As we step into the sixth year of the Pradhan Mantri Awas Yojana (PMAY), its aim of Housing for All by 2022 is nearing a close finish. PMAY aimed at slum redevelopment through private participation, partnering in affordable housing projects, a home loan to economically weaker sections, and credit-linked subsidy.
The PMAY rural scheme has money sanctioned for around 85% of the beneficiaries, while the construction status is complete in 55% of houses. In PMAY urban, 1.1 crores of the allotted 1.68 crore houses have been already sanctioned. The scheme now also benefits beneficiaries from the middle-income group, thus covering the housing aspirations of a wider populace. Under PMAY, you will receive the interest subsidy upfront, reducing your EMI burden and the housing loan amount. The scheme has been actively implemented and, challenges notwithstanding, PMAY is steadily progressing to meet its goals despite the pandemic setback. It was an ambitious mission, to begin with, and it is hardly a surprise that applicants faced quite a few roadblocks in their housing efforts.
Here is a look at some of the top hurdles faced by PMAY applicants:
- Inherited issues
The PMAY caters to the Low-Income Groups (LIG) and Economically Weaker Section (EWS). Many don’t have documented employment records, which acts as a hurdle in their home loan eligibility. People from these income groups often fail to produce proper land and ownership records, which complicates the loan approval process. Similarly, slum dwellers often have no record of authenticating their rights over their existing property.
The viability of land acquisition for affordable housing in urban regions is questionable. Due to the rapid urbanization, there are precious little pockets of land in cities. While slums are often situated in the heart of the city, affordable housing projects had to resort to peripheral locations due to land price and scarcity. In such cases, applicants faced a compromise on the land and location.
The cost of raw materials and labor has also increased in recent years. Many construction raw materials fall under higher slabs which escalate their retail price. The credit-linked subsidy scheme of PMAY allows an interest subvention of up to Rs 2.67 lakhs to EWS and LIG applicants. While middle-income group I and II category applicants can get a maximum interest subsidy of Rs 2.3 and Rs 2.35 lakhs, respectively. Thus, for a fixed subsidy, the overall increase in the cost of construction or purchase has made homeownership an expensive affair for the applicants.
For the hurdles that PMAY pose, it offers substantial savings for the income groups to whom these savings matter a lot. Therefore, it is expected that more and more people will avail it and fulfill their aspiration of owning a home.
Raj Kumar is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance clap.