The 21st century is called the urban century because for the first time, since dawn of civilization, more people are residing in urban India than in rural areas. The most important problem in all cities has been housing due to sudden and large scale influx of migrants from rural areas to urban areas. Because of the housing shortage in every city almost fifty percent of the population live in slums. Whilst the overall population growth has declined over the last decade, urban population growth continues to be almost twice the annual national population growth rate.

Further, the urban share of the GDP is projected to increase to 75 per cent in 2031 from an estimated 62-63 percent in 2009-2010 (The High Powered Expert Committee (HPEC),2011), Consequently, there is a dire need to improve the quality of life in our cities and to address the current and anticipated future shortage of housing along with other infrastructure deficit issues prevalent in our urban centers.

The government estimated the total urban housing shortage at 18.78 million units in the 12th year plan (The Technical Group on Urban Housing, 2011). Within these 18,78 million units, the housing shortage amongst the Economically Weaker Section (EWS) and the Lower Income  Group (LIG) is extraordinarily high with a 96 per cent share of the total shortage.

Pradhan Mantri Awas Yojana (PMAY), or Affordable Housing for All Mission is divided into two parts:

1. PMAY (Gramin), which comes under the ambit of the Ministry of Rural Development and
2. PMAY (Urban), which falls under the Ministry of Housing and Urban Affairs

• The target for PMAY is to build approximately 1.2 crore affordable homes in urban centers by the year 2022 in 4 years.
• PMAY has already quadrupled the number of affordable house sanctioned when compared to the previous 10 years of JNNURM.

Embracing Urbanisation:

Today, while agriculture continues to employ over 40 per cent of India’s workforce, its contribution to India’s Gross Value Added has fallen to 16.4 per cent.  On the other hand, the contribution of services has significantly increased, and is today at 55.2 per cent.  By its very nature, the services sector resides in urban areas. Given the growing aspirations of India’s citizens, they would seek employment in services, and thereby seek out urban centres. It is estimated that by 2030, almost 600 million Indians or 40 per cent of India’s population will live in Indian cities. Given this demographic shift in India, Elements of Goal 11 of the Sustainable Development Goals (SDGs) titled “Make cities and human settlements inclusive, safe, resilient and sustainable”, were incorporated by India in its development efforts and plans even before the SDGs and the 2030 developmental agenda were formally adopted by the United Nations in 2015.

What is an affordable house?

Under PMAY(U), an affordable house goes beyond the construction of four walls using bricks and cement. A PMAY (U) home, by its very definition, must have a functioning toilet, an electricity connection, a tapped water connection, and door waste collection, the title of a PMAY (U) home can be registered under the lady of the house, or co-jointly through a PMAY(U) home, families have access to all amenities that will allow them to lead a life of dignity, security and prosperity.

PMAY(U) Implementation:

The implementation of PMAY(U) is undertaken through four verticals

1. In-situ slum redevelopment.
2. Affordable Housing in Partnership (AHP).
3. Credit Linked Subsidy Scheme (CLSS).
4. Beneficiary Led Construction (BLC).

A – In – situ slum redevelopment (ISSR)

This uses land as a resource. The scheme aims to provide houses to eligible slum dwellers by redeveloping the existing slums on public/private land. A grant of INR 1 lac per house is provided by the central government to the planning and implementing authorities of the states/UTs under this scheme.
B – Affordable housing in partnership(AHP):

This aims to provide financial assistance to private developers to boost private participation in affordable housing projects; central assistance is provided at the rate of INR 1.5 lac per EWS house in private projects where at least 35 percent of the hoUses are constructed for the EWS category.

C – Credit – linked subsidy scheme (CLSS):

This scheme facilitates easy institutional credit to EWS, LIG and MIG households for the purchase of homes with interest subsidy credited upfront to the borrower’s account routed through primary lending institutions (PLIs). This effectively reduces housing loan and equated monthly instalments (EMI).

D – Beneficiary – led construction or enhancement )BLC):

This scheme involves central assistance of INR 1.5 lakh per family for new construction or extension of existing houses for the EWS/LIG.

• Holding period for capital gains tax for immovable property reduced form 3 years to 2 years.
• Indira Awaas Yojana will be extended to 600 districts.

