Why are states pushing for a Rs 1 lakh hike in PMAY-G house assistance?

The list of states which put forth the demand includes: Manipur, Tamil Nadu, Tripura, Madhya Pradesh, Nagaland, Punjab, Bihar, Andhra Pradesh, Assam, Gujarat, Haryana and Jharkhand. While Manipur, Tripura, Madhya Pradesh, Assam, Gujarat and Haryana are run by BJP-led governments, BJP is an ally in the coalition governments in Nagaland, Andhra Pradesh and Bihar. In Tamil Nadu, it’s the DMK-led government and in Punjab, it’s the Aam Aadmi Party government.

The unit assistance under PMAY-G has not been revised since the inception of the scheme in 2016. In 2016, the government had fixed the PMAY-G unit assistance at Rs 1.20 lakh for plain areas and Rs 1.30 lakh in for hilly states/UTs of J&K and Ladakh, North Eastern States, difficult areas and worst affected Left-Wing Extremism (LWE) districts.

Before the government brought in the PMAY-G, the unit assistance was Rs 70,000 in plain areas and Rs 75,000 in hilly areas under the erstwhile Indira Awaas Yojana (IAY).

While the unit assistance provided under the PMAY-G has remained frozen in the last nine years, several states provide higher assistance to beneficiaries from their own funds. For instance, the Jharkhand government provides a unit assistance of Rs 2 lakh per beneficiary under its Abua Awas Yojna’ (AAY). Tamil Nadu, on the other hand, gives a top-up of Rs 1.2 lakh over and above of the Rs 1.2 lakh unit assistance provided under the PMAY-G.

When PMAY-G was launched in 2016, the government aimed to construct 2.95 crore houses in rural areas.

Presenting the Interim Budget for 2024-25 on February 1, last year, Union Finance Minister Nirmala Sitharaman, had announced that two crore more houses will be built under the PMAY-G in the next five years. The same target was approved by the Union Cabinet in its first meeting on June 10. When Sitharaman presented a regular budget on July 16, 2024, she allocated Rs 54,500 crore for PMAY-G for financial year 2024-25.

Explaining the rationale for the allocation, the Expenditure Budget noted, “At present, the beneficiary households are being provided unit assistance of Rs 1.2 lakh in plain areas and Rs 1.3 lakh in IAP districts/Hill/ North Eastern States. However the unit assistance is being enhanced to Rs 2 lakhs in plain areas and Rs 2.20 lakhs in IAP districts/Hilly/ North Eastern States and difficult areas from FY 2024-25 onward with a target to construct 2 crore houses.”

“The estimated Financial Requirements: For construction of 2 crore houses each of Rs 2.05 lakh average unit assistance (estimated), tentative financial provision of approximately Rs 4,18,200 crores (including 2% Admin. Funds) with the following breakup: (a) Central share Rs 2,63,466 crore (63% of total cost) and (b) States share Rs 1,54,734 cr (37% of total cost),” it noted.

However, on August 9, 2024, when the Union cabinet gave approval for extension of the PMAY-G till 2028-29, it kept the unit assistance unchanged at Rs 1.20 lakh for plain areas and Rs 1.30 lakh for North Eastern Region States and Hilly States.

Sources said the states’ demand is important in view of rising construction costs over the years.