MAHARASHTRA NATIONAL LAW UNIVERSITY MUMBAI

Name:vasudha gurav

Roll number: 2022 122

Section: b

Course: B.A., LL.B(HONS.)

first year, first-semester

Subject: economics

Topic: " Pradhan Mantri Awas Yojana: Critical Analysis"

Submitted to ASST.PROF.ROHIT B.JADHAV

Submitted on:20 october 2022

" Pradhan Mantri Awas Yojana: Critica

Sections Page number
1]Introduction 2
2]Objective of PMAY 3
3]History of housing schemes 5
4]Over view 7 – 13
A] vertical i
B] vertical ii
C] vertical iii
D] vertical iv
5]Finance 14
6]Impact 15
7]Conclusion 18

PROJECT OBJECTIVE

1. What is pradhan Mantri Awas yojana ?

2. What is its objective?
3. What was the scheme related to housing before PMAY?
4. What process was followed for the best implication?
5. How much of the authorized money was given by the government and who were the
private helpers?
6. What were the success and failures of PMAY?

Introduction

1
“Pradhan Mantri Awas Yojana – Housing for All (Urban)”, a mission to address the housing
needs of urban India is launched by the Government of India, with the objective that “every
family will have a pucca house with water connection, toilet facilities, 24x7 electricity supply,
and access” by the time the Nation completes 75 years of its Independence, i.e. by the year 2022.
Housing affordability is currently a prominent concern in India, especially in urban areas.
Globally, there have been several interventions that have aimed to provide affordable housing
solutions for all.

Housing is one of the most basic human needs. It’s a valuable prerogative for the development of
the individual as well as the society as whole. Not only does a house provide shelter, but also a
dignity to the human life, thus leading to a better standard of living. Every citizen of a civilized
society hence deserves a house of his own. Government of India has made it clear in its intention
to make available a house of their own for every family. The condition of the house also plays an
important role in the progress of the man and society, as the house itself.

Urbanization is an index of transformation from traditional rural economies to modern industrial

one. The graduation of number of urban centers from lower population size categories to class I
cities has resulted top heavy structure of urban population in India. India's urbanization is often
termed as over urbanization, pseudo- urbanization. The big cities attained inordinately large
population size leading to virtual collapse in the urban services and followed by basic problems
in the field of housing, slum, water, infrastructure, quality of life etc., Urbanization is a product
of demographic explosion and poverty induced rural-urban migration. Urbanization is occurring
not due to urban pull but due to rural push.

The rapid pace of urbanization overseen throughout India has led to a serious shortage of houses
for the urban population – migrants and locals alike due to the ever increasing urban population.
The housing problems commonly observed across India are:

Shortage- less number of houses, less than the demand

2
Condition of houses- Unlivable condition of available houses, eg kutchha houses,

dilapidated houses, slums, etc.

Cramped living- More number of persons sharing the same house, lack of privacy and

Dignity

Technical Committee of the Ministry of Housing and Urban Poverty Alleviation (MHUPA) has
estimated that urban housing shortage in Bihar is nearly 1.19 million households in 2012.
Around 8% of this shortage constitute of households Below Poverty Line (BPL). As per Census-
2011, all across the state, there are 670 slums with a population of about 648,912 constituting of
132,509 households, ie. a total of 5.52% of the population in Bihar are living in slums.

The objective of Pradhan Mantri Awas Yojana

main objectives of Pradhan Mantri Awas Yojana

● Reasonable homes with water association, latrine offices, 24x7 power supply and finish
get to.
● 2 crore houses to be worked over the country’s length and broadness Focusing on the
Lower Income Groups (LIG) and Economically Weaker Section of our general public
(EWS), essentially the urban poor by the year2022.
● 2 million non-ghetto urban poor family units are proposed to be secured under the
Mission. 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 & Private sectors
● Subsidy for beneficiary-led individual house construction /enhancement

Coverage and Duration of Mission

All statutory towns as per Census 2011 and towns notified subsequently would be eligible for
coverage under the Mission. The mission will support construction of houses upto 30 square
meter carpet area with basic civic infrastructure. States/UTs will have flexibility in terms of

3
determining the size of house and other facilities at the state level in consultation with the
Ministry but without any enhanced financial assistance from Centre. Slum redevelopment
projects and Affordable Housing projects in partnership should have basic civic infrastructure
like water, sanitation, sewerage, road, electricity etc. ULB should ensure that individual houses
under credit linked interest subsidy and beneficiary led construction should have provision for
these basic civic services.

