A Closer Look at Pradhan Mantri Awas Yojana – Urban (PMAY-U)

Policy Update
Sreya S Motti

INTRODUCTION:

Pradhan Mantri Awas Yojana – Urban (PMAY-U) is a flagship Mission of the Government of India implemented by the Ministry of Housing and Urban Affairs (MoHUA). Finance Minister Arun Jaitley launched the scheme on 25th June 2015, while presenting The Budget 2014-15, announcing the set up of a Mission on low-cost affordable housing to be anchored by the National Housing Bank (NHB). The Mission tried to address the urban housing shortage among the Economically Weaker Sections (EWS) and Low-Income Groups (LIG)  including the slum dwellers by ensuring a pucca house to all eligible urban households by the year 2022 when the Nation completes 75 years of its Independence. The scheme also expanded its scope to cater to the housing needs of the mid-income group as well by the Prime Minister doubling the quantum of loan eligible for interest benefits under the PMAY in urban areas to ₹12 lakhs. 

Although the scheme was initially scheduled for completion by 2022, the government, in August 2022, approved the extension of PMAY-Urban (PMAY-U) until December 31, 2024, to facilitate the completion of houses sanctioned up to March 31, 2022.

HISTORICAL BACKGROUND:

The historical background of the Pradhan Mantri Awas Yojana- Urban (PMAY-U) can be dated back to India’s long-standing efforts to address housing challenges. Various initiatives focused on public Housing in India began shortly after independence and determined the rehabilitation of the refugees. By the 1950s, schemes like the Village Housing Programme (VHP) were introduced. This scheme provided loans for housing construction. Over time, many other programs, such as the Indira Awas Yojana (IAY) in 1985, targeted rural housing for marginalized communities.

Recognizing the growing need to address the urban housing crisis due to rapid urbanization and migration, the Government of India launched PMAY-U on June 25, 2015, as part of its “Housing for All” mission. This scheme sought to address the limitations of earlier efforts by targeting the urban population, aiming to provide affordable housing for economically weaker sections and low-income and middle-income groups.

PMAY-U integrates modern approaches, such as slum redevelopment, credit-linked subsidies, and public-private partnerships, to ensure inclusivity and sustainability in urban housing development. It represents a major step forward in addressing India’s urban housing needs while building on the foundation of earlier housing programs.   

Initially, the mission was set to conclude by March 31, 2022, with a target of constructing 2 crore houses. However, in August 2022, the government extended the scheme until December 31, 2024, to complete houses sanctioned up to March 2022.

OBJECTIVES:

The primary goal of PMAY-U is to provide pucca houses or permanent structures with basic amenities for the beneficiary urban households.

Other major objectives of the scheme are;

• Slum Redevelopment: Development of urban slums to rehabilitate slum dwellers and improve their standard of living. 
• Inclusivity: Promoting inclusivity by prioritizing the vulnerable sections such as women, senior citizens, differently abled, and members of the Scheduled Castes (SCs) and Scheduled Tribes (STs). 
• Public-Private Partnership: To increase the partnerships between the private and public sectors of the country which can help create affordable housing projects.
• Housing Loan Support: To provide financial assistance by providing housing loans and interest subsidies for constructing houses under the Credit Linked Subsidy Scheme (CLSS).
• Modern Urban Planning: To integrate housing plans with the modern infrastructure for overall infrastructure development.

Source: PMAY(U)

FUNCTIONING: 

PMAY-U has functions through a multifaceted funding and implementation framework in which the central and state resources as well as private sector support are integrated. The central government provides a fixed subsidy per housing unit. This can range from ₹1 to ₹1.5 lakh. Then, the state governments add their funds to increase these efforts. The financial structure is further enhanced under schemes like the Credit Linked Subsidy Scheme (CLSS) and Affordable Housing Programme(AHP). 

The Ministry of Housing and Urban Affairs (MoHUA) oversees PMAY-U by serving as its nodal agency. The execution is carried out by state agencies and Urban Local Bodies (ULBs) which identify beneficiaries, approve housing plans, and check upon the construction of the approved plans. With the involvement of the private sector and the participation of banks through subsidies and loan disbursement, the scheme increases its efficiency.

Identification of the beneficiaries and the selection process also play an important role in ensuring that the housing support reaches the right recipients. The eligibility criteria are set based on the annual income of households. 

