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PMAY-G: Transforming the rural housing program in India (Part I)

Posted on by MSC

This is the first part of a two-part series blog on rural housing programs in India

Majuli in the northeastern Indian state of Assam is the biggest river island in the world. Flanked by the mighty river Brahmaputra, the low-lying island is prone to flooding. The annual onslaught of floods destroys everything—from houses to paddy fields, disrupting the lives of poor villagers. In response, the government introduced “Chang Ghar” houses—structurally sound buildings raised on stilts. They have a big room, a central kitchen, and an attached toilet.

“This is sheer magic and I now have a pukka[1] house for myself with a toilet, running water, and also a gas connection,” exclaimed one villager after she received her house through the Pradhan Mantri Awaas Yojana – Grameen (PMAY-G) scheme. Many others in her village had a similar experience. PMAY-G is the central government’s program that provides affordable housing for eligible poor beneficiaries.

To understand how PMAY-G came into existence and how it has performed so far, we must look at the genesis of the rural housing programs in India.

Introduction and evolution of rural housing programs in India

After India became independent in August 1947, the young nation faced a huge housing crisis due to large-scale migration, which left many without houses or shelter. During the 1950s, the Government of India (GoI) began providing housing to rehabilitate refugees of the partition. By 1960, around half a million homes were provided across northern India.

From 1957 to 1996, the GoI implemented several rural housing schemes. In 1957, the GoI introduced the Village Housing Program (VHP), under which individuals and cooperatives availed housing loans of up to INR 5,000 (USD 70[2]). The GoI then introduced House Sites-cum-Construction Assistance Scheme (HSCAS) in 1969, under which it constructed 67,000 houses over the next 10 years.

The GoI further advanced its rural housing agenda through employment programs, such as the National Rural Employment Program (NREP, 1980) and the Rural Landless Employment Guarantee Program (RLEGP-1983). Houses were constructed under these programs for Scheduled Castes/Scheduled Tribes (SCs/STs)[3] and rescued bonded laborers.[4] Indira Awaas Yojana (IAY) was the first major attempt by the GoI to respond to the shortage in rural housing in the country by providing lump-sum monetary assistance for construction.

  1. Indira Awaas Yojana

The GoI launched IAY in June, 1985 as a sub-scheme under RLEGP for the construction of houses for SC, ST, and rescued bonded laborers. In January, 1996, IAY became an independent scheme and coverage was extended to Below Poverty Line (BPL)[5] households as well. Since its inception, assistance under IAY has been used to construct 36 million homes, which represents 89% of the annual target set by the GoI.[6] Although this completion rate is quite respectable, the GoI faced several challenges in the design, implementation, and monitoring of the IAY scheme. The following section outlines these challenges:[7]

  • Targeting: Under the scheme, authorization to select beneficiaries from the target segment rested with gram panchayats.[8] Providing greater autonomy to local village bodies without proper monitoring resulted in the inclusion of ineligible beneficiaries. There were instances of multiple benefits being provided to the same family. The scheme did not meet the criteria regarding the allotment of 60% of the funds for the construction of houses to SC/ST and 40% to non-SC/ST below poverty line (BPL) households. Out of the houses sanctioned during 2008-09 to 2012-13, only 55% were allotted to SC/ST households.
  • Baseline assessment of housing shortage: The housing shortage assessment, which determines the gap between housing required and existing availability, is of utmost importance for the scheme to be effective. Under IAY, 14 states across the country did not undertake a housing shortage assessment, which resulted in inaccurate figures for housing requirements.
  • Convergence with other schemes: The scheme envisaged convergence with existing GoI programs around sanitation, clean drinking water, electricity connections, and affordable credit so that benefits under these programs could be extended to IAY beneficiaries. Convergence with these existing schemes rested with the gram panchayats. Lack of effective monitoring resulted in poor outcomes for the convergence.
  • Universal house design: Under IAY, the GoI suggested a uniform house design across all geographies. The design, however, was not suited for topographical variations in the country, which reduced the longevity of the houses. The GoI also failed to provide technical assistance for the design and construction process to beneficiaries of the scheme.

