The Centre is set to introduce a credit guarantee scheme for beneficiaries in rural areas who are struggling to complete the construction of pucca houses under the Modi government’s flagship Pradhan Mantri Awas Yojana (Gramin).
The rural development ministry is finalising the contours of a credit guarantee scheme which will extend financial help of Rs 70,000 per beneficiary in rural areas. The scheme is being formulated as several beneficiaries are struggling to complete the construction of sanctioned houses due to spiralling costs of construction material after the pandemic outbreak.
According to sources, the scheme will involve the vast network of self-help groups (SHGs) in rural areas. The SHGs will stand as guarantors for a beneficiary willing to take an easy loan of Rs 70,000 from the bank.
The government has set an ambitious target of completing 2,71,92,795 pucca houses under PMAY (Gramin) by March 2024. According to the rural development ministry statistics, 1,96,62,963 houses have been completed. The target is now to complete 75,29,832 pucca houses in 16 months. PMAY (Gramin) is being implemented since April 1, 2016 and promises assistance of Rs 1.20 lakh in the plains and Rs 1.30 lakh in hilly areas to rural households to construct a pucca house with basic amenities. The cost is shared on a 60:40 ratio between the Centre and the state (it is 90:10 ratio for hill states). Through the new loan scheme, the beneficiary will be able to tap into additional funds to the tune of Rs 70,000.
In the first phase of PMAY (Gramin) from 2016-17 to 2018-19, the states were supporting the completion of 30 lakh houses per year. However, the pace has had to double to 65 lakh houses per year to achieve the mission target, which has also been revised.
A senior official, who did not wish to be identified, told ET, “The biggest problem beneficiaries are facing is the increase in cost of construction material over the last two years of pandemic. Due to this, they are struggling to complete the construction of pucca houses. This will be addressed with the scheme.”
The move will have political ramifications especially in states bound for elections over the next 12 months. Barring election-bound Gujarat, all poll-bound states have less than 80% achievement of house completion target, as per ministry statistics. Madhya Pradesh has 71.34% completion against the ministry target, Chhattisgarh 75.27%, Rajasthan 77.67% and Himachal Pradesh 67.34%. The new scheme could help increase the completion of houses in the states. The Uttar Pradesh elections have pointed towards the political benefits of welfare schemes especially PMAY, Pradhan Mantri Ujjwala Yojana and free grain distribution programmes. The labarthi samooh or beneficiary community had upset the caste arithmetic in several constituencies in the Hindi heartland state.