Steep climb ahead to achieve target of Housing for all by 2022: ICRA

NEW DELHI: The Pradhan Mantri Awas Yojna (PMAY) was launched in 2015, through which the Government of India had set a target of constructing 50 million new housing units by 2022, of which 30 million units are proposed to be constructed in the rural areas (through PMAY-Rural) and 20 million in the urban areas (through PMAY-Urban).

However, the actual implementation has fallen below the scheduled targets and would require a substantial push going forward. Subsequently, the government has set a scaled down near-term target of 21.4 million under PMAY-Rural and 11.2 million units under PMAY-Urban by 2022.

With 1.5 years to go, against the revised targets, 19.55 million houses have been sanctioned and 14.16 million have been completed through PMAY-Rural till April 2021, implying completion of 67% of the revised target and 72% of the sanctioned houses.

Further, 9% of the houses have not been sanctioned so far. While under the PMAY-U, against a revised target of 11.2 million units, almost entire 11.2 million housing units has been sanctioned and 4.8 million houses have been completed, leading to the completion of only 43% of the near-term target as well as the sanctioned units under the PMAY-U. Thus, a significant pick-up in the implementation pace for both, the PMAY-U and the PMAY-R, will be required to achieve the Housing for All target by 2022.

The performance is also likely to get impacted in FY22 on account of Covid-19. In terms of funding, the allocation towards the PMAY-Urban in the Union Budget has been reduced to Rs 8,000 crore for FY22, against a revised estimate (RE) of Rs 21,000 crore for FY21 and the same has remained stagnant when compared to the budget estimate (BE) of Rs 8,000 for FY21.

The allocation towards the PMAY-Rural in the Union Budget has remained at Rs 21,000 crore for FY22, the same as the revised estimate (RE) and the budget estimate (BE) for FY21. Though the extra budgetary resources (EBR) for PMAY-Rural have been increased from Rs 10,000 crore to Rs. 20,000 crore in BE of FY22 against Rs. 10,000 crore in FY21; the EBR for PMAY-U for FY2022 is nil, against Rs 10,000 crore in BE of FY21.

Thus far, the government has allocated/committed Rs. 2.72 lakh crore and incurred Rs. 2.02 lakh crore (74%) out of the total estimated requirement of Rs. 2.88 lakh crore[1] for the revised targets of PMAY-Rural, leaving pending commitment/allocation of Rs. 16,000 crore and pending expenditure of Rs 86,000 crore. Further, it has allocated/committed Rs 1.81 lakh crore and has incurred only Rs. 0.95 lakh crore (53%) out of the total estimated requirement of Rs. 1.81 lakh crore towards the revised targets under the PMAY-Urban.

“Thus, in aggregate, out of the required Rs. 4.70 lakh crore, Rs. 2.97 lakh crore has been incurred in the last five years but a whopping Rs. 1.71 lakh crore (~37%) of the expenditure would be required to be incurred within the next 1.5 years to complete the construction of the balance units by 2022 to meet the near-term scaled down target. However, in terms of expenditure trend, the actual consolidated expenditure on PMAY in FY20 was Rs 25,000 crore, the RE for FY21 was Rs 40,500 crore, while the aggregate budgetary allocation for FY22 is only Rs. 47,500 crore (including budgeted EBR), thus a large gap of Rs. 1.24 lakh crore is required to be plugged in the next 1.5 years to meet the near-term target,” said Kapil Banga, assistant vice-president and sector head, ICRA.

Although the cabinet had approved a Rs 60,000-crore dedicated affordable housing fund – the National Urban Housing Fund – in 2018 to support the PMAY programme implementation, a considerable portion of the same has already been utilised, raising the need for more allocation. In the absence of a substantial ramp-up in budgetary allocation, the execution could continue to lag, while the dependence on extra budgetary resources is likely to remain elevated. Thus, the ability to provide the required EBR to plug the gap would be critical to meet the financial spending and consequently the physical completion targets within the stated timeline. It remains to be seen what additional avenues the Government will tap into to raise such financing to expedite the implementation of the scheme.