Thirty-one years after its inception, IAY was not able to completely address the shortage of housing in rural India. In 2012, the rural housing gap was estimated to be approximately 40 million based on the assessment of the Working Group on Rural Housing under the XIth plan. To address the shortcomings of IAY and expedite the provision of rural housing, the GoI revamped the scheme and relaunched it as Pradhan Mantri Awaas Yojana – Gramin (PMAY-G) in 2016.

2) Pradhan Mantri Awaas Yojana – Gramin (PMAY-G)

The Ministry of Rural Development (MoRD), a Ministry under the GoI’s purview, launched PMAY-G to provide 29.5 million pukka houses, which featured basic amenities including toilets, electricity connections, and clean drinking water. The objective of the scheme was to provide such pukka houses by 2022 to all rural houseless and those living in kutcha houses[1] and in dilapidated housing. The GoI utilized the Socio Economic Caste Census (SECC 2011) to identify and select beneficiaries.

Under PMAY-G, eligible beneficiaries receive a sum of INR 120,000 (USD 1,720)[2] in multiple installments[3] to construct a house. To provide further assistance and basic necessities to the PMAY-G beneficiaries, the scheme converges with existing government programs.

PMAY-G’s convergence with Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) entitles beneficiaries to 90 person-days of work on one’s own house and payment of INR 18,000 (USD 260) for such work, while convergence with the Swacch Bharat Mission – Gramin (SBM-G) entitles beneficiaries to additional assistance worth INR 12,000 (USD 170) for toilets. Convergence with Pradhan Mantri Ujjwala Yojana (PMUY) ensures cooking gas connections, the National Rural Drinking Water Program (NRDWP) ensures clean drinking water connections, while Pradhan Mantri Sahaj Bijli Har Ghar Yojana (SAUBHAGYA) ensures electricity connections to PMAY-G beneficiaries.

Besides, beneficiaries are entitled to avail of a housing loan of up to INR 70,000 (USD 1,000) from banking institutions at a rate below the prevailing rates in the market. All monetary benefits accruing to beneficiaries are transferred to their respective Aadhaar[4]-linked bank accounts through the Public Financial Management System (PFMS).

Under PMAY-G, MoRD targeted the construction of 29.5 million houses in multiple phases. During the first phase, 10 million houses were to be constructed between 2016 and 2018, and another 19.5 million in the second phase from 2019 to 2022. PMAY-G was designed to overcome the challenges that emerged under IAY. We discuss these challenges in more detail below.

Improvements over IAY

i) Scheme design

  • Robust beneficiary identification and selection: The scheme emphasizes fairness and transparency in beneficiary selection. The scheme design was built on the principle of “housing for all.” Under the revamped PMAY-G scheme, beneficiaries are identified and targeted as follows:

The eligible list of beneficiaries that has been generated is verified by gram panchayats for discrepancies. This list is referred to as the permanent waitlist. Based on annual targets, housing sanctions are made based on the final rankings of beneficiaries on the waitlist.

  • Implementation of e-governance: The implementation and monitoring of the scheme are carried out through an end-to-end e-governance model, consisting of AwaasSoft (MIS) and AwaasApp (mobile application). The AwaasSoft plays a pivotal role in key governance and operational functions and AwaasApp provides a mobile-friendly interface. The functions include target setting, beneficiary selection, beneficiary management, fund management, sanction management, and construction progress monitoring. The implementation of the e-governance solution has expedited the overall progress of home construction and facilitated more effective resource management.
  • Convergence with other schemes: To foster better convergence outcomes, AwaasSoft is linked to the respective scheme databases for MGNREGS and SBM-G. It captures beneficiary details during registration that are utilized to transfer convergence benefits seamlessly into their respective bank accounts. Responsibility of convergence with other schemes, that is, PMUY, SAUBHAGYA, and NRDWP rests with the gram panchayats.
  • Technical assistance: The National Technical Support Agency (NTSA), which was established under PMAY-G, monitors construction quality. Beneficiaries receive suggestions on housing design and the use of appropriate technology for home construction best suited to the local conditions through information, education, and communication activities. Beneficiaries also receive assistance with raw material procurement from locally available sources and cost and material estimates, as well as labor requirements.

ii) Scheme performance

  • Physical progress of the scheme: The scheme has achieved 94.8% of its target[5] for the first three years. It has completed the construction of 9.11 million houses.

