Housing for all by 2022- The Vision and Challenges

September 2015 witnessed a momentous gathering of 193 member states of the United Nations in New York for the “Summit on Sustainable Development”. After three days of intense deliberations, on 25^th September, they unanimously adopted a bold new global agenda to end poverty by 2030 and pursue a sustainable future. 17 Global Goals constitute the core of this historic Sustainable Development Agenda. One of the critical goal is, ensure access for all to adequate, safe, affordable housing and basic services and upgrade slums by 2030. It is interesting to note that policy makers in India had not only anticipated this global priority but had also fixed an ambitious timeframe of 2022 to achieve it in the country.

The Union Budget 2014-15 announced the setting up of a mission on low cost affordable housing. In this context the Union Cabinet broadly cleared the “Housing for All by 2022” concept in February 2015. In June 2015, the Union Cabinet approved Housing for All by 2022 Mission or National Mission for Urban Housing. This Mission provides the broad framework under which the Housing for All by 2022 Scheme (Pradhan Mantri Awas Yojana) was formally launched by the Ministry of Urban Development on June 25^th with the following components.

• Slum rehabilitation of Slum Dwellers with participation of private developers using land as a resource.
• Promotion of affordable housing for weaker section through credit linked subsidy.
• Affordable housing in partnership with Public and Private sectors and
• Subsidy for beneficiary-led individual house construction or enhancement.

Under the Slum rehabilitation of Slum Dwellers, component, a central grant of Rs 1 lakh per house, on an average will be available. An interest subsidy of 6.5 per cent on housing loans with a maximum tenure of 10 years will be provided for weaker sections under the Credit Linked Subsidy Component. Under the last two components of partnership with public and private sector as well as beneficiary led individual house construction or enhancement, the central assistance would be Rs 1.5 lakh per house. To avail of these benefits under the four components of the scheme the State Governments or their agencies like Housing Boards will have to implement mandatory reforms like preparing or amending master plans for earmarking land for affordable housing, a single window time bound clearance system for building permissions, relaxation of layout approvals for housing for low-income groups etc, which would make adequate urban land available for affordable housing. Hence the Mission would not only aim to provide housing for all but would also trigger far reaching reforms in India’s urban governance.

The Housing for All by 2022 Scheme will have a universal urban coverage and would provide about 2 crore houses, in all 4041 statutory towns with initial focus on 500 class I cities. The scheme is proposed to be implemented in three phases. Phase I from April 2015-March 2017 would covet 100 cities, phase II from April 2017- March 2019 is expected to cover additional 200 cities and phase III form April 2019 - March 2022 would cover all other remaining cities. The Housing and Urban Poverty Alleviation Department of Ministry of Urban Development would provide an assistance of over Rs 2 lakh crore over the next 6 years under this scheme. It is hoped that by year 2022, coinciding with 75 years of India’s independence the target of 2 crore houses for the urban poor, would be achieved.

Two important dimensions of Housing for All by 2022 Mission are- Integration of Adhar Number and Jandhan Yojana bank account numbers of intended beneficiaries as well as a technology sub-mission which would facilitate adoption of modern, innovative, disaster resistance and green technologies/ building materials for construction of houses. The Adhar Jandhan Yojana bank account integration would lead to transparent identification of beneficiaries, better tracking of physical and financial progress and cut down the delays in crediting the beneficiary bank accounts. The technology sub-mission would lead to preparation and adoption of cost effective/green housing designs suitable for various geo-climatic zones in the country, facilitate faster and quality construction of houses and would popularize environment friendly technologies of construction.

The Mission and the scheme provide a radical departure from the earlier approach of “one size fits all”, of previous Governments towards rural and urban housing schemes. Under the earlier housing schemes like Indira Awas Yojana (IAY) for rural poor and Rajiv Awas Yojana (RAY) for urban poor, the Central Government had prescribed a standardized and uniform norm for financing the construction of housing units across the country without providing the State Governments with a bouquet of financial and design options. This in turn had adversely impacted the off take of these schemes among the intended beneficiaries. This had also led to a situation of a large number of incomplete houses as well as abandoned housing units, calling into question the appropriateness of following an approach of constructing standardized housing units across the country without taking due notice of the localized factors. The present scheme, provides flexibility to States for choosing the best among the four options of the scheme to meet the demand for housing in their respective States.

