(Sanjeev Sanyal, principal economic advisor to Modi government, was in conversation with Union Urban and Housing Minister Hardeep Singh Puri on Sansad TV on the ambitious “Housing for All” scheme. Bhumika Arora has transcribed the talk for the benefit of readers).
Sanjeev Sanyal: We are going to explore the area of housing for all. As you all know, housing for all, is an important focus area for this government and there is a major scheme called the Prime Minister’s Awas Yojana (PMAY). There is an urban and a rural component to it.
There are several verticals under it: There is the in-situ slum redevelopment (ISSR) scheme; there is the credit-linked subsidy scheme (CLSS); there is affordable housing in partnership (AHP) and the beneficiary-led construction (BLC). All have been very, very successful.
Just to give you a sense of scale.
For example, when we are talking about the urban part of the PMAY, in the last six years as many as 1.14 crores houses have been sanctioned, of which 52 lakhs have already been built. So these are not the trivial scale that we are talking about. In the past when there were such schemes, the fundamental philosophy was that the government or some government agency would decide these housing schemes would be rolled out. The idea was in keeping with the top-down economic planning approach that the economic planner knew where these people wanted to live and that they would then be able to build out these houses and then consequently people would, particularly the poor, would then go and live in those places.
Now, of course, in the Socialist era of shortages, people had no choice. I mean, if you build It out something there was a shortage people went and lived in there but in the last 25 years as we have opened out the economy and more choice has popped up, it was quickly realized that in many of the places the houses for the poor were built far out on the edges of the city.
What was discovered was that the poor didn’t want to live there. After all, when you have migrants moving, for example, into the city, they are not moving in because they don’t have houses, they have houses back in the villages, the reason they moved to the cities that they want to be close to where the jobs are. If you build houses for them, far out in the suburbs, then it, well, misses the point.
It was discovered that they were many cases, where the government or the government agency would build out housing, but, you know, people would refuse to move there. In fact, they have been occasions where those who received those houses actually returned those houses. So we had a rather awkward situation that even in a city as crowded and as sought-after as Delhi, there were housing schemes that were actually effectively abandoned.
The PMAY is a much more de-centralized approach, a much more demand-driven approach where essentially the government became an enabler – to allow people to live where they wanted to live. So you have a bunch of schemes that I just readout. One that is being particularly popular is called the beneficiary-led construction scheme. The essential idea here is there the beneficiary either wants to build a house or extend an existing house or upgrade it and is provided with a certain amount of support from the government in order to do this. Depending on where they have access to either land or of want to live and so on and so forth. So this is a very important part of the thinking of the PMAY. Now, let me add that. There is a wider context to all of this. There are smaller towns too. There are many cities, particularly in the Northeast places like Agartala,for example, which have been completely rebuilt in some parts because of this PMAY.
In addition, there has been a recognition and this is not entirely just about the PMAY but the wider urban policy that we are a country that is on the move- We are on the move geographically, people migrate all the time and socially people are moving up the social ladder. So in that context also, we need to remember that you have some capability of delivering rental housing.
(Sanjeev Sanyal, addressing Hardeep Singh Puri): Let me begin by asking you the most obvious. Why is this particular effort different from earlier efforts?
Hardeep Singh Puri: You’re absolutely right. This is not the first government that has conceived Pradhan Mantri Awas Yojana or housing for all. But this is a very different one from earlier schemes. I think in 2004, which ran till 2014, the total number of houses, which were grounded homes was 8.58 lakhs. The total number of houses approved was only 13 lakhs. So, 13 lakhs in 10 years and you have the PMAY we started in 2015, which is 114 lakhs. Even these 13 lakhs, that scheme was three years of our period. I think the JNURM continued till about March 2017 or thereabouts.
The second important difference is this scheme is being implemented through four verticals, those for verticals are very interesting.
One of them is in situ slum rehabilitation (ISSR) you know, typically people come to large cities looking for work and they choose to live in informal settlements. I prefer the use of the term, informal settlements rather than slum. These are informal settlements that come up in the heart of this city. Now, our experience, particularly the experience of a previous Congress government. showed that when you try to relocate people, who have lived in a particular place. And you try to take them 100 kilometers away or 200 km away, ostensibly to rationalize urban space, a scheme like that is doomed to fail, right from the point of inception.
Why do I say this? Because the most important people thing for those who are living in informal settlements is proximity to their livelihood to work. So, one of the lessons we learnt was that we would do in-situ slum rehabilitation, that is you allow the cluster of people where they are, try and capture the value of the land and try through a system of cross-subsidization, where a government doesn’t spend anything. You get a promoter or a builder in, you create decent clean environmentally friendly units with a toilet, a kitchen for those who had that original space and you finance that through the capture of the land value through commercial space. It’s working in the heart of Bengaluru. I went to the inauguration. In Delhi, we have two projects. One of them is nearing completion. I think east of Kailash if I’m not mistaken, another Katputli colony is taking a little longer because they were difficulties.
Second (scheme) is Credit Linked Subsidy Scheme. This is a system of interest subvention. Typically, young people got new jobs. They get married. They want a home of their own. They go to a bank, ask for a loan from the bank, which typically asks them to pay 12 percent and above. Through the system of subvention, we give them three percent upfront. It helps. Now the interest subvention scheme from what I can make out has already got 17.35 lakh people as against in the earlier 10-year period which was only one 0.18 lakh. that’s 18 000 against 1800,000!