  • Effects on employment generation: Various research organizations have assessed the effectiveness of PMAY-G on generation of direct employment.[6] Research estimates from the National Institute of Public Finance and Policy (NIPFP) showed that since its inception on 1st April, 2016 up until 5th March, 2018, the scheme generated up to 298.4 million person-days of unskilled labor[7] and up to 213 million person-days of skilled labor[8].

PMAY-G benefitted from improvements to both design and performance when compared to its predecessors. Difficulties, however, remained around achieving targets and differential performance among states. The next blog in this series, “PMAYG: Transforming the rural housing program in India – Part II” will discuss the challenges PMAY-G faces and how addressing these challenges will facilitate the GoI’s objective of “Housing for All by 2022.”

[1] A kutcha house is a temporarily constructed shelter not made from cement. They are mostly made from brick and mud.

[2] PMAYG is funded by GoI and state governments in the ratio of 60:40, for the Northeastern states and two Himalayan states (Himachal Pradesh and Uttarakhand) the ratio of funding is 90:10. The scheme is financed wholly by GoI in the case of union territories.

[3] The installment payments are linked to level of construction. State governments have the autonomy to decide the number of installments.

[4] Aadhaar is a verifiable 12-digit unique identification number issued by the GoI to residents of India.

[5] Houses for which construction started in one year but completed in subsequent years are counted as achievement against the annual target set for the year in which construction was initiated; hence, this does not reflect actual physical completion of houses in that particular year.

[6] Impact of PMAY-G on Income and Employment, 2018

[7] Unskilled labor refers to workers who have no special training or experience. They comprise the workforce and have an extremely limited skill set.

[8] Skilled Laborers are workers who have acquired the necessary skills and training for a particular job (Example: plumber or electrician).

[1] A pukka house is one that can withstand normal wear and tear due to usage and natural forces including climatic conditions, with reasonable maintenance, for at least 30 years.

[2] Conversion rate USD 1 = INR 70

[3] Due to the iniquitous and hierarchal character of Indian society, SC/ST communities are considered as socially disadvantaged groups.

[4] Bonded labor is the pledge of a person’s services as security for the repayment of a debt or other obligation.

[5] Below Poverty Line is an economic benchmark set by the GoI to identify economically weaker people and households. It refers to a threshold income level; people whose income is below this threshold are considered poor or below poverty line.

[6] Rajya Sabha question on status of IAY, 2016

[7] Performance audit report: Indira Awaas Yojana, 2014

[8] Gram Panchayats are formalized local self-governance systems in India at the village level, which has a sarpanch as its elected head.

Use of electronic vouchers for distribution of relief Part 2

Posted on by MSC

In our previous blog, we discussed why humanitarian organizations and governments the world over use e-vouchers to distribute relief. We presented the challenges in the disbursement of cash and physical goods and outlined the benefits e-vouchers present to recipients, humanitarian organizations, governments, and the ecosystem. We highlighted examples of programs that have implemented e-vouchers successfully.

In this blog, we take a close look at the implementation of e-vouchers in Kenya. We assess the roles of key stakeholders in the ecosystem, understand the challenges they face, and reflect upon the lessons learned so far.

The implementation of an e-voucher system requires various actors within the ecosystem. It entails coordination among stakeholders comprising humanitarian organizations and governments, the platform or service provider, local vendors, external suppliers, and beneficiaries.

The various actors within the ecosystem play different roles, as follows:

Humanitarian organizations and governments

  • Provide funds for social benefits transfers
  • Collect beneficiary details, such as demographics, GPS coordinates, levels of food insecurity, and criteria for other programs
  • Make bulk payments using Real Time Gross Settlement to the payment service provider(s)
  • Share the e-voucher with the beneficiaries using an SMS to the mobile phone number nominated by the beneficiary; the message also provides details on how and where the beneficiaries may redeem the voucher

The payment service provider(s)

  • Generate e-vouchers and issue them to humanitarian organizations and governments to distribute them to the beneficiaries
  • Issue a USSD code for the beneficiaries; beneficiaries dial and follow the prompts on the USSD platform to pay for the specified goods at a merchant outlet