The minimum size of houses constructed under the mission under each component should
conform to the standards provided in National Building Code (NBC). If available area of land,
however, does not permit building of such minimum size of houses as per NBC and if
beneficiary consent is available for reduced size of house, a suitable decision on area may be
taken by State/UTs with the approval of SLSMC. All houses built or expanded under the Mission
should essentially have toilet facility. The houses under the mission should be designed and
constructed to meet the requirements of structural safety against earthquake, flood, cyclone,
landslides etc. conforming to the National Building Code and other relevant Bureau of Indian
Standards(BIS) codes.

The houses constructed/acquired with central assistance under the mission should be in the name
of the female head of the household or in the joint name of the male head of the household and
his wife, and only in cases when there is no adult female member in the family, the house can be
in the name of male member of the household. State/UT Government and Implementing
Agencies should encourage formation of associations of beneficiaries under the scheme like
RWA etc. to take care of maintenance of houses being built under the mission.

History OF HOUSING SCHEME

The public housing program in India started with the rehabilitation of refugees immediately after
independence. Till 1960, nearly 5 lakh families were provided houses in different parts of
northern India. In 1957, within the ambit of the second five-year plan of Prime Minister Nehru,
the Village Housing Programme (VHP) was introduced providing loans to individuals and

4
cooperatives of up to Rs.5,000/- per unit. Only 67,000 houses could be constructed in this
scheme till the end of the 5th Five Year Plan (1974-1979). Another scheme introduced in the 4th
Plan called House Sites-cum-Construction Assistance Scheme (HSCAS) was also transferred to
the State Sector from1974-75. With the launch of the Indira Awas Yojana (IAY) by then Prime
Minister Rajiv Gandhi in 1985, the public housing program in India got a boost.IAY was
launched as a rural housing program targeting SC/ST and Minority populations. The program
was gradually extended to cover all Below Poverty Line (BPL) populations. As a part of the
continuous efforts of the Indian Government to fulfill the housing needs of the rural and urban
poor, the Pradhan Mantri Awaas Yojana was launched by Prime Minister Narendra Modi in June
2015 to provide affordable housing.

Housing Program Year

Integrated Subsidized Housing Scheme for Industrial workers and Economically 1952

Weaker Sections

Low Income Group Housing Scheme 1954

Subsidized Housing Scheme for Plantation Workers 1956

Middle Income Group Housing Scheme 1959

Rental Housing Scheme for State Government Employees 1959

Slum Clearance and Improvement Scheme 1956

Village Housing Projects Scheme 1959

5
Land Acquisition and Development Scheme 1959

Provision of House Sites of Houseless Workers in Rural Areas 1971

Environmental Improvement of Urban Slums 1972

Sites and Services Schemes 1980

Indira Awas Yojana 1985

Night Shelter Scheme for Pavement Dwellers 1990

National Slum Development Program 1996

Million Housing Program 1998

Valmiki Ambedkar Malin Basti Awas Yojana 2000

Pradan Mantra Gramodaya Yojana 2001

Jawaharlal Nehru National Urban Renewal Mission 2005

National Urban Housing and Habitat Policy (NUHHP) 2007

Rajiv Awas Yojana 2011

6
 Pradhan Mantri Awas Yojana-Housing for All (Urban) 2015

Overview

The features of Pradhan Mantri Awas Yojana are that the government will provide an interest

subsidy of 6.5% (for EWS and LIG), 4% for MIG-I and 3% for MIG-II on housing loans availed

by the beneficiaries for a period of 20 years under credit link subsidy scheme (CLSS) from the

start of a loan. The houses under Pradhan Mantri Awas Yojana would be constructed through a

technology that is eco-friendly, while allotting ground floors in any housing scheme under

PMAY, preference will be given to differently abled and older persons.

Launched in 2015 by the Ministry of Housing and Urban Poverty Alleviation (MoHUPA), there

are two components in PMAY: the Pradhan Mantri Awas Yojana (Urban) (PMAY-U) for the

urban poor and the Pradhan Mantri Awas Yojana (Gramin) (PMAY-G and also PMAY-R) for

the rural poor . The PMAY (U) covers 4041 statutory towns but focuses on 500 Class I cities in

its initial phase4 with the goal to make India slum-free by 2022. As mentioned earlier, this

program is based on similar programs that preceded it (JNNURM & RAY) but has an ambitious

goal of providing 20 million homes by 2022. It is the flagship program for Modi’s government

which came into power in 2014 and was launched simultaneously with the Smart Cities program.

The program policy outlined by the government, stresses on collaboration with different

ministries and their programs targeting the urban poor. As framed by the Indian government, the

PMAY(U) rests on ‘four pillars’.

7
The Mission will be implemented through four verticals giving option to beneficiaries, ULBs and

State Governments. These four verticals are as below:

I. "In situ" Slum Redevelopment

II. Affordable Housing through Credit Linked Subsidy

III. Affordable Housing in Partnership

IV. Subsidy for beneficiary-led individual house construction or enhancement

Following chart summarizes the highlights of each of these project modes, hereafter referred to as
verticals

Each of these verticals is briefly discussed below, as per the recommendations of the Mission

guidelines, published by the GoI.

