It all starts with the classification of affordable housing itself...affordable for what, and by whom? The prevalent supply-demand mismatch in the affordable or low cost housing projects in India is a consequence of this subjectivity. To fully understand how to make the much publicized Pradhan Mantri Awas Yojana (PMAY) scheme work, nothing works better than gaining some case-by-case context.
For instance, a young family with children require a larger home in comparison to a retired couple whose children are away. Yet, an "affordable" home for the former continues to elude. Ownership must be fungible to ensure such gaps between requirement and ability are bridged.
Consider the following two examples.
A home loan with a "hire purchase" plan where the buyer pays an initial deposit to take occupancy, while paying the remainder balance (plus interest) over an extended time-period before taking possession. The property is owned by the vendor till the last payment is cleared.
A government employee typically pays a nominal rent for government-owned accommodation and, on a transfer, relocates to another home where he continues to pay rent till retirement when he must vacate. The government gives him a pension and other benefits, yet the payments made for rent are not deemed as instalments for a home.
Perhaps a combination of these two is the way forward. The idea would be to club the viability of occupancy from the former and fungibility of ownership from the latter.
The government can focus on subventing investments in group housing projects and enable roll-out of hire purchase plans. State-owned Housing Boards can take the lead.
The model should allow buyers to roll forward their installment payments (made to centralized housing funds) when they move from one employer to another, like Employee Provident Fund (EPFO) and National Pension Scheme (NPS scheme) contributions. That way private sector labour mobility will be assured and employees will not lose any upside. They would be eligible to receive a housing allotment of similar size and specifications at the new place of work where they then continue to pay the outstanding instalments till the home becomes theirs. The government (which acts as the vendor) will own the asset till the maturity of the plan.
Affordable housing in India as a result can become truly commoditized and house ownership can be a liquid concept.
Putting in place reforms which would accommodate such flexibility in the present Pradhan Mantri Awas Yojana (PMAY) will be a desirable step towards ensuring that affordable housing in India becomes truly affordable.