The beneficiaries

  • Redeem the electronic vouchers in exchange for goods predefined by the donor agency

The local vendor

  • Receive electronic value as a transfer of float to their e-money wallet
  • Use the electronic float to replenish their supplies by paying external suppliers

 

Figure 2: AN example of an electronic voucher redeemable at a specified merchant outlet in Kenya

Challenges of using electronic vouchers

Limited choice of shops to redeem vouchers

The humanitarian organizations and governments may predefine the shops where the e-vouchers can be redeemed. In some instances, remote areas may lack enough shops, which may mean that beneficiaries have to travel far to redeem the e-vouchers for predefined goods. Due to reduced competition, the shops may increase the prices of goods, sell substandard quality items, or charge beneficiaries for products they have not purchased.

Low levels of digital capability

Low levels of digital capability undermine the use of mobile services, which impedes the usage of e-vouchers.

Infrastructure challenges

Challenges related to infrastructure, such as inadequate mobile network connectivity hinder the ability of beneficiaries to use e-vouchers and also their ability to join assistance programs. Programs incur high costs when setting up the e-voucher system.

Inadequate access to technological tools, such as mobile phones

According to World Bank data, Kenya has a high mobile cellular subscription of 96.32 per 100 people compared to the average in Sub-Saharan Africa of 82. Beneficiaries of social benefit programs, and particularly women have lower mobile phone ownership, live in areas with poor connectivity, and have insufficient access to electricity.

Preference for cash by external suppliers

The residents receive the e-vouchers and exchange the value for goods or services at local stores. The vendors subsequently redeem the electronic value to replenish their stock of goods or services. The lack of a digital economy may pose a challenge in remote areas since the suppliers may not accept electronic value as they often prefer cash value.

Risk of diversion of benefits

The e-vouchers program works well if the beneficiaries’ data is accurate and reliable. The point of data collection has a vulnerability—local actors may add beneficiaries who are not whom the social assistance programs target. The risk of poor targeting methods and identification reduces the impact of the interventions.

Increased costs of maintaining beneficiary database

Maintaining beneficiary databases is always challenging. This is because of the need to clean up the data regularly to take account of movements of beneficiaries, deaths, and other circumstances that may change the beneficiary’s status.

How can stakeholders address the challenges?

  • Increased investment in digital capability: To increase the adoption of e-vouchers, stakeholders in the relief aid sector need to work together to promote the digital capability to enable beneficiaries to accept and use e-vouchers. Training on digital capability at the village level with the help of community-level influencers or agents can be one effective way of imparting knowledge on the use of e-vouchers and other digital financial products.
  • Increased investment by county and national governments: The governments at the national and county levels need to increase investments to encourage the growth of local retail shops and allow beneficiaries of electronic vouchers to exchange their vouchers for goods and services. In Kenya, trade and industry are largely a function devolved to the county governments. County governments need to employ concerted efforts to facilitate trade in the counties to enable locals to open and operate retail shops. This can be done by creating enabling policies and a conducive environment for retail businesses to operate. For example, the Kakamega County government has budgeted for setting up modern markets in every sub-county to facilitate trade by constructing lockable stalls, providing lighting, 24-hour security and access to low-interest loans, and capacity building to enable them to utilize the funds effectively.
  • Create incentives for mobile network operators: Donor organizations and government actors need to incentivize mobile network operators to invest in infrastructure in rural areas to enable the connectivity that is critical to support e-vouchers. Ultimately, this will be a commercial decision and will drive companies to deploy new technology, such as nano satellites. The question is not if, but when—and how policymakers can encourage and accelerate this coverage.
  • Create innovative models to increase the ownership of technological tools: Lack of access to technological tools, such as mobile phones, especially among women reduces the ability of some beneficiaries to receive the e-vouchers. Donor organizations and government actors must create innovative models and partnerships to enable financing to enable low-income beneficiaries to acquire mobile devices and pay for them according to their income patterns. Models, such as pay as you go (PAYGO) enable beneficiaries to acquire devices and pay for them in staggered payments of daily or weekly installments according to the ability of the client. Besides, in some regions, special attention will be required to ensure that female beneficiaries continue to own and use mobiles.
  • Increased awareness of campaigns on the use of digital payments: Stakeholders, such as regulators, policymakers, and financial service providers need to work together to increase the effectiveness of e-vouchers and the use of digital payments. This would also increase awareness on the benefits of digital payments to increase their acceptability. For example, the elimination of commissions on low-value transactions by providers in Kenya as part of the response to COVID-19 increased uptake and usage.
  • Increase efficiency in data collection: Donor organizations and government actors need to increase efficiency through additional verification of beneficiaries to reduce the risk of targeting the wrong beneficiaries. While this may come at an additional cost to the donor organizations, it will ensure that the right beneficiaries receive the relief aid.
  • Proper identification of beneficiaries: A robust selection mechanism is needed to ensure the right beneficiaries are targeted with social assistance. It should target only those who need social assistance and eliminate those who do not. For example, the use of stop-gap measures, such as mobile operator databases and social registries can identify new beneficiaries of social assistance to eliminate the bias in the selection of new beneficiaries.
  • Automation of beneficiaries’ databases: Automated beneficiary databases need to be implemented to reduce monitoring and maintenance costs and manage the onboarding, payment, and exit processes of beneficiaries. This will enable donor organizations to cut down on the costs of maintaining the databases. Investing in a robust management information system to manage the onboarding, payments, grievances, and exit processes is one of how donor organizations can manage the costs of maintaining beneficiary databases.

