ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Changes in Credit-linked Subsidy

Housing for the Urban Poor?

Recent modifications in the credit linked subsidy scheme—an important vertical under the Pradhan Mantri Awas Yojana (Urban)—have raised the income limits for eligibility of loans, increased the amount of subsidised loans, relaxed norms with regard to built-up area, and importantly, have included the middle-income group, diluting its core agenda of being “pro-poor.” While this would boost the housing sector, there is risk that subsidies will be cornered by real estate developers, private builders, and the urban middle class. The planners must view this development with concern.

At the joint session of Parliament on 9 June 2014, the President of India proclaimed the intention of the newly elected National Democratic Alliance (NDA) government of providing every family “a pucca house with water connection, toilet facilities, 24 × 7 electri­city supply and access.” In pursuit of this, the union government has launched a comprehensive mission, Pradhan Mantri Awas Yojana-Housing for All (Urban) (PMAY-HFA[U]), under which houses are to be provided to all eligible families/beneficiaries1 by 2022 in a phased manner, wherein the union government would assist the implementing agencies through states and union territories.

The total housing shortage to be addressed is 20 million (18 million slum households and 2 million non-slum urban poor, households). Four programme verticals are envisaged under the mission to address the housing requirements of the urban poor, including slum dwellers, where an eligible beneficiary can take advantage of only one of the following: (i) slum rehabilitation of slum dwellers with the participation of private developers using land as a resource; (ii) promotion of affordable housing for the weaker section through credit-linked subsidies; (iii) affordable housing2 in partnership with public and private sectors; and (iv) subsidy for beneficiary-led individual house construction or enhancement.

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