Through these verticals, the Mission covers the entire canvas of affordable housing -from the slum dweller living in the most inhumane conditions; to those belonging to the economically weaker sections and middle income groups who need affordable banking finance; and to those belonging to the economically weaker sections and middle income groups who need affordable banking finance; and to those who own a piece of land, but require additional funding to build their house.

PMAY (U) makes a significant departure from previous top-down models. The Mission trusts the judgment of the beneficiary to make the most optimal decisions, based her needs.

PMAY(U) is one of several flagship programmes, which is anchored in, and thriving under, the cooperative federalism model. Under PMAY(U), the state governments themselves accord these approvals, with only minor suggestions, if any, made at the central level.

Under the scheme, government has announced that an interest rate of only 4 per cent would be charged on loans above Rs 9 lakh and 3 per cent on amount above Rs 12 Lakhs. However, there is ambiguity whether those not falling under EWS (Economically Weaker Section) or the LIG (Low Income Group) segments would be the beneficiaries. More projects will now be eligible for profit-linked income tax exemptions.

Government as Catalyst:

1. In the budget for 2017-18, affordable housing was given infrastructure status.
2. The budget for 2018 -19 institutionalized an Affordable Housing Fund under the National Housing Banks, to boost financing in the sector.
3. In addition to these, measures, Section 80-IBA of the Income Tax now provides for 100 percent deduction of profits for Affordable Housing Projects, to encourage private participation in the mission.

Regulatory Framework (RERA):

• The government enacted the Real Estate (Regulation and Deregulation) Act or RERA in 2016.
• RERA is institutionalized in the country for the first time in 70 years, as a regulator for the real estate sector.
• As a result of this Act of Parliament, the hard earned life savings of a homebuyer are no longer at the mercy of a corrupt system, which was designed to circumvent and undermine India’s legal framework.
• The Insolvency and Bankruptcy Code, which bars willful defaulters from submitting a resolution plan, and which puts the home-buyer alongside financial creditors, has given a further fillip to weed out corrupt actors in the sector.  

Way forward:

• The Swachh Bharat or Clean India Mission, has today become a Jan Andolan, or a social movement. Its emphasis on ODF seeks to not only build the requisite number of toilets, but bring about behavioral change in the country.
• The 500 cities under Atal Mission for Rejuvenation and Urban Transformation (AMRUT), which will have universal water supply coverage and improved sewage networks, will   further improve the quality of life of those living in affordable homes.
• Under the Smart Cities Mission, the 99 cities selected have had extensive citizen engagement to ensure those living in affordable homes too have an equal say in the development of their city.  
• Estimates suggest for India to meet its urban demand, the country will have to build 700 to 900 million square meters of residential and commercial space every year till 2030. To put this in perspective, between now and 2030, India will have to build a new Chicago every year, if it has to meet its citizen demand for urban living.
• Given this context, the success of PMAY(U) needs to be viewed in conjunction with entire gamut of planned urbanization underway in the country.

The PMAY(U) epitomizes the seismic shifts taking place in our urban centres and the efforts that are being made to make Indian cities best in their class.

TID – BITS:

 Shyama Prasad Mukherji Rurban Mission:

• To create 300 such Rurban growth clusters over the next 3 years, which will be ODF, green and also create agro based and thematic clusters based on skilled  manpower and access to economic opportunities.
• 267 clusters already identified. 153 integrated Cluster Action Plans (ICAPs), which are the blueprints of investment for 29 states and one UT of Dadra & Nagar Haveli.

Land – pooling Mechanism

The budget announced that the new stage capital of Andhra Pradesh is being constructed by an innovative land – pooling mechanism without the use of the Land Acquisition Act. It is a significant step in the light of the Land Acquisition Bill.Land acquisition remained a much – debated issue and a major hurdle with respect to large-scale developments and it was also affecting the affordable housing segment. The new land pooling mechanism may significantly reduce land related disputes and increase the speed of development. The exemption of capital gains tax will uplift the confidence of landowners whose land is being pooled for the creation of the capital city under the government scheme. However, the exemption is only limited to those who were the owners of such land as of June 2014, the date on which the state of Andhra Pradesh was reorganized.