Editorial Articles

Issue no 52, 26 March - 1 April 2022


Affordable Housing For All


Budget 2022 has one spectacular aspect to it. Union Finance Minister has announced allocation of Rs 48000 crs under Prime Minister's Awas Yojana where it is expected to complete around 80 lakh houses for socially needy persons in the financial year 2022-23. Similarly, allocation of Rs 60000 crs to cover 3.8 crore households for tap water to boost the Affordable Housing sector is a major step in this direction. At the same time, the Budget stresses on Urban Development for pushing employment in the urban areas and encourage the upcoming talents. More employment will boost spending capacities of the households. This in turn will contribute to the growth in the economy.

The real estate is one sector which was hard hit by the Pandemic in recent years. In a country like India's size and population, the need for housing is a historical one. Housing shortages have been felt for ages due to ever growing populations, inspirational changes, nuclear family living and also life style needs. Every urban and rural family wants to stay in a dignified way. Added to that, segments of populations like single working women, aged citizens, students and start up smaller entrepreneurs need their specific accommodation requirements due to specific works. The working class, lower income and those having sporadic incomes often are not able to get affordable houses within their active working life. At the same time, intracountry migration, displacements, livelihood changes, industrial reorganisations and technological changes have also resulted in variations in the income generation of people. Therefore the need for affordable housing has increased more.

Given the backward and forward linkages with ancillary industries, the plan to support the construction of over 80 lakh such houses will help in pushing demand for construction materials. The Budget proposal is expected to help the government move towards the achievement of its stated objective of Housing for All.

Concept of 'Affordable Housing'   

Definition: Affordable housing refers to housing units that are affordable by that section of society whose income is below the median household income.

Description: Different countries have different definitions for affordable housing, but it denotes largely the same, i.e. affordable housing should address the housing needs of the lower or middle income households. Affordable housing becomes a key issue especially in developing and newly emerging nations where a majority of the population finds it difficult to buy houses at the market price.

Disposable income of the people remains the primary factor in determining the affordability. As a result, it becomes the increased responsibility of the government to cater to the rising demand for affordable housing. The Government of India has taken various measures to meet the increased demand for affordable housing along with some developers and stressing on public-private partnerships (PPP) for development of these units.

PMAY (Pradhan Mantri Awas Yojana) backgrounder

 In India, the level of urbanisation increased from 27.81% in 2001 to 31.16% in 2011 as per the last Census report. A rough estimate indicates that around 35% of Indian population are at present living in urban areas. This census also states that total number of internal migrants per annum stands around 139 million. Similarly the Inter-state migration in India has been close to 9 million annually between 2011 and 2016. Urbanisation and migration are life changing factors that require new settlements to absorb people. Existing accommodations are not enough to service the floating populations. After the completion of 2021 census scheduled data collections, a more clear picture might arise definitely narrating the ruralurban changes and its implications on the housing needs of common people.

Pradhan Mantri Awas Yojana (PMAY) Eligibility etc

The Central Government has a theme 'Housing for All by 2022'. To achieve it, it had introduced the PMAY scheme. PMAY is a Central Government affordable housing scheme for Lower Income Groups (LIG) and Economically Weaker Sections (EWS) and Middle Income Group (MIG) consumers. This scheme is divided into Rural and Urban chapters. Let's see who all are eligible to avail benefits of Pradhan Mantri Awas Yojana.

Rural Areas

The following broad criteria is necessary for availing PMAY in Rural Areas

A    Houseless Families & Families with houses having zero, one or two rooms with a Kutcha wall and Kutcha roof

B    Households without a literate adult above 25 years & Households without an adult/adult male member between 16 and 59 years of age/without any able bodied members and with disabled member

C    Landless households who derive income from casual labour

D    Scheduled Caste, Scheduled Tribe, Others and Minorities

 Urban Areas

As per PMAY (U) guidelines, the size of a house for Economically Weaker Section (EWS) could be up to 30 sq meter carpet area, however, states and UTs have the flexibility to enhance the size of houses in consultation with and approval of the ministry.

A   Economically Weaker Section (EWS) with an annual income up to INR 3 lakh

B   Low Income Group (LIG) people whose annual household income is between INR 3 lakh to INR 6 lakh.

C   As per Middle Income Group (MIG) 1, a person earning up to Rs 12 lakh per year is entitled to avail a 4% subsidy on a loan of up to Rs 9 lakh. A maximum subsidy of INR 2.35 lakh is granted under a credit linked subsidy scheme, CLSS.