Vertical - I :

“In-situ” Slum Redevelopment using land as Resource

8
“In-situ” slum rehabilitation using land as a resource with private participation for providing

houses to eligible slum dwellers is an important component of the “Pradhan Mantri Awas Yojana

– Housing for All (Urban)” mission. This approach aims to leverage the locked potential of land

under slums to provide houses to the eligible slum dwellers bringing them into the formal urban

settlement.

1. Slums, whether on Central Government land/State Government land/ULB land, Private

Land, should be taken up for “in-situ” redevelopment for providing houses to all eligible slum

dwellers. Slums so redeveloped should compulsorily be de-notified.

2. Private partner for Slum Redevelopment would be selected through open bidding process.

State Governments and cities would, if required, provide additional Floor Area Ratio

(FAR)/Floor Space Index (FSI)/Transferable Development Rights (TDR) for making slum

redevelopment projects financially viable. Slum rehabilitation grant of Rs. 1 lakh per

house, on an average, would be admissible for all houses built for eligible slum dwellers in

all such projects. States/UTs will have the flexibility to deploy this central grant for other

slums being redeveloped for providing houses to eligible slum dwellers with private

participation, except slums on private land. It means that States/UTs can utilise more than

Rs. 1 lakh per house in some projects and less in other projects but within overall average of

Rs. 1 lakh per house calculated across the State/UT.

3. The per house upper ceiling of central assistance, if any, for such slum redevelopment

projects would be decided by the Ministry.

9
4. “In-situ” redevelopment of slums on private owned lands for providing houses to eligible

slum dwellers can be incentivised by State Governments/UTs or ULBs by giving additional

FSI/FAR or TDR to land owner as per its policy. Central assistance cannot be used in such

cases.

5. Beneficiary contribution in slum redevelopment project, if any, shall be decided and fixed by

the State/UT Government.

6. Eligibility of the slum dwellers like cut-off date etc. will be decided by States/UTs preferably

through legislation.

7. States/UTs may decide whether the houses constructed will be allotted on ownership rights

or on renewable, mortgageable and inheritable leasehold rights. States/UTs may impose

suitable restrictions on transfer of houses constructed under this component.

8. Approach for slum rehabilitation with private partnership is decided.

Vertical - II :

Credit-Linked Subsidy Scheme

The Mission, in order to expand institutional credit flow to the housing needs of urban poor will

implement credit linked subsidy component as a demand side intervention. Credit linked subsidy

will be provided on home loans taken by eligible urban poor (EWS/LIG) for acquisition,

construction of house.

1. Beneficiaries of Economically Weaker section (EWS) and Low Income Group (LIG)

10
seeking housing loans from Banks, Housing Finance Companies and other such

institutions would be eligible for an interest subsidy at the rate of 6.5 % for a tenure of 15

years or during tenure of loan whichever is lower. The Net Present Value (NPV) of the

interest subsidy will be calculated at a discount rate of 9 %.

. Vertical - III :

Affordable Housing in Partnership (AHP)

The third component of the mission is affordable housing in partnership. This is a supply side

intervention. The Mission will provide financial assistance to EWS houses being built with

different partnerships by States/UTs/Cities.

1. To increase availability of houses for EWS category at an affordable rate, States/UTs,

either through its agencies or in partnership with private sector including industries, can

plan affordable housing projects. Central Assistance at the rate of Rs.1.5 Lakh per EWS

house would be available for all EWS houses in such projects.

2. The States/UTs would decide on an upper ceiling on the sale price of EWS houses in

rupees per square meter of carpet area in such projects with an objective to make them

affordable and accessible to the intended beneficiaries. For that purpose, State and

cities may extend other concessions such as their State subsidy, land at affordable cost,

stamp duty exemption etc.

Vertical - IV :

11
Beneficiary-led individual house construction or enhancement (BLC)

The fourth component of the mission is assistance to individual eligible families belonging to

EWS categories to either construct new houses or enhance existing houses on their own to

cover the beneficiaries, who are not able to take advantage of other components of the mission.

Such families may avail of central assistance of Rs. 1.50 lakhs for construction of new houses

or for enhancement of existing houses under the mission.

Classification of Cities for preparation of HFAPoA

All statutory towns as per Census 2011 and towns notified subsequently are eligible for

coverage under the Mission. However, states/UTs have the flexibility to include in the Mission

the Planning area as notified with respect to the Statutory town and which surrounds the

concerned municipal area.

