The Union government is set to significantly increase the grant for private developers and government agencies to develop rental housing facilities under the revamped Pradhan Mantri Awas Yojana-Urban 2.0 (PMAY-U 2.0), approved by the cabinet on 9 August, despite a muted response to the existing scheme.
The Ministry of Housing and Urban Affairs is finalising the guidelines for the implementation of the scheme, which are likely to be announced by next month, senior ministry officials said.
For instance, according to senior ministry officials, the revamped scheme will offer Rs 1.5 lakh per unit for the construction of a rental housing complex with one-bedroom flats, measuring 30 square metres. This is an increase from the Rs 60,000 now offered under the Affordable Rental Housing Complex scheme (ARHC), a sub-scheme under the current PMAY-U.States will also have to pay a portion of the grant given under the affordable rental housing component. For instance, of the Rs 1.5 lakh grant per dwelling unit given to an entity, Rs 90,000 will be paid by the Centre, with the remaining Rs 60,000 to be borne by the states or Union territories, according to ministry. Earlier, the entire cost was borne by the Centre.
The amount per dormitory will also be increased from Rs 20,000 to Rs 50,000. The sub-scheme will now be one of the four main components of the revamped housing initiative. Like the current scheme, it will be implemented under two models: converting existing housing stock constructed by government agencies into rental complexes (model 1) and giving grants to private companies or government agencies to build, operate, and maintain rental complexes (model 2). Both the existing scheme and the new one allow for the construction of one- or two-bedroom houses and dormitories.
The steep increase in the incentive could help improve the participation from private companies, under model 2, to develop rental housing for working women, migrant workers and students, among others. The policy change is also expected to lead to an increase in the number of hostel-like facilities for the people in these categories.
Under the current scheme, private companies, under model 2, have mostly developed rental housing for their employees. Over the past four years, over 82,000 units have been sanctioned for construction and operation by various private companies, and of this, more than 20,000 units are ready, said an official.
Under the existing ARHC scheme, the Centre had proposed that 83,534 flats built by central government-funded schemes would be converted to accommodation for the urban poor and migrant workers. However, according to the PMAY-U dashboard, only 5,648 units have been successfully transformed into rental housing in the past four years.
