Pradhan Mantri Awas Yojana - Urban: Govt needs Rs 1 lakh crore in three years to build one crore houses, Crisil says
M Allirajan | TNN | Dec 6, 2018, 20:38 IST
COIMBATORE: The central government has to mobilise Rs 1 lakh crore in the next three years for achieving its target of building 1 crore houses under the Pradhan Mantri Awas Yojana - Urban (PMAY-U), being implemented by the ministry of housing and urban affairs under the mission ‘Housing for All by 2022’ since June 2015, ratings agency Crisil has estimated.
“Our calculations show the government will have to garner around Rs 1 lakh crore over the next three years if it has to achieve the target of building 1 crore houses. This is going to be a tall task given the current fiscal arithmetic,” said Prasad Koparkar, senior director, Crisil Research.
For extra budgetary resources, the ministry has already initiated fund-raising in the form of bonds through entities such as the Housing and Urban Development Corporation.
As these are typically bonds with 10 years of maturity, with interest and principal repayment to be managed through future budgetary announcements, the provisions in future budgets would be a key monitorable.
“The scheme also faces headwinds such as unavailability of land in prime areas, low participation of private developers on account of brand dilution, bidding mechanism, stringent cost and time schedules resulting in low yields, increasing construction costs due to absence of bulk sourcing of materials, and lack of new technology that impacts productivity, cost efficiency and quality,” Crisil stated.
“That said, PMAY-U does offer a huge opportunity for several sectors by setting off a virtuous cycle,” it said.
“One crore houses would mean an opportunity for over Rs 2 lakh crore of home loans, and incremental consumption of 80-100 million tonne of cement and 10-15 million tonne of steel,” said Rahul Prithiani, director, Crisil Research.
“The construction opportunity is of about four billion square feet over the life of PMAY-U. And all that would translate into 9-10 crore incremental jobs over the execution period,” he said.
Though 63 lakh houses were sanctioned, only 12 lakh have been constructed, while 23 lakh are under construction.
Andhra Pradesh, Uttar Pradesh, Maharashtra, Madhya Pradesh and Tamil Nadu together accounted for 55% share of the sanctions.
The ministry aims at sanctioning 75 lakh houses and constructing 30 lakh of them by the close of this fiscal.
The central government needs to contribute a whopping Rs 1.5 lakh crore in seven fiscals through 2022, at an average Rs 1.5 lakh per house. However, only 22% of this, or Rs 32,500 crore, has been disbursed so far.
“Our calculations show the government will have to garner around Rs 1 lakh crore over the next three years if it has to achieve the target of building 1 crore houses. This is going to be a tall task given the current fiscal arithmetic,” said Prasad Koparkar, senior director, Crisil Research.
For extra budgetary resources, the ministry has already initiated fund-raising in the form of bonds through entities such as the Housing and Urban Development Corporation.
As these are typically bonds with 10 years of maturity, with interest and principal repayment to be managed through future budgetary announcements, the provisions in future budgets would be a key monitorable.
“The scheme also faces headwinds such as unavailability of land in prime areas, low participation of private developers on account of brand dilution, bidding mechanism, stringent cost and time schedules resulting in low yields, increasing construction costs due to absence of bulk sourcing of materials, and lack of new technology that impacts productivity, cost efficiency and quality,” Crisil stated.
“That said, PMAY-U does offer a huge opportunity for several sectors by setting off a virtuous cycle,” it said.
“One crore houses would mean an opportunity for over Rs 2 lakh crore of home loans, and incremental consumption of 80-100 million tonne of cement and 10-15 million tonne of steel,” said Rahul Prithiani, director, Crisil Research.
“The construction opportunity is of about four billion square feet over the life of PMAY-U. And all that would translate into 9-10 crore incremental jobs over the execution period,” he said.
Though 63 lakh houses were sanctioned, only 12 lakh have been constructed, while 23 lakh are under construction.
Andhra Pradesh, Uttar Pradesh, Maharashtra, Madhya Pradesh and Tamil Nadu together accounted for 55% share of the sanctions.
The ministry aims at sanctioning 75 lakh houses and constructing 30 lakh of them by the close of this fiscal.
The central government needs to contribute a whopping Rs 1.5 lakh crore in seven fiscals through 2022, at an average Rs 1.5 lakh per house. However, only 22% of this, or Rs 32,500 crore, has been disbursed so far.
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