CHENNAI : Sand crisis has resulted in an increase in the cost of beneficiary-led individual house construction (BLC) in Tamil Nadu under Pradhan Mantri Awas Yojana (PMAY) Housing for All Mission from Rs 5 lakh to Rs 7 lakh, according to a study conducted under ‘Inclusive Cities Partnership Programme (ICPP) project, jointly being implemented by Ministry of Housing and Urban Affairs (MoHUA) and GIZ India.
The study, which was done to analyse the implementation of BLC in the State by taking a sample survey from Chennai and Coimbatore and a town panchayat, found that only 10 per cent of the 3,66,165 houses approved under the scheme has been completed.
The completion rates of the project in the State has been low due to cost overruns following a surge in the price of sand, an increase in the cost of transportation and labour in the State.
This has forced beneficiaries under PMAY to approach moneylenders or relatives to deal with the increase in cost of construction. They are unable to get the desired sums from banks, due to their financial background.
“The overdependence on informal borrowing to deal with cost escalation can be attributed to the relative ease of borrowing from a money-lender or relative in the middle of construction and to avoid regulatory requirements associated with bank loans,” the study stated.
It also states that beneficiaries are shying away from applying for housing loans as the loans are of high-interest rates and beneficiaries are uncertain about their ability to repay the loans since the average income of the household is low.
The study found that most of the applicants under the scheme are unaware of the true cost of construction and they borrow money up to a point where they get stuck in a vicious circle due to lack of foresight and planning.
It also suggested the conduct of periodic camps by banks to inform applicants of interest rates, repayment schedules and other documents required with a possible comparison on savings made between formal and informal financing methods.
As per the demand survey conducted by the State, there is a demand for 3,90,000 dwelling units under BLC, of which 90 per cent has already been met, with 3,66,165 houses approved so far. The work order was issued for 2,64,529 units of which 36,240 have been completed.
Under BLC scheme, beneficiaries get the Central assistance of Rs 1.5 lakh and the State government contributes Rs 60,000.
Approval and work order:
There is a demand for 3,90,000 dwelling units under BLC, of which 90 per cent has already been met with. 3,66,165 houses approved so far.
Work order issued for 2,64,529. 36,240 units have been completed.
Beneficiaries rather than going to banks are dependent on money lenders and relatives to finance cost overruns.