{"id":82043,"date":"2020-02-18T10:49:10","date_gmt":"2020-02-18T10:49:10","guid":{"rendered":"https:\/\/www.zameen.com\/blog\/?p=82043"},"modified":"2020-02-19T04:59:28","modified_gmt":"2020-02-19T04:59:28","slug":"india-low-cost-housing","status":"publish","type":"post","link":"https:\/\/www.zameen.com\/blog\/india-low-cost-housing.html","title":{"rendered":"Pradhan Mantri Awas Yojana (Housing for All 2022): Studying India\u2019s Attempt to Provide Affordable Housing Part 1"},"content":{"rendered":"\n

Undoubtedly, The Naya Pakistan Housing Scheme is a timely\nand necessary initiative taken by this government. However, in the context of\nemerging and developing economies, this initiative to target low income houses\nis not unique. Countries like India and Turkey have endeavored to provide\nhousing for the poor for a while now, with relative success. This series of\narticles will analyze these programs, highlight what worked, what did not, and\nhow our country can learn from these experiences. <\/p>\n\n\n\n

We will start off this series from India\u2019s low called\nhousing program introduced in 2015, titled \u2018Pradhan Mantri Awas Yojana\u2019 (PMAY),\nor in simpler words, Housing for All by 2022. <\/p>\n\n\n\n

The target set by the government in 2015 was to provide 20\nmillion affordable houses to the urban poor and 30 million units for the rural\npoor by the year 2022. The ambition to build 5 million units in 5 years under\nthe Naya Pakistan Housing Scheme seems underwhelming in comparison to Indian\ngovernment\u2019s vision of providing low cost housing unit. <\/p>\n\n\n\n

Of course, the Indian economy and its population is much larger in scale, hence the bigger targets for housing, but without proper socio-economic policies promoting low cost housing, it would have been very difficult to make any progress. The relative success of their initiative is the result of a conducive environment created by the government to promote private sector involvement in the affordable housing sector. <\/p>\n\n\n\n

Strategy of policy makers across the border was to converge\nthe housing initiative with other schemes aimed at poverty alleviation. So, for\ninstance, PMAY Housing Initiative was coupled with Swachh Bharat Abhiyan (SBA),\nor Clean India Mission, ensuring that all the houses built had proper\nsanitation facilities. Similarly, Aubhagya Yojana electricity connection,\nUjjwala Yojana LPG gas connection, access to drinking water and Jan Dhan\nbanking facilities, etc. were in one way or another linked with the housing\nprogram, ensuring that the project adequately fulfilled the needs of those\noccupying the houses. <\/p>\n\n\n\n

As previously discussed in our housing affordability article<\/a>, Indian government housing schemes target particular income segments within the economy. Through this housing program, the government provided interest subsidy of 6.5% to Economically Weaker Sections (EWS) and Low Income Groups (LIG), 4% for Middle Income Group I (MIG-I) and 3% for Middle Income Group II (MIG-II) on housing loans availed for a period of 20 years under Credit Link Subsidy Scheme (CLSS). These interest rates are significantly lower than market rates which are all above 8%. <\/p>\n\n\n\n

From the fiscal side, approximately US$ 8 billion investment\nwas approved by the government for this project, with the rest being chipped in\nby the private sector financial institutions such as IIFL Home Loans, ICICI\nBank AU Housing Finance and Home First finance companies. <\/p>\n\n\n\n

All of these financial institutions became interested in this sector only when they were ensured of adequate foreclosure laws within the country that promoted non-judicial foreclosure. We can expect the same trend of private housing loan financial institutions in Pakistan if regulatory work by the government is completed on this very important issue. (Read: Foreclosure laws article<\/a>). Moreover, Real Estate Regulatory Framework in India has also played a very important role in efficiently streamlining this project. <\/p>\n\n\n\n

Overall, this low-cost housing program in India has met with\nvaried success. Statements from Indian Union Housing and Urban Affairs Minister\npaint a very rosy picture of the project, suggesting that the government may\neven achieve its housing targets earlier in 2020 rather than in 2022.  That is perhaps not the case. <\/p>\n\n\n\n

Fact checking suggests that about 1.44 million houses have\nbeen constructed under the PMAY-Urban scheme and 1.39 million have been\noccupied up till January 31, 2019, according to the latest Ministry of Housing\ndata presented to the Lok Sabha in February 2019. This is only 20% of 7.26\nmillion houses sanctioned for construction till January 31, 2019. Thus, there\nseems to be some progress, even if it is slower than the ambitious targets set\nup by the government. <\/p>\n\n\n\n

Occupancy rate of the built houses overall presents an\nimpressive figure. This is important because at times, people do not end up\nmoving to these new units due to locality and infrastructural issues, such as\nnot being adequately connected to the city center. According to housing\nministry officials, around 164,000 low-cost homes are vacant. Indian government\nshould ensure that they provide support infrastructure to these housing\nlocalities to ensure that the homes do not end up deteriorating, and the\ncommunities do not become ghettos. <\/p>\n\n\n\n

Further criticism of this program suggests that this\ninitiative is still not as affordable as it can be. It bypasses homeless people\nwho cannot afford mortgage payments. As suggested by representatives of Centre\nof Equity Studies in India \u2018Those who really need these homes cannot afford\nthem, and those who can afford them don\u2019t want them\u2019. <\/p>\n\n\n\n

From this experience, policy experts in India are voicing\nfor the development of affordable rental housing as a far more effective\nsolution to tackle shortage. <\/p>\n\n\n\n

In conclusion, it can be argued that the Indian Housing for All Initiative has shown some progress. However, the targets have not been met, which suggests two things. Firstly, as is the case with Naya Pakistan Housing Scheme as well, the targets from the start seemed too ambitious. Secondly, it signals that much more can be done to ensure further success of the program by enticing the private sector with more policy incentives. <\/p>\n\n\n\n

In part 2 of this series, we will study in depth some of the\nfeatures that have ensured partial success of this housing program. <\/p>\n","protected":false},"excerpt":{"rendered":"

Undoubtedly, The Naya Pakistan Housing Scheme is a timely and necessary initiative taken by this government. However, in the context of emerging and developing economies, this initiative to target low income houses is not unique. Countries like India and Turkey have endeavored to provide housing for the poor for a while now, with relative success. This series of articles will analyze these programs, highlight what worked, what did not, and how our country can learn from these experiences. We will start off this series from India\u2019s low called housing program introduced in 2015, titled \u2018Pradhan Mantri Awas Yojana\u2019 (PMAY), or in simpler words, Housing for All by 2022. The target set by the government in 2015 was to provide 20 million affordable houses to the urban poor and 30 million units for the rural poor by the year 2022. The ambition to build 5 million units in 5 years under the Naya Pakistan Housing Scheme seems underwhelming in comparison to Indian government\u2019s vision of providing low cost housing unit. Of course, the Indian economy and its population is much larger in scale, hence the bigger targets for housing, but without proper socio-economic policies promoting low cost housing, it would have…<\/p>\n","protected":false},"author":97,"featured_media":82045,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[29],"tags":[53999,43961,690,53998,42928],"persona":[32409,35639],"class_list":{"0":"post-82043","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-construction","8":"tag-indias-attempt-to-provide-affordable-housing","9":"tag-lob","10":"tag-low-cost-housing-schemes","11":"tag-pradhan-mantri-awas-yojana","12":"tag-zameen-research","13":"persona-constructiondevelopments","14":"persona-property-management","15":"cat-29-id"},"acf":[],"yoast_head":"\nPradhan Mantri Awas Yojana (Housing for All 2022): Studying India\u2019s 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