The scheme also strengthens the theme of cooperative federalism by devolving to the States the power to formulate and approve various housing projects in accordance with the guidelines. This hopefully would not only lead to faster implementation of the scheme but would also foster a sense of ownership of the scheme among the State Governments. The efficacy of this feature of the scheme is attested by the fact that so far 15 States (Andhra Pradesh, Bihar, Chhattisgarh, Gujarat, J&K, Jharkhand, Kerala, Madhya Pradesh, Manipur, Mizoram, Nagaland, Odisha, Rajasthan, Telangana and Uttrakhand), have agreed to implement the mandatory reform measures essential for making the housing mission in urban areas a success. On the recommendations of some of the States, the Ministry of Urban Development has also notified changes in the guidelines to simplify the procedure. Earlier the Ministry had stipulated a time period one year to complete a house and furnish the utilization certificate. Now this time limit has been extended to three years.

While announcing the Housing for All by 2022 Mission and the Pradhan Mantri Awas Yojana, the current Government has shown a clear intent and a definite thought process to provide affordable housing to the homeless particularly the urban and the rural poor as well as economically weaker sections. There is a school of thought which has criticized this intent and vision of the Government on the ground of it being “unrealistic”. The criticism hinges on the fact that the mission would have to ensure construction of 2 crore urban houses and 2.95 crore rural houses within a 7 year period. This task, it has been argued is daunting because presently there is no guarantee of land availability, the problems in land acquisition would continue because of Government’s inability to get the amendments in the Land Acquisition Act 2013 passed in the Parliament, easy credit to private sector for housing remains a problem with high interest rates and thin profit margins being the norm in the housing sector at present.

What this school of thought, fails to appreciate are the silver linings on the horizon. With the Central Government permitting State Governments to move ahead with legislations to facilitate easier land availability, a part of this problem can be addressed by State led initiatives. The State Governments will also have to play a major role by formulating and customizing their State specific housing policies in-tune with the Central Government’s Mission. The Centre is also slated to table the Real Estate Regulation and Development Bill in the Parliament, which if passed would grant infrastructure status to “Affordable Housing”. This in turn would mean lower borrowing rates and tax concessions. In such a scenario with cheaper funding and strengthened profit margins, the private sector, may find affordable housing more attractive. A fillip to cheap and easy finance, has been provided by the Reserve Bank of India which has slashed the benchmark Repo rate by 50 basis point in September 2015 and has in October 2015 eased mortgage rules which would allow lenders to set aside less capital to cover home loan default risks, thus effectively helping to lower their cost of funds. It is expected that the banks would follow this lead shown by the RBI and provide a push for housing.

In addition the Central Government’s philosophy of using JAM (Jandhan Bank Accounts, Aadhar Platform and Mobile Governance) would hopefully lead to better and transparent identification of beneficiaries and lesser financial leakages in the affordable housing schemes of both the Central and State Governments. Timely delivery of housing units, both in rural and urban areas would ultimately depend on preparation and execution of clearly articulated actionable plans for all stakeholders primarily State Governments, semi-Government agencies such as HUDCO, NBCC etc, financial institutions and private players.

Effective implementation of the Mission and Pradhan Mantri Awas Yojana is dependent, among other factors, on the States and urban local bodies evolving a effective policy framework for Economically Weaker Section (EWS) and Lower Income Group (LIG) housing, eliminating the need for multiple approvals and long time period involved in obtaining them, reducing the cost of capital, easy availability of land and its optimal usage. The challenge of the Mission is to create a governance climate that would trigger multiple solutions to these issues.

One must not lose track of the fact that the role of the State in providing affordable housing in rapidly growing urban India, has shrunk over the past few decades. The housing units constructed under various urban housing schemes of the previous Governments have addressed a mere fraction of the requirement of India’s urban population. Our cities are increasingly being characterized by urban decay, squalor, slums, bad or non-existent sewerage and drainage system. In such a context, the announcement of the Mission as well as Pradhan Mantri Awas Yojana, with its ambitious targets has triggered a process of intense State involvement in the process of urban housing, planning and infrastructure. Such an involvement must be applauded.

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Published Date: 18^th February 2016, Image Source: http://www.ibtimes.com [3]
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the Vivekananda International Foundation)