The Pradhan Mantri Awas Yojana - Urban (PMAY-U) is nowhere close to achieving ‘Housing for All’ by 2022 as only 12 lakh houses have been constructed out of the 63 lakh sanctioned since June 2015.

To meet its objective of building one crore houses, the Centre needs to contribute Rs 1.5 lakh crore through 2022 – a goal that seems impossible given the precarious fiscal scenario, a CRISIL report said.

“Our calculations show that the Centre will have to garner around Rs 1 lakh crore over the next three years if it has to achieve the target of building 1 crore houses. This is going to be a tall ask given the current fiscal arithmetic,” Prasad Koparkar, Senior Director, CRISIL Research, said in a statement.

Another 23 lakh houses are under construction with Andhra Pradesh, Uttar Pradesh, Maharashtra, Madhya Pradesh and Tamil Nadu accounting for 55 percent share of the sanctions. The Ministry of Housing and Urban Affairs aims to sanction 75 lakh houses and construct 30 lakh of them by the end of this fiscal.

Disbursements show lag

The Central Government needs to contribute an average of Rs 1.5 lakh per house. However, only 22 percent of this, or Rs 32,500 crore, has been disbursed so far. “Of the total assistance given by the Centre, Rs 19,000 crore has been factored in the budgetary allocation till FY 19. The balance would be met through future budget allocations and internal and extra budgetary resources, of which Rs 25,000 crore has been provided for fiscal 2019,” CRISIL said.

For extra budgetary resources, the ministry has initiated fund-raising (in the form of bonds) through entities such as the Housing and Urban Development Corporation. As these are typically bonds with a maturity period of 10 years , as well as the interest and principal repayment to be managed through future budgetary announcements, the provisions in future budgets would be a key monitorable, it added.

Multiple headwinds

The scheme also faces headwinds such as unavailability of land in prime areas, low participation of private developers on account of brand dilution, bidding mechanism, stringent cost and time schedules resulting in low yields, increasing construction cost due to absence of bulk sourcing of materials, and lack of new technology that impacts productivity, cost efficiency and quality. These need to be addressed.

However, PMAY-U offers a huge opportunity for several sectors by setting off a virtuous cycle. “One crore houses would mean an opportunity for over Rs 2 lakh crore of home loans and incremental consumption of 80-100 million tonne of cement and 10-15 million tonne of steel. The construction opportunity is of about 4 billion square feet over the life of PMAY-U. And all that would translate into about 10 crore incremental jobs over the execution period,” Rahul Prithiani, Director, CRISIL Research, said.

The PMAY-U mission has four verticals – In-situ Slum Redevelopment (ISSR), Affordable Housing in Partnership (AHP), Beneficiary-led Individual house construction or Enhancement (BLC), and Credit-Linked Subsidy Scheme (CLSS). Under the scheme, Economically Weaker Sections and Low Income Group beneficiaries can avail central assistance of up to Rs 2.67 lakh per house as provisioned under the different components of the scheme while benefits to Middle Income Group are restricted to CLSS only.