Lessons learned

As the world gears up to the second wave and different strains of COVID-19, the low- and moderate-income populations will require support from humanitarian organizations and governments. According to research conducted by MSC, innovative delivery of targeted social assistance to low- and moderate-income people is critical to ensure their survival. Adherence to the mandated social distancing and preventive guidelines will provide a further impetus for digital financial services to support targeted social assistance efforts.

E-vouchers provide an opportunity for donor organizations and government actors to support individual beneficiaries and provide much-needed community development by supporting local economies. As an immediate response mechanism, e-vouchers allow beneficiaries to address their basic needs, facilitate improved preparedness and recovery, and overcome the loss of income and livelihoods among the most vulnerable.

However, e-vouchers require governments’ support and political goodwill to succeed. As governments are the major distributors of relief to vulnerable populations, its buy-in helps encourage digital financial services and e-vouchers to distribute social assistance.

E-vouchers present several benefits, such as enhanced reach, better accountability, and robust monitoring. Humanitarian organizations, governments, and the private sector have a strong case to use e-vouchers for disbursements. The conditional use of funds allows for their traceability. Thus, governments may use e-vouchers to provide bursaries to students in public government schools and bolster women’s health programs, such as the Linda Mama program.

Capacity-building efforts by payment service providers for beneficiaries and other stakeholders, such as government employees, retail merchants, and service providers are necessary to promote stakeholder buy-in, encourage acceptance, and enhance ease of use for beneficiaries.

When done right and done well, digital voucher assistance places people at the center of any humanitarian response, ensuring that those excluded from digital and financial opportunities can effectively access, use, and make their own life-defining decisions for their families.

Use of electronic vouchers to distribute relief part 1

Posted on by MSC

At the onset of the COVID-19 pandemic, residents of Kibera, the largest slum of Sub-Saharan Africa, gathered at a district office to collect food donated by former Prime Minister Raila Odinga. These donations were made to cushion the residents from hunger amid the pandemic. The situation got out of hand and a brief stampede ensued, which led to the death of at least two people and injuries to several others.

Social distancing became the new normal during the pandemic. In the pre-COVID-19 era, humanitarian organizations, such as the World Food Programme (WFP) used to deliver food aid physically. Since the outbreak, these organizations have struggled to distribute relief to the extremely poor as they fear contracting or spreading the SARS-CoV-2 virus.

In light of the causalities caused by the poorly organized and chaotic food donation drive in Kibera, the Government of Kenya banned the public distribution of food and non-food donations within communities across the country. The government envisages that this ban will curb such incidents in the future. To avoid the recurrence of such incidents, humanitarian organizations must find new ways to distribute relief.

