Will PM Modi’s “Housing for All” mission work?

One of the Prime Minister’s biggest promises has been to provide affordable housing for all, specifically the masses. For the last year or so, his policies have been focused on the real estate sector in India. He has two primary aims. The first is to extract black money and ‘benami’ properties. The second has been to provide permanent housing to the poorest of the poor. This scheme has been named the ‘Pradhan Mantri Awas Yojana-Housing For All’.

The provisions of the scheme are very promising. There are four major steps that this scheme is taking:

1. Slum dwellers are to be rehabilitated so that multi-story buildings can be constructed on the land. Original residents of that land will be provided the newly constructed housing while the remaining land will be used to construct houses for residential and commercial proposes.

2. 35% of the housing in a particular project will be reserved for economically weaker sections (EWS). A subsidy of 1.5 lakh will be provided to each beneficiary.

3. Along with the second provision, the government will also subsidize the interest rate on home loans for weaker sections. For up to 6 lakhs, the rate will be 6.5%.

4. For a beneficiary-led private housing construction, the government will provide a subsidy.
However, the plan has been running far behind schedule. The number of houses actually built differs vastly from what was originally promised. The major reasons for this are:

• Delays in Approvals: Approval for any real estate project can take several years, which not increases costs but will clearly be very detrimental to the “Housing for All” scheme. Even though RERA (Real Estate Regulatory Act) is increasing transparency in all operations, a simpler clearance system is needed to speed up the process.

• Confusion and lack of clarity: The scheme is a national initiative and hence it comes under the purview of the Central government. But the vast scope means that local agencies and governments are supposed to play major roles in the execution. This has resulted in conflicts and confusion regarding the distribution of power and the decision-making process.

• Lower profit margins mean lower participation: The real estate sector has been viewed as a high-profit market till now. Since this is a scheme to benefit the poor, it has a lower profit margin. For this reason, the big players of the real estate are unwilling to contribute. There is a lack of qualified professionals for various positions which is leading to further delays and increase in costs.

At this stage, the entire mission is in a rather chaotic state. It has also been speculated that the government will make it mandatory to link Aadhar to property and all related transactions. A lot of change is being planned in the real estate sector but it remains to be seen whether the government will manage to implement it all. Unless more players in the sector participate and come together to fix the roots at the ground level, it may be difficult to carry out this mission.

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