Middle Income Group (MIG) 2, a person earning up to Rs 18 lakh can avail a 3% subsidy on a loan of up to Rs 12 lakh. The maximum subsidy amounts to Rs 2.30 lakh under CLSS

Interest Subsidy on PMAY


EWS-------------6.4 Percent


MIG (1) ---------4.0

MIG (2)----------3.0

 A Critical Look into Policy

Pradhan Mantri Awas Yojana-Urban (PMAY-U)

The PMAY which was launched in June 2015, aims at providing affordable housing to the urban poor. In November 2016, a rural component was added. PMAY-U intends to subsidize the construction of around 1(one) crore urban houses, by providing Central assistance to similar number of eligible families or beneficiaries over the period FY 2015-22. The mission is being implemented through four verticals, as detailed below:

Supply-side intervention: Insitu slum redevelopment (ISSR) with participation of private developers provides 'pucca' houses to eligible slum dwellers by redevelopment of existing slums on private/public land. Private partners are selected via an open bidding process, based on the lowest cost of construction per unit; extra FSI/TDR/FAR is provided to make the projects financially viable. A grant of Rs. 1 lakh per house is provided by the Central Government to the planning/ implementing authorities of the States and Union Territories.

Affordable housing in partnership with public and private sector - Provides central assis-tance of Rs 1.5 lakh per EWS house in projects where at least 250 houses are being cons-tructed and 35% of the houses are for the economically weaker section (EWS).

 Affordable housing through credit-linked subsidy scheme (CLSS) - Focuses on expanding institutional flow of credit by providing interest subsidy of 3- 6.5%. Subsidy for a maximum tenure of 20 years is credited upfront to the beneficiary accounts, for new construction loans as well as enhancements.

Subsidy for individual-led house construction/ enhancements - It provides Central assistance of Rs 1.5 lakh to eligible EWS families for construction of new houses or enhancement of existing houses. Beneficiaries living in slums, which are not being redeveloped, can be covered under this component if they have a kutcha/ semi-pucca house.

While the EWS beneficiaries are eligible for assistance under all four verticals, LIG and MIG categories are eligible only for the CLSS component. With the Government push for affordable housing through provision of land, subsidies and incentives, private sector participation in the lower-ticket-size segment has been ramping up at a considerable pace, resulting in some narrowing of the demand-supply gap. The addition of the PPP policies, with land being provided by public authorities, was an important step, given that the availability of low-cost land has been a key challenge in the development of affordable housing units, particularly in urban areas. Demand has been outstripping supply in city-centric areas with a dire need for affordable housing, resulting in high land prices. In fact, depending on project location, land costs can vary anywhere between 20% to 60% of the total project cost. On the other hand, buyers of affordable housing are typically price-sensitive endusers, which results in low pricing flexibility and limited scope for margin expansion for the developer.

As on date, large tracts of vacant land are available with the Central Ministries, especially the Ministry of Defence, the Ministry of Railways, and the Ministry of Civil Aviation.

Identification and strategically planned absorption of such unutilised land, with earmarking for affordable housing, would address the key need of the hour, pertaining to unlocking of land at appropriate locations. Land available with certain lossmaking PSEs, such as HMT Bearings in Hyderabad, Hindustan Antibiotics in Pune, Heavy Engineering Corporation in Ranchi, Indian Drugs and Pharmaceuticals in Gurgaon, Tungabhadra Steel Products in Karnatka and HMT Watches in Nainital, has already been identified. National Building Constructions Corporation Ltd, NBCC has been appointed as the land management agency to auction the real estate assets of loss-making companies.

 Pradhan Mantri Awas Yojana - Gramin (PMAY-G): With the aim of addressing gaps in rural housing and providing Housing for All by 2022, the earlier Indira Awas Yojana (launched in 1996) was restructured into PMAY-G from April 1, 2016. The restructured mission has two phases:

Phase I targeted at providing 'pukka' houses to 1 crore households living in 'kutcha'/ dilapidated houses over the period FY 2017-19. Phase-II has a goal of providing coverage to 1.95 crore households over the period FY 2020-22, with an immediate target of 60 lakh houses in FY 2019-20, before the pandemic started.

The mission functions through the provision of cash incentives for the development of pucca homes and also ties in the requirement for each such house to have a cooking area, toilet, LPG connection, electricity connection and water supply through convergence with other relevant schemes like the 'Swachh Bharat Mission-Gramin (SBM-G'), 'Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS)', etc. Developed houses are required to have a minimum size of 25 sq. mt. and are to be constructed within 12 months of the sanction date.

Overview of Government Assistance provided to Beneficiaries : 

·         Financial assistance per Unit: Provision of Rs 1.2 lakh per unit in plains and Rs 1.3 lakh in hilly states, difficult areas and Integrated Action Plan districts. The cost is to be shared between Central & State Governments in ratio of 60:40 for plain areas and 90:10 for northeastern and Himalayan states 

·         Provision of unskilled labour- Provision of 90-95 days unskilled labour wage under MGNREGA for construction of house Labour may be contributed by other workers in case beneficiary has exhausted his/her 100 days under the scheme 

·          Support Services- Development and provision of house design typologies, Training of masons Sourcing of construction material, Facilitation of loans up to Rs 70,000 from banks, Beneficiaries are selected using housing deficiency and other social deprivation parameters in the Socio Economic and Caste Census, 2011 which is further verified by gram sabhas.

