Grant Thornton Report on Affordable Housing

Grant Thornton Report on Affordable Housing
Apr 2021 , by , in Interviews

Grant Thornton Bharat LLP is providing e-governance consulting to the Housing Department, Government of Maharashtra since January 2020. We have streamlined several processes from ensuring highest standards in data compliance, collecting long pending utilization certificate from urban local bodies (ULB) to performing capacity building exercise for over 390 ULBs across the state of Maharashtra. We are assisting the department in rolling out ARHC, where in the key activities include, assisting the Urban Local Bodies (ULBs) in the selection of concessionaire for ARHC implementation, scrutinizing the ULB proposals, troubleshooting any issues with respect to Management Information System, compliance of ARHC and monitoring the progress of the same. Also, overall monitoring support to the scheme.

In the backdrop of impending large-scale urbanization in India, it is imperative to identify, evaluate and address the challenges faced by the affordable housing consumer. 


About the PMAY Scheme

Pradhan Mantri Awas Yojana (PMAY) was launched in 2015 to provide a pucca house to all eligible beneficiaries of urban India by 2022. The minimum size of the house is to be 25 sq. m. (raised from 20 sq. m) with a hygienic cooking space. Central and state governments will share the cost of unit assistance in this scheme in the ratio 60:40 in plain areas and 90:10 for north-eastern and the Himalayan states. The beneficiaries have been categorized into 4 categories, people whose household income is INR 3 lakh or below fall under Economically Weaker Section (EWS) category, people having the household annual income of INR 3-6 lakh fall in the category of Lower Income Group (LIG), Middle Income Group 1 (MIG 1) are those who earn under INR 12 Lakh while MIG 2 are the beneficiaries whose household income is between INR 12-18 Lakh.

There are four verticals under PMAY scheme namely In-Situ Slum Redevelopment (ISSR), Affordable Housing in Partnership (AHP), Credit Linked Subsidy Scheme (CLSS) and Beneficiary Linked Construction (BLC). Under ISSR, the center will provide an assistance of INR 1 lakh for slum dwellers. The land will be provided in partnership with private developers for the slum rehabilitation in respective states and UTs. For AHP vertical, the central government will provide an assistance of INR 1.5 lakh per EWS house in projects where at least 35% of the houses in the projects are for EWS category with a minimum capacity of at least 250 houses. Under CLSS vertical, Beneficiaries of EWS/LIG/MIG 1/MIG 2 seeking housing loans from Banks, housing finance companies and other such institutions for acquiring, new construction or enhancement of houses are eligible for an interest subsidy of 6.5%, 4% and 3% on loan amount up to INR 6 lakh, INR 9 lakh and INR 12 lakh, respectively. For BLC vertical, the central government will provide an assistance of INR 1.5 lakh to construct or upgrade the pucca or semi-pucca house measuring 21 sq.m. to 30 sq. m.


Status so far & Impact on Indian economy

Under the PMAY scheme, more than 10 million houses have been sanctioned, 7.5 million houses have been grounded and 4.3 million houses have been completed across the nation. Government of India through Ministry of Housing and Urban Affairs has committed an amount of more than 24 billion USD for the successful implementation of this scheme, with the total investment amounting close to 100 billion USD. Uttar Pradesh followed by Madhya Pradesh and Andhra Pradesh have been the best performing states for implementation of PMAY scheme.

The scheme has had a positive impact on the Indian economy, generating employment opportunity for more than 6 crore workers through forward and backward linkages across several sectors. Steel and cement industry got a big boost with demand of over 13 million MT of steel & 17.7 million MT of cement for building of sanctioned houses. In terms of usage of renewable source of energy, more than 31 Lakh sq. m. roof top would be available for solar grid installation under AHP vertical. The demand across ancillary sectors such as frame and furniture, transport, iron & steel, electrical, paints & plumbing equipment has also seen a rapid surge.


Role of Covid-19 & Launch of ARHC

COVID-19 pandemic has resulted in a reverse migration of urban migrants/poor in the country. Uttar Pradesh had 21.69 lakh workers returned, Bihar and Maharashtra had 10 and 11 lakhs, respectively. These people need decent rental housing at an affordable rate at their work sites. The migrants stay in slums/ informal settlements/ unauthorized colonies/semi-urban areas to save cost on housing. To address this need, the Ministry of Housing & Urban Affairs has initiated Affordable Rental Housing Complex (ARHCs), a sub-scheme under PMAY (U). The scheme will be implemented through two models, first by utilizing the existing government-funded vacant houses through public-private partnership or by public agencies. Second by constructing, operating, and maintaining which is to be done by public/private entities on their own vacant land.


Leveraging Latest Construction Technology 

Prime Minister Narendra Modi on January 1, 2021 virtually laid the foundation stone of Light House Projects (LHP) under the Global Housing Technology Challenge (GHTC) -India, conceptualized by the Union ministry of housing and urban affairs. The LHPs will be constructed at Indore, Rajkot, Chennai, Ranchi, Agartala and Lucknow, comprising about 1,000 houses at each location along with allied infrastructure facilities. The ones in Indore will not have walls made of bricks; “pre-fabricated sandwich panel” system will be used for these. For Rajkot, the French “monolithic concrete construction” technology will be used. Precast concrete system from the United States and Finland will be used in Chennai, while in Ranchi, Germany’s 3-D construction system will be used. New Zealand’s steel frame technology will be used in Agartala and a technology from Canada will be used in Lucknow. Global Housing Technology Challenge-India (GHTC-I) intends to get the best globally available innovative construction technologies. It aims to demonstrate and deliver ready to live-in houses in minimum time and minimum cost with high-quality of construction in a sustainable manner.

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