to affordable housing.

The implementation models under PMAY-U 2.0 have also been refined. The Beneficiary-Led Construction (BLC) model remains a cornerstone of the program, offering financial assistance to EWS families for constructing new homes on their land.

For landless beneficiaries, states or UTs may provide land rights. The Affordable Housing in Partnership (AHP) model continues to provide financial aid to EWS beneficiaries for purchasing homes built through public-private partnerships. Additionally, the scheme now includes a Technology Innovation Grant (TIG) of Rs 1,000 per square meter for projects utilizing innovative construction technologies.

However, the Insitu Slum Rehabilitation (ISSR) vertical, previously a part of PMAY, has been completely removed following the 17th Lok Sabha report that highlighted its inefficiencies. In its place, the Affordable Rental Housing Complexes (ARHC) model, initially introduced in response to the COVID-19 pandemic, has been elevated to a main vertical under PMAY-U 2.0.

Despite reports of the ARHC’s ineffectiveness and legal challenges, the government has decided to proceed with this model, aiming to create rental housing for urban migrants, industrial workers, and other eligible groups.

Funding And Implementation: A Collaborative Approach

The financial structure of PMAY-U 2.0 is designed to ensure widespread participation and affordability. The cost of constructing houses under the different verticals, except for the Interest Subsidy Scheme (ISS), will be shared among the central government, states, UTs, and beneficiaries.

For instance, in the BLC and AHP verticals, the central government will contribute Rs 2.50 lakh per unit, with states providing additional funding to ensure affordability. Special arrangements have been made for northeastern states, Himachal Pradesh, Uttarakhand, and union territories like Delhi, J&K, and Puducherry, where the central government’s share will be higher.

Emphasis On Technology And Innovation: A Sustainable Future?

PMAY-U 2.0 places a strong emphasis on the use of modern, green technologies in housing construction through the Technology & Innovation Sub-Mission (TISM). States and Union Territories are encouraged to adopt these practices to ensure faster and more sustainable construction of homes.

However, the specifics and guidelines for implementing these green technologies are yet to be released. Reflecting on the previous version of PMAY, the use of green technology often appeared to be a piecemeal effort, more rhetorical than practical, and did not effectively target the needs of poorer sections. This raises concerns about whether the emphasis on sustainability will be genuinely impactful this time around.

Perspectives On The Revamped PMAY: A Step Forward, But Challenges Remain

Akshay Tripathi, a veteran civil servant with over a decade of experience at NITI Aayog and the Ministry of Housing, provides critical insights into the current housing challenges. He emphasises that while state governments bear the responsibility to adapt the scheme to their specific populations, the central government must also learn from previous state-level initiatives.

Tripathi highlights a significant gap: neither the schemes nor the verticals have been adequately evaluated, and the absence of an updated census is severely impacting India’s housing outcomes.

Hemant Ranjan, Chairperson of the Ranchi Development Authority, acknowledges the difficulties states face in implementing housing schemes. He notes that while states often encounter challenges, legal hurdles make changes difficult. Ranjan stresses the need for regular, structured feedback to the central government and suggests a workshop-based gathering from every state before any major revamp of the scheme is undertaken.

Rupali Thakkar from the Ahmedabad Urban Development Authority (AUDA) adds a critical perspective, noting that while increased allocations and housing units in the latest budget are welcome, the exclusion of slum rehabilitation from PMAY-U 2.0 leaves the most impoverished segments of society without support. Thakkar emphasizes the need for a mechanism to address this gap, as the scheme now primarily caters to those with land and a certain income, leaving out the very classes it should aim to help.

The implementation of PMAY-U 2.0 is expected to be a transformative force in India’s urban housing landscape. By focusing on inclusivity, affordability, and sustainability, the scheme aims to fulfil the government’s vision of "Housing for All."

However, as experts highlight, significant challenges remain, particularly in evaluating the program's effectiveness and ensuring that it reaches the most vulnerable populations.