Applicants are required to submit their details through urban local bodies or banks. The eligibility of the applicants is verified by using Aadhar and income records. After the verification, approved beneficiaries receive the subsidies assigned to them and housing allotments.

COMPONENTS:

The structure of PMAY-U mainly consists of four components or verticals. These verticals are structured to address the diverse housing needs of urban beneficiaries. These components try to ensure affordable housing for the different segments of the urban population.

The components of PMAY-U are:

1. In-Situ Slum Redevelopment (ISSR)– This vertical aims to upgrade or redevelop the urban slums using land as a resource. It is implemented through Public-Private partnerships incorporating resources from both the public and private sectors. The government has allocated ₹1 lakh per house from central funds. This vertical mainly focuses on slum dwellers who already live in poor housing conditions.
   
2. Credit-Linked Subsidy Scheme (CLSS)- This vertical provides interest subsidies on home loans for different income groups. It divides subsidy rates according to the segments. People from EWS/LIG receive an interest subsidy of 6.5% for loans up to ₹6 lakh. The Middle Income Group is divided into two sub-parts from which (MIG-I) receives a 4% subsidy for loans up to ₹9 lakh and (MIG-II) receives a 3% subsidy for loans up to ₹12 lakh. The objective of this vertical remains to make home loans affordable and encourage homeownership.

3. Affordable Housing in Partnership (AHP)- This vertical focuses on public-private partnerships to construct affordable housing projects. A government assistance of ₹1.5 lakh per house is provided to EWS beneficiaries. Under this vertical, private developers are encouraged to build affordable housing with incentives.

4. Beneficiary-Led Construction (BLC)- Under this vertical, individual households who already own land but lack a proper house are focused. The government provides around ₹1.5 lakh per house for new construction or enhancement.

Source: PMAY(U)

PERFORMANCE AND IMPACT ANALYSIS:

Pradhan Mantri Awas Yojana- Urban is a major initiative designed to address the housing needs of the urban poor and low-income households. PMAY-U has sanctioned an unprecedented 11.9 million houses across its five sub-schemes, which is about 10% of the Census 2011 urban housing stock. It has covered almost all of India’s urban areas. 

Despite a high number of sanctions on houses, the actual completion and occupancy rates remain significantly lower than the planned targets. The Scheme initially targeted to build 1.12 crore (11.2 million) houses by 2022. Out of which 1.08(10.8 million) houses got approved. Around 60.5 lakh (6.55 million) houses were completed which is 60% of the target, out of which 60 lakh (6 million) houses are occupied now which is 55% of the target. Funding gaps and delays in disbursal have made the process difficult. 

Government estimates reported a shortage of 3 million houses in urban areas, yet independent studies show over 60 lakh houses remain unaddressed. According to ICRIER, the urban housing shortage grew by 54%, from 1.88 crore (2012) to 2.9 crore (2018), reflecting unmet needs. 

When it comes to financing disbursement, only 74% of central assistance has been disbursed despite being in the final years of the scheme. Several projects face financial constraints due to slow fund releases and state-level bottlenecks. Some states including Uttar Pradesh (17.3 lakh or 1.73 million), Maharashtra (17.3 lakh or 1.73 million), Madhya Pradesh (10.3 lakh or 1.03 million), Tamil Nadu (9.2 lakh or 0.92 million), and Andhra Pradesh  (20.3 lakh or 2.03 million) stands in front in terms of sanctioned houses while some other states have faced slow implementation due to lack of land availability and administrative hurdles. This creates a regional disparity between various states.

Several beneficiary-level issues also occurred during the implementation of the scheme such as the households in the Economically Weaker Section (EWS) struggling to get access to credit-linked subsidies due to banking restrictions and complex documentation requirements. Infrastructure gaps in water, sanitation, and roads have led to poor living conditions in newly built housing projects.

While PMAY-U has made significant progress in the housing sector, many challenges stand in the way of the success of the scheme such as fund utilization, slow construction, and housing occupancy.

Emerging issues:

The Pradhan Mantri Awas Yojana- Urban (PMAY-U) has made major steps in addressing urban housing challenges. However several emerging issues continue to impact its implementation.