The scheme will cover the entire urban area consisting of 4041 statutory towns with initial focus

on 500 Class-I cities and it will be implemented in three phases as follows:

Phase Duration No. of towns covered

Phase-I April 2015 – March 2017 100

Phase-II April 2017 – March 2019 200

Phase-III April 2019 – March 2022 remaining

Source: Housing for All (Urban) Scheme Guidelines, March, 2016

12
Earlier to this Mission, Slum Free City Plan of Action Plans were prepared under Rajiv Awas

Yojna (RAY) launched by Government of India with the vision to make India a slum-free

country. As per guidelines of the Mission, it is suggested that attention should be paid on the

earlier initiatives addressing the issue of housing in urban areas. Present SFCPoA augments

such efforts towards achievement of the stated objectives.

Finance

The government has approved an investment of 439.22 billion (US$6.2 billion) for

construction of 6,83,724 houses for urban poor including central assistance commitment

of 100.50 billion (US$1.4 billion) by April 2016. IIFL Home Loans have been helping

beneficiaries avail Credit linked Subsidy under Pradhan Mantri Awas Yojana across the

country. Till 17 August 2017, the company has helped 4187 beneficiaries avail

government subsidy. ICICI Bank is giving subsidised home loans to the people eligible

for this scheme. AU Housing Finance Limited is also doing subsidy based funding under

this scheme. Home First Finance company also provide help beneficiaries to avail Credit

linked Subsidy under Pradhan Mantri Awas Yojana across different regions of India

13
 IMPACT

a. Successes & Failures

The PMAY(U) has had both successes and failures. While the successes revolve around the use

of credit-linked subsidies and public-private partnerships, the failures are largely a result of the

framing of the policy making it less people-centered. Beneficiaries are perceived as passive and

the policy contains only a handful of empowerment measures making access to benefits

exclusive3. Like in the Chilean case, the long-term urban effects of achieving the housing goals

are neglected.

In order to assist in financing development expenditures, the first pillar of PMAY, which focuses

on slum reconstruction, gives priority to the interests of private developers. Individual cities have

the authority to decide whether to redevelop a slum, which limits access to rehabilitation. Due to

14
the exclusion of citizen organisations from the reconstruction process, the community is viewed

as passive3 4. Additionally, there are no future slum prevention strategies under the policy.

Additionally, it only serves people who have lived in the relevant slums since before January 1,

2000. Those who moved in later are wholly neglected as a result2. Unlike the earlier programme

RAY, which granted land rights to slum dwellers, PMAY is exclusively concerned with building

homes on government-owned property.

Women, people with disabilities, members of specific castes, and transgender people from the

LIG and EWS are given preference under the second pillar, demonstrating a commendable

commitment on inclusivity3 8. However, the application procedure is restrictive because it

"needs internet connectivity, reading comprehension in Hindi and English, and evidence of

identity credentials that many slum inhabitants are unable to furnish."

Only homes in the EWS category are eligible for state-sponsored financial assistance through

the third pillar. The LIG section's beneficiaries are not included in this pillar. This pillar is also

characterised by a dearth of collaborations with other infrastructure suppliers and connections to

government programmes for essential amenities3.

The fourth pillar provides funding to beneficiary-led building in slums that are not designated for

redevelopment or in non-slum regions. Due to the fact that development is carried out in

partnership with the community, this pillar is the only one that views beneficiaries as active

participants. This pillar also acknowledges and encourages India's practise of self-help or auto-

construction houses. However, beneficiaries who occupy land illegally, as is frequently the

case3, are disqualified by proof of land ownership3.

15
As previously indicated, the PMAY mandates a maximum dwelling unit size of 60 square metres

for LIG households and 30 square metres for EWS households, which has been judged

inappropriate for an expanding economy4. The policy does not take into account any other types

of social housing, like hostels, dorms, senior citizen houses, etc. As most urban poor people

cannot afford even subsidised housing, it is also unaware of other tenure typologies like rents.

Additionally, PMAY(U) does not devote any resources to the study and creation of cutting-edge

construction technology that could further lower construction costs4.

CONCLUSION

Pradhan Mantri Awas Yojana (Urban) is an ambitious program based on lessons

learned from failed housing policies implemented in India. However, the policy is not

without flaws and needs careful review if it is to achieve its goal of overcoming India's

housing shortage.

The main drawback of this program is that the urban poor are treated as passive,

voiceless beneficiaries in the development process, and that there is a need to make

the dream of an India without slums truly sustainable. behavior is lacking. PMAY(U)

favors disadvantaged groups, but is far from complete when it comes to comprehensive

housing policy. The main obstacles to implementing this policy are the unequal

16
distribution of power and conflicts of interest between different levels of government,

scarcity of land in urban areas and an inefficient system for identifying beneficiaries

17