No new sanctions in urban housing scheme for a year
Premium- Centre is focused on ensuring that all the homes that have been sanctioned are completed
NEW DELHI : The Union ministry for housing and urban affairs is unlikely to sanction any more homes under the flagship affordable housing scheme Pradhan Mantri Awas Yojana (urban) for the next one year as it knuckles down on completing sanctioned projects.
The shift in focus comes as only 6.1 million houses have been completed out of the total 12.2 million that have been sanctioned. Work on around 10 million houses has been started. The figure includes the 6 million completed homes.
Two officials in the know said that, largely, the demand which has come from states so far has been met and that the states now have to work toward completing the projects.
“Our emphasis right now is to complete those houses, because the stakeholders are beneficiaries, the central government and the state government. Sanctioning is not enough. The houses are either being constructed by beneficiaries or urban bodies or state government. They need to start and complete as soon as possible," said one of the two officials.
The other official said that for at least the next one year, the Centre will be fully focussed on talking to all the states and ensuring that all the homes that have been sanctioned are completed so that they can be used by the beneficiaries.
The second official added that states have not been able to ground —or start — all the sanctioned houses. “There is not one state which can say ‘I have grounded all the houses that you gave’. They still have to start the houses which we sanctioned."
The two people cited above, however, added that in case of new demand for houses under the scheme comes from states, the Centre would look into the requests.
Prashant Thakur, head of research with Anarock Property Consultants said that as the covid-19 pandemic forced the delay in the ‘housing for all’ target, the government would now look at completing the sanctioned houses rather than adding more to the list of sanctioned houses.
In the Union budget for FY23, finance minister Nirmala Sitharaman said that the government would now focus on faster clearances for projects under the scheme.
“The central government will work with the state governments for reduction of time required for all land and construction related approvals, for promoting affordable housing for middle class and economically weaker sections in urban areas," she said, adding that the Centre also work with the financial sector regulator to expand access to capital and reduce the cost of intermediation.
Several demand-boosting incentives under the scheme closed in FY22. A credit-linked subsidy scheme for people belonging to the middle-income group (MIG) and low-income group (LIG) or economically weaker section (EWS) for affordable housing ended on 31 March.
Similarly, the additional tax deduction of ₹1.5 lakh on interest paid on housing loans for purchase of affordable homes, the deadline for which was extended twice, also ended in the last financial year.
The decision to not sanction new homes comes amid a rise in input costs of key commodities, including steel and cement, which has impacted the affordable housing segment. As per industry estimates, construction costs have shot up by around 20%.
The recent hikes in interest rates by the Reserve Bank of India are also expected to dampen housing demand going forward.
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