One of the major emerging issues is the delay in project completion. A huge number of houses under PMAY-U remain incomplete or delayed. As of 2023, PMAY-U sanctioned over 1.20 crore houses, but only 73 lakh houses had been completed. This leaves a gap of nearly 47 lakh houses that are delayed or under construction. This affects the timely delivery of benefits to intended beneficiaries which can cause tensions and distress among them.

Despite its scale, PMAY-U has found it hard to adequately address the housing needs of slum dwellers. According to the 2011 census, 35% of the urban population lives in slums. Although PMAY-U aims to address this issue through the In-Situ Slum Redevelopment (ISSR) vertical, its implementation has reached only 13% of its intended beneficiaries. This leaves a gap in urban housing equity.

Another emerging issue is complex land records where issues with property records and registration systems create barriers for beneficiaries. Particularly in accessing land ownership documentation required for schemes like Beneficiary- Led Construction. In states like Uttar Pradesh and Bihar, over 40% of beneficiaries faced challenges due to unclear land ownership records, slowing down Beneficiary-Led Construction (BLC) projects.

Additionally, the Economically Weaker Section (EWS) households often faced challenges in securing loans and subsidies due to limited access to institutional finance.

Way Forward:

Moving forward, PMAY-U can be improved and made efficient to address the urban housing needs of India’s urban areas with certain measures. This can include:

• Faster Fund Release: Reducing administrative delays in the process can lead to faster fund release. This can make the scheme more effective by speeding up the financial disbursement.
• Enhance Private Sector Participation: Encouraging more Public Private Partnerships (PPPs) can lead to faster construction of houses.
• Better Living Standards: Ensuring that the newly built houses have basic infrastructure like water, electricity, and sanitation must be kept as a main priority of the scheme. This increases the standard of living in the houses built and makes the families more prosperous.
• Address Credit Barriers: Many Low-income groups are restricted from getting many credit barriers as they do not have any institutional assets. This can lead to inaccessibility of the scheme. Simplifying banking processes for EWS and Low-Income Group (LIG) beneficiaries can let the scheme meet its objectives.
• Stronger Monitoring and Transparency: Improving the monitoring and real-time tracking of the project progress can increase the efficiency of the scheme.

References:

1. CSEP. (2024). Deconstructing PMAY-U: What the Numbers Reveal. Retrieved from [https://csep.org/wp-content/uploads/2024/08/Deconstructing-PMAY-U-What-the-Numbers-Reveal-1.pdf](https://csep.org/wp-content/uploads/2024/08/Deconstructing-PMAY-U-What-the-Numbers-Reveal-1.pdf)

2. Visualize Data Portal. (n.d.). Retrieved from [https://visualize.data.gov.in/?inst=ff22827e-bf69-4197-a5ba-0d11d98c40fe&vid=108825](https://visualize.data.gov.in/?inst=ff22827e-bf69-4197-a5ba-0d11d98c40fe&vid=108825)

3. CSEP. (n.d.). Deconstructing PMAY-U: What the Numbers Reveal. Retrieved from [https://csep.org/working-paper/deconstructing-pmay-u-what-the-numbers-reveal/](https://csep.org/working-paper/deconstructing-pmay-u-what-the-numbers-reveal/)

4. PMAY-Urban. (n.d.). Retrieved from [https://pmay-urban.gov.in/](https://pmay-urban.gov.in/)

5. The Hindu. (n.d.). An overview of the PMAY-U scheme: Explained. Retrieved from https://www.thehindu.com/news/national/an-overview-of-the-pmay-u-scheme-explained/article68099465.ece](https://www.thehindu.com/news/national/an-overview-of-the-pmay-u-scheme-explained/article68099465.ece

6. Hindustan Times. (n.d.). Inadequate subsidies, insignificant slum redevelopment: CSEP report on PMAY. Retrieved from https://www.hindustantimes.com/india-news/inadequate-subsidies-insignificant-slum-redevelopment-csep-report-on-pmay-101723373388173.html](https://www.hindustantimes.com/india-news/inadequate-subsidies-insignificant-slum-redevelopment-csep-report-on-pmay-101723373388173.html)

About the Contributor:

Sreya S Motti is a research intern at IMPRI. She is currently pursuing a BA(Hons) in Humanities and Social Sciences from the University of Delhi.

Acknowledgment:

The author would like to express sincere gratitude to Dr.Arjun Kumar, Dr.Vaishali Singh, Ms. Aasthaba Jadeja, and the IMPRI team for allowing writing the article.

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