Modi 2.0 Is Firm On Turning Its Vision For Housing for All by 2022 Into Reality

The independnce of India in the year 1947 ensured roti, kapda and makaan to all its citizens. The same is also considered as a fundamental right of every citizen living in any part of the world by the United Nations. However, the execution of this dream in India resulted as a slow process, and the boom in population made it more difficult for the government as well as the real estate industry to achieve it fully. Out of several housing schemes introduced by various governments for decades, the most recent one emerged as a game changer. The central government under the Prime Ministership of Shri Narendra Modi launched Pradhan Mantri Awas Yojana (PMAY) or Housing for All by 2022 scheme on 25th June 2015.  

This housing scheme as an initiative by the Government of India functions under two components:

• Pradhan Mantri Awas Yojana (Urban) (PMAY-U) for the urban poor.

• Pradhan Mantri Awaas Yojana (Gramin) (PMAY-G and also PMAY-R) for the rural poor.

With an aim to build 2 crore affordable houses by 31st March 2022 for the urban poor population, more than 300 cities were identified under the scheme such as Chhattisgarh, Gujarat, Jammu and Kashmir, Jharkhand, Kerala, Madhya Pradesh, Odisha, Rajasthan, and Telangana to name a few.

How far is the progress of PMAY?

The construction of houses in urban regions include converting katcha house into pucca houses in slums for inhabitants as well as for population that fall under Low Income Group (LIG), Economically Weaker Sections (EWS) and Middle Income Group (MIG) categories.

Indira Awaas Yojana (IAY) as a housing scheme for rural regions in India was renamed as Pradhan Mantri Awaas Yojana (Gramin) (PMAY-G)  in the same year in 2015. The mission is to move people living in katcha houses to pucca houses in rural India.

 With the year 2019, PMAY enters its third and final phase where the government is working to cover all the remaining cities and housing projects in urban and rural regions.

Housing for All by 2022 under Modi 2.0

Housing for All by 2022 scheme at present is simply a continuity of the housing scheme that has been functioning since Modi 1.0. The second term for the Modi Government, popularly known as Modi 2.0 now stands firm to successfully complete the mission of providing a home for all as declared in the scheme.          

The question that haunts is how far will it achieve the remaining target by 2022? The challenges are quite acknowledged such as high construction costs, unavailability of urban land at reasonable prices, and policies that differ with every new state in the country.

According to a study by Deloitte, India's total urban housing shortage is estimated to be about 30 million by the year 2022. The reason is found to be the increasing gap between demand and supply in the affordable housing segment. The situation forces people to live in slums or informal settlements. On the other hand, from a high-profit margin perspective, real estate developers prefer Middle Income Group and High Income Group segments while aiming higher returns from their residential projects. Hence, building low-cost housing projects for EWS and LIG segments in the country seem less attractive deal to them.

The figure below by Deloitte explains the basic ecosystem of building an affordable housing project:

However, while executing the project at the ground level, there are various factors beyond the ecosystem that affect the pace of affordable housing development:

• Improper selection of land parcels for Affordable Housing (AH) projects in terms of improper infrastructure development, connectivity issues, lack of employment opportunities, etc.

• Lengthy statutory clearance and approval processes from multiple authorities affecting the project cost and delay in delivery.

• Lack of participation of big organised real estate players.

The performance of PMAY (Gramin) under the Modi government as per the data from the Ministry of Rural Development states below expectation. During 2017-18, the success rate was 57.5 percent where the government was able to complete 2.93 million houses against the target of 5.1 million houses. Hence, the challenge before Modi 2.0 government is to double the speed of construction in order to complete the remaining target of the scheme.

The potential of Modi 2.0 government

The best parameter to judge the potential of the Modi government is to evaluate its work and execution so far. No other government in the past highlighted a housing scheme and emotions related to having own house for each individual or family to this extent. The enthusiasm was realised and supported by the real estate players who believed in the vision of Modi. These real estate developers for the first time gave importance to building affordable houses for lower income and poor groups.

The government can overcome the hurdles and focus on the fast-track development of the scheme by:

• Using the barren lands which are a portion of government bodies such as various Industries, Indian Railways, and so on. Such lands can come in use by constructing affordable housing development in them.

• Consider improving the infrastructure of the far-flung areas from every city and turn it into an opportunity for residential and commercial development.

• Offering more benefits in terms of taxation and other incentives will ensure bigger participation of the private players from real estate. The Public-Private Partnerships (PPP) model will increase the funding.  

• The use of technology has always been a beneficial deal as it allows to build homes faster. The cost is relatively low as well. Adhering to the use of new-age technology, the government launched the Global Housing Technology Challenge at the beginning of 2019 with an aim to fast-track the development of affordable housing by shortening the duration from three years for construction to a minimum of three months.