Digital technologies have been transforming the way we respond to emergencies. An example of such an innovation is SurePay. Launched by M-Pesa in Kenya, SurePay is a service that facilitates humanitarian organizations to distribute relief to specified recipients using electronic vouchers. Through e-vouchers, humanitarian organizations can impose restrictions on funds for specific uses and to specific cash-out points. During crises like the COVID-19 pandemic, humanitarian organizations can use e-vouchers to distribute social assistance to those affected adversely.

The COVID-19 pandemic has affected the health, social, and economic situation of communities across the world.

Reeling from significant income losses, low- and moderate-income populations need support from governments and humanitarian organizations.

Humanitarian organizations have been providing relief to vulnerable groups for quite a while through the physical distribution of food and cash. However, these organizations have faced several challenges, some of which are as follows:

  • “Leakages” in benefit transfer programs by intermediaries
  • Diversion of benefits to unintended purposes by the beneficiaries
  • High cost of logistics involved in handling cash and distributing it physically among the recipients
  • Risk of sidelining women, since male members of the household tend to collect cash on their behalf and sometimes divert these funds to unintended

The World Food Programme (WFP) introduced the e-voucher system in Kenya in 2015 to disburse funds to beneficiaries. It implemented the e-voucher system in five counties to strengthen its cash-based response. Through e-vouchers, WFP ensures that beneficiaries use cash to pay for food from designated stores. These vouchers enable WFP to trace the entire value chain from disbursement to the expenditure of funds. A back-end functionality provides humanitarian organizations with reports that show the utilization of funds in terms of the amount, balance, and stores where beneficiaries used the funds. WFP, in partnership with Mastercard, has now been implementing similar e-voucher programs in 25 countries.

In other markets, such as Nigeria, humanitarian organizations use e-vouchers to distribute relief to internally displaced people and vulnerable host communities in conflict-prone areas. Catholic Relief Services (CRS) has also been providing food assistance to conflict-affected states in Nigeria. Initially, CRS disbursed cash to beneficiaries. However, due to challenges around logistics and security of funds for cash disbursement, CRS switched to e-vouchers.

Why should humanitarian organizations and governments use e-vouchers?

Humanitarian organizations and governments can use e-vouchers to enhance cost-effective reach for beneficiaries at the last mile. This saves logistical costs associated with the delivery of food items or cash to beneficiaries. Humanitarian organizations and governments can remotely process and share e-vouchers with the nominated phone numbers of the beneficiaries.

E-vouchers can also help widen the reach of both humanitarian organizations and governments through nominated agents or local administrators, such as chiefs and sub-chiefs, who can map and collect mobile phone details of beneficiaries. The data collected can help create a database of beneficiaries for relief distribution. Agents and local administrators can identify and register beneficiaries from remote areas and pastoralist communities, who often migrate from one place to another.

Some other benefits of e-vouchers are listed below:

  • Reduced administrative costs: E-vouchers are cheaper to use due to the lower cost of distribution logistics. Humanitarian organizations and governments can repurpose these savings and reallocate more resources to relief efforts.
  • Economic growth of the local area: Beneficiaries redeem vouchers at designated local shops to get the food items. This increases the circulation of cash, which results in the economic growth of the local area. Hence, e-vouchers have a multiplier effect on the local economy.
  • Better governance: E-vouchers can help enhance transparency and accountability, and reduce chances of misappropriation before the funds reach the target beneficiaries. This enables humanitarian organizations and governments to ensure that the intended beneficiaries receive the vouchers and utilize the funds appropriately.
  • Enhanced data-backed monitoring of disbursements: To administer e-vouchers, humanitarian organizations and governments create data sets of beneficiaries. Such databases have multiple use-cases, such as determining consumption preferences of beneficiaries within different localities. Humanitarian organizations and governments can also develop a customized portal to assess the use of funds by beneficiaries.
  • Ability to restrict the use of e-vouchers to desired purposes: Humanitarian organizations and governments can enforce conditions on how and where beneficiaries can use the provided funds. By locking the redemption options to specific vendors, such as food stores, they can ensure that beneficiaries utilize the disbursed funds meaningfully.

E-vouchers offer several benefits to recipients, humanitarian organizations and governments, and the larger ecosystem.

In our next blog, we examine the implementation of e-vouchers comprehensively. We also assess the roles of key stakeholders in the ecosystem, understand the challenges they face, and reflect upon the lessons learned so far.