In an important move on Wednesday evening, the Union Cabinet, chaired by Prime Minister Narendra Modi, gave its approval for the development of Affordable Rental Housing Complexes (AHRCs) for urban migrants and poor as a sub-scheme under Pradhan Mantri Awas Yojana-Urban (PMAY-U).
Under the scheme, the government will be converting vacant funded housing complexes under its ownership into ARHCs through concession agreements for 25 years. The concessionaire will make the complexes liveable through repairs, retrofitting and maintenance of rooms as well as filling up infrastructure gaps like water, sewerage facilities, sanitation, road access, etc.
The concessionaires will be selected by states and union territories through a process of transparent bidding. Complexes will revert to the urban local bodies after 25 years to either restart the next cycle or to be run on their own.
Special incentives like use permission, provision of 50 per cent additional floor area ratio (FAR) and floor space index (FSI), concessional loans at priority sector lending rates, tax reliefs comparable with affordable housing, etc., will be extended to private and public entities to develop ARHCs on their own available vacant land for 25 years.
In a tweet sent in Hindi from his official Twitter handle, Prime Minister Modi stated, “A home isn’t just about building a structure using bricks and cement. It is a space where our dreams take shape and our aspirations take flight. Today’s important cabinet decision will bring a positive change in the lives of several people.”
The Union Minister of Housing and Urban Affairs Hardeep Singh Puri wrote on the popular microblogging site, “ARHCs will offer dignified living spaces to large part of our urban workforce which migrates to urban centres in search of employment but are forced to live in squalor. ARHCs will create new ecosystem in cities making affordable rental housing available close to place of work.”
Secretary Ministry of Housing and Urban Affairs (MoHUA), Durga Shankar Mishra noted in a Tweet, “It is the first such scheme since independence to provide dignified & quality living to such important contributors of urban economy close to their workplaces. Available vacant government funded housing complexes will be converted into ARHCs via Concession Agreements for 25 years.”
300,000 Beneficiaries to be Initially Targeted
A large part of the workforce employed in sectors like manufacturing, hospitality, healthcare, commercial establishments and construction or other sectors, and students arriving in cities from rural areas or small towns in pursuit of better opportunities are the targeted beneficiaries.
An expenditure of Rs 6 billion is estimated in the form of a technology innovation grant and will be released for projects using identified innovative technologies for construction. Nearly 300,000 beneficiaries are expected to be initially covered under ARHCs.
ARHCs will create a new ecosystem in urban areas making housing available at affordable rent close to the place of work. Investment under ARHCs is expected to create new job opportunities. ARHCs will cut down unnecessary travel, congestion and pollution.
The government funded vacant housing stock will be converted into ARHCs for economically productive use. The scheme would create a conducive environment for entities to develop AHRCs on their own vacant land, which will enable new investment opportunities and promote entrepreneurship in the rental housing sector.
The Ministry of Housing & Urban Affairs (MoHUA) had identified ARHCs for urban migrants and poor as a sub-scheme under the PMAY-U. The scheme was announced by Finance Minister Nirmala Sitharaman on May 14. This scheme seeks to fulfil the vision of Aatmanirbhar Bharat or self-reliant India.
The COVID-19 pandemic has resulted in a massive reverse migration of workers and urban poor to their homes in towns or villages across the country. These migrants live in slums, informal and unauthorised settlements or peri-urban areas to save on the cost of living. They spend lot of time commuting long distances to work by walking or cycling, often risking their lives in the process.
Industry Welcomes Decision
Following the announcement, the industry welcomed the move. Dr. Niranjan Hiranandani, President National Real Estate Development Council (NAREDCO) and Founder & Managing Director, Hiranandani Group termed it “a significant move” that would help create an urban ecosystem providing affordable rental housing at to urban migrants and poor.
Dr. Hiranandani said that the scheme would help provide suitable living facilities for migrant labourers to restart the urban economy, optimise usage of existing government-funded vacant housing stock, create new job opportunities and build an environment conducive for companies to develop such projects on own vacant land to promote entrepreneurship in rental housing.
“Special incentives like use permission, 50 per cent additional FAR and FSI, concessional loans at priority sector lending rate, tax reliefs at par with affordable housing, etc., which will be offered to private and public entities to develop ARHCs on their own available vacant land for 25 years, make it an attractive proposition. The biggest plus point is that this will make housing available at an affordable rent, at locations close to places of work. This will reduce unnecessary travel, congestion and help control pollution,” he said.
Ankush Kaul, President & Sales & Marketing, Ambience Group observed, “The cabinet’s approval of AHRCs for urban migrants and poor as a sub-scheme under the PMAY-U is a kind of move that will strengthen the government’s commitment of ‘Housing for All’. This, if implemented, will create affordable housing for many who are not in a position to buy. Moreover, it will solve the problem of the affordable housing shortage in cities.”
The only challenge was to ensure the availability of land and the necessary infrastructure to create such a supply, cautioned Kaul.