The beneficiaries are chosen by the Gram Sabha, according to the data collected on the national level Socio-Economic and Caste Census. The aim is to draft the list of socially and economically backward masses of the country to categorize the list of beneficiaries under the plan PMAY Rural scheme. If the applicant's name is listed in the released list of the Gram Sabha, he/she is eligible to apply for a home loan under PMAY rural scheme.

 Budget Implications

 Industry observers are of the understanding that "The Prime Minister Housing Scheme" is expected to achieve the 'Housing for all' objective with 80 lakh beneficiaries. This will lead to higher growth of affordable housing. The spending on various housing projects is expected to create demand for real estate-linked industries.

The announcement by the Government about working closely with the State Governments for a reduction of time for land and construction related approvals is also expected to promote affordable housing for the middle class and economically weaker sections in urban areas.

The Government has allocated Rs 48,000 crore for the completion of 80 lakh houses under the PMAY scheme in the financial year 2022-23. This is significantly higher compared to Rs 27,500 crore that was allocated for the ongoing financial year for both urban and rural regions.

The Central Government has also stated that it will work with the State Governments for reduction of time required for all land and construction-related approvals, for promoting affordable housing for the middle class and Economically Weaker Sections (EWS) in urban areas.

Hit hard by the pandemic and some policy reforms, the real estate sector had high expectations from the Budget 2022. However, while most of its hopes can be analysed after a careful study of the provisions in the budget, there are definitely some good news for affordable housing.

Single-window environmental approvals will also help to grow affordable housing more in the times to come.

Also, the government's focus on urban development will push employment in the urban cities and encourage upcoming talent. With more employment, the spending capacities of households will increase, which in turn will boost the overall economy and with this we expect the housing market to further improve as the sector just needs positive sentiment.

It also needs to be noted that connectivity has always helped real estate. So, with road construction given a boost by increasing the target to 25,000 kms of National Highways construction, the sector is likely to benefit.

Industry experts said the Union Budget 2022-23 is forward looking and focuses on a longterm plan for the country with digitization, urban development, and sustainability at its core.

Policy Overview - Technology Sub-Mission with construction costs and timelines being key concerns for developers of affordable housing units, the Government introduced a Technology Sub-Mission under the PMAY-U to facilitate the adoption of modern, innovative and green construction technologies and construction material for faster and improved quality of construction. Sixteen new technologies of formwork systems, panel systems, steel structural systems and pre-cast concrete construction systems have been earmarked for adoption. Use of the same is expected to lead to cost and time efficiencies, thereby making the construction of such spaces more financially viable.

 Some Affordable Housing Schemes in India

Main points:

1      Affordable Houses come at a price less than market prices

2      Housing projects all over the country by Government departments and PSUs reserve certain percentage of houses under Affordable category.

Apart from being an economic activity, Housing provides the below benefits.

1      Creation of Jobs

2       Opportunities for Economic Development

3      Increased Job Retention and Productivity

4      Greater Generation of Tax

5      Ability to address Inequality

Affordable Housing as a category addresses the above for a better socio-economic distribution of state resources and inter-sectoral growth.

The Government of India and the State Governments provide housing schemes to Indian citizens so that they can buy their homes easily. Irrespective of the class or group they belong to, these housing schemes allow the middle and lower income group to buy their own houses in India, which they are unable to do due to their financial constraints. A housing scheme helps avoid costly property purchases and provides a house at a lower price than the market price. One can apply for the housing scheme from the selected Housing Finance Companies (HFCs) or banks. Let us check out some of the government housing schemes from which one can buy a property in India at less cost than the market price.

1. Pradhan Mantri Awas Yojana (PMAY)

2. Haryana Housing Board Housing Scheme

3. Kerala Housing Board Scheme

4. The Maharashtra Housing and Area Development Authority Scheme

5. Delhi Development Authority DDA

6. NTR Urban Housing Scheme

7. Tamil Nadu Housing Board Scheme

8. Odisha Housing Board Scheme

9. West Bengal Housing Board Scheme

The government's push in Union Budget proposal of Rs 48,000 crore outlay for helping build low-cost houses in both rural and urban regions across the country is expected to boost the affordable housing segment and ancillary industries including cement and steel.

(The author is Additional Director General, Regional Outreach Bureau, Ministry of Information & Broadcasting, (Bhubaneswar.) E-mail: akhilkmishra1@gmail. com)

Views expressed are personal