The third is Beneficiary-led Construction. Typically, let’s say you have a family home, which is, in a somewhat rundown condition or one might even say dilapidated. You want some money to get, do it upfront. This is central government, will give you one lakh and a half and you do it up. Again doing very well.
And the fourth major component is affordable housing in partnership. The state government provides land, the central government gives a little bit of money, we give a lakh and a half for every beneficiary. some state governments give much more. Roaring.
So I want to conclude by telling you, when we started this scheme, much before I came on board. I came on board, only in September of 2017, the scheme started in 2015, June. We did a demand assessment, how many homes or units Do you really need to produce for the prime minister’s dream that by 2022 Every Indian, no matter where he or she lives whichever part of the country they must have a home which he, or she can call their own with clean, ecologically, friendly, toilet, kitchen, gas cylinder. And most importantly, the title of the home must be in the name of the lady of the house.
Sanjeev Sanyal: Now, the underlying philosophy of what you’re trying to do, seems to be that this is not a top-down kind of approach, this is much more bottom-up. Demand-driven effort de-centralized in sort of thinking, but there is another element to this in the end. You are still thinking in terms of static ownership of property in the sense that we are. We are a country, which is clearly turning in many ways, whether it’s migration that is happening. People are moving around, horizontally. There is also people moving up the social ladder, so vertical mobility as well. So in that context, surely a very important part of the thinking has got to be rental.
Hardeep Singh Puri: Absolutely correct. Absolutely. Let us say, my basic place of birth and what I call home is Jharkhand. Right, but I don’t live in. Jharkhand. I came looking for work in India, in some other part of India, Delhi, Mumbai.
So we’ve done three things, one is static ownership is what you described where you own a property which you got through one of these four verticals. The other is the affordable rental housing scheme. What this means is you where people come looking for work for the short term. There is existing housing which is not utilized. You make that available to people like migrant workers or there are economic entities, which are production facilities in a particular place. They might want to construct something for their workers. Now, this is pure. renting. Would you at some stage contemplate converting that rented property into ownership? Leave that open. Second thing, you know, because of the difficulties and the fault lines in our renting market, there are a large number of units, which got constructed, but never were put on rent because the landlord feared that once you put them on rent he or she will lose control and may never get them back. Secondly, and this is more important. It was not based on contract. It was based on Paghari. So now if you touch the Paghari component, there is going to be difficulty.
What we did was we needed to circumvent that and produced a template which is circulated to state governments who in turn implement it. This scheme is beginning to do very well. So what is happening so you bring in one crore 14 lakh units on ownership into the market, then you supplement that by virtue of the experience you learn during the pandemic when many of our, citizens because they were migrants workers. They became more vulnerable to the adversity of the pandemic.
Now state governments are signing MOU’s through two models to bring that about and the third is the template on renting. To take it away from the informal settlement system to make it contract-based. So you have a home. I want to live in it. You and I sign a contract, defining duration, defining terms of compensation, etc. So I think what we have succeeded in doing is to slowly but surely post 2014 bring about a fundamental paradigmatic shift in the housing market.
I must tell you, I was used to being very worried as housing minister what if real estate, doesn’t pick up but today, I can say with a degree of confidence, real estate is picking up, both residential and commercial real estate. Affordable housing is a segment that has been added to it.
Sanjeev Sanyal: So now, you’ve run this program for some time. I’m sure there are many learnings from this first, we’d like to get some sense of what, what have we learned as far as the next generation of housing is concerned? And in that context, also remember that the nature of society is going to change in many ways. For example work from home may fundamentally change, Urban landscape. So combining housing with urban development, How would you think that things will change into the next decade or so?
Hardeep Singh Puri: Three things that I can tell you straight on. One is you have to satisfy the aspirations of the large segment of your arrival, especially the people who are in the economically weaker section, lower-income group, medium income group. The beauty of the PMAY to my mind lies not only in the fact that you make a Home affordable to people and a on an affordable place, right, but you’re catering to the EWS (Economically Weaker Section).
Second, you started with basic construction, right? Then, the Prime Minister, got this idea, it is entirely his, he decided to name an entire year as housing technology construction here, which is, I think 20 20 21. If I remember correctly in which global players were invited to demonstrate their technologies. I think 54 such green technologies in the real estate sector were compiled and listed.
Then we had a design competition and which shows six Lighthouse projects – a lighthouse in the sense of demonstrative effect in six different parts of the country to build 1,000 residential units in one year. I would like to show you the progress of that on a real-time basis. I mean in terms of the use of Technology all of them embody different green technologies, which are state of the art cutting edge. Five of them are doing very well. One has some problem with land acquisitions.
We’re hoping that this will have the catalytic demonstration effect like. The private sector has already been using green technology. Now in the heart of Delhi, you know, the Parliament building is coming up. All right, you have other buildings which come up in a short duration of 11 months, 12 months because you’re using newer technologies
Sanjeev Sanyal: they are also local materials?
Hardeep Singh Puri: Absolutely. The new technology doesn’t mean the material has to be imported from Ohio, right? Green Technology means you, use ecologically, friendly, local materials on an as-is where it is.