NEW DELHI — In a bid to tackle one of India’s most pressing urban challenges, the central government has launched the Affordable Rental Housing (ARH) scheme, a flagship initiative designed to provide subsidized, temporary housing for low-income migrants and economically vulnerable families in major cities. The program, which offers single and double-bedroom units alongside dormitory-style accommodations, seeks to address the chronic shortage of affordable housing for workers in the informal sector—particularly those who migrate to urban centers in search of livelihoods but struggle to secure stable accommodation.
Operating under a dual-model framework, the scheme leverages both public sector assets and private sector participation to expand housing supply. The first model involves state and municipal governments repurposing underutilized or vacant government-owned properties into rental units, while the second encourages private developers to construct or renovate properties for affordable rentals, incentivized by tax exemptions, faster regulatory approvals, and relaxed land-use norms. Despite its ambitious scope, the program has encountered early bureaucratic delays, uneven private sector engagement, and concerns over eligibility criteria that may exclude many informal workers due to documentation requirements.
What Happened: The Scheme’s Structure and Rollout
The ARH scheme, formally announced in 2024 as part of the Pradhan Mantri Awas Yojana-Urban (PMAY-U), was conceived to provide short-to-medium-term rental housing for urban migrants, including construction workers, street vendors, domestic helpers, and daily wage laborers. The initiative targets two primary income groups:
– Economically Weaker Sections (EWS): Families with annual incomes up to ₹3 lakh.
– Low-Income Groups (LIG): Families earning between ₹3 lakh and ₹6 lakh annually.
Key features of the scheme include:
– Housing Models:
– Public Sector Model: State and city governments identify and convert unused government buildings, vacant plots, and underutilized public properties into rental housing. These units are managed by urban local bodies (ULBs) or designated public agencies.
– Private Sector Model: Developers are encouraged to build or retrofit properties for affordable rentals, with 100% tax exemptions on rental income for 10 years, priority project clearances, and relaxed floor space index (FSI) norms in select cities. Private players can also partner with public-private partnership (PPP) models to develop rental housing on government land.
– Unit Types: The scheme offers single-bedroom (250–300 sq. ft.), double-bedroom (400–500 sq. ft.), and dormitory-style accommodations (for single migrants, with shared facilities).
– Rental Terms: Tenants sign 1–3 year agreements, with options for renewal based on availability. Rents are capped at 10–15% of the tenant’s monthly income, with subsidies provided by state governments in some cases.
– Eligibility and Documentation: Applicants must submit proof of income (salary slips, employer certificates, or self-declaration for informal workers), identity documents (Aadhaar, voter ID), and proof of urban residency (rental agreements, utility bills, or employer letters). Priority is given to migrant workers, women-headed households, and persons with disabilities.
Why It Matters: Addressing India’s Urban Housing Crisis
India’s rapid urbanization has outpaced affordable housing supply, leaving an estimated 18–20 million urban households in need of adequate shelter, according to a 2025 report by the Ministry of Housing and Urban Affairs (MoHUA). The problem is particularly acute for migrant workers, who constitute nearly 30% of India’s urban workforce but often live in overcrowded slums, unauthorized colonies, or makeshift shelters due to high rents and lack of formal housing options.
Key challenges the ARH scheme aims to address:
1. Housing Shortage for Migrants: Many urban migrants, especially those in the informal sector, lack access to formal rental markets due to high deposits, discrimination, and lack of documentation. The ARH scheme seeks to formalize rental housing for this demographic, reducing reliance on exploitative landlords and slumlords.
2. Underutilized Public Assets: India has thousands of acres of vacant or underused government land in prime urban locations. The scheme’s public sector model aims to monetize these assets while addressing housing shortages.
3. Private Sector Reluctance: Historically, private developers have avoided affordable housing due to low profit margins, regulatory hurdles, and high land costs. The ARH scheme’s tax incentives and fast-track approvals are designed to attract private investment.
4. Urban Livability: Overcrowded slums and informal settlements contribute to poor sanitation, health risks, and social instability. By providing regulated, affordable rental housing, the scheme could improve living conditions for millions.
Background and Context: India’s Affordable Housing Push
The ARH scheme builds on earlier government efforts to expand affordable housing, including:
– Pradhan Mantri Awas Yojana (PMAY): Launched in 2015, PMAY aimed to provide 20 million affordable homes by 2022 (later extended to 2024). While the program made progress in homeownership, it did little to address rental housing gaps, particularly for migrants.
– Model Tenancy Act (2021): This legislation sought to reform India’s rental market by balancing landlord-tenant rights, reducing deposit requirements, and speeding up dispute resolution. However, low adoption by states limited its impact.
– Smart Cities Mission: Several cities, including Surat, Indore, and Pune, have experimented with affordable rental housing projects, but these remained small-scale and localized.
Despite these efforts, affordable rental housing remains a critical gap in India’s urban policy. A 2025 study by the National Institute of Urban Affairs (NIUA) found that only 12% of urban migrants have access to formal rental housing, with the majority relying on informal arrangements that offer little security.
Competing Claims and Uncertainty: Will the Scheme Deliver?
While the ARH scheme has been hailed as a step forward, it faces significant skepticism from experts, activists, and potential beneficiaries.
# Supporters’ Arguments:
– Government Data: The MoHUA claims the scheme could benefit 3.5 million urban migrants in its first phase, with 500,000 units expected to be operational by 2027. States like Maharashtra, Gujarat, and Tamil Nadu have already identified hundreds of vacant properties for conversion.
– Private Sector Interest: Early reports suggest moderate private sector participation, with developers in Bengaluru, Hyderabad, and Delhi-NCR expressing interest in the tax incentives and fast-track approvals. The Confederation of Real Estate Developers’ Associations of India (CREDAI) has welcomed the scheme, calling it a “game-changer” for affordable housing.
– Migrant Worker Advocacy Groups: Organizations like Aajeevika Bureau and Jan Sahas have praised the scheme’s focus on informal workers, though they caution that documentation requirements may still exclude many.
# Critics’ Concerns:
1. Eligibility Barriers:
– Income Thresholds: The ₹3 lakh (EWS) and ₹6 lakh (LIG) income caps may exclude millions of informal workers who earn below or just above these limits but lack formal documentation. A 2025 survey by the Centre for Policy Research (CPR) found that 60% of urban migrants in Delhi and Mumbai do not have formal income proof.
– Documentation Requirements: Many migrants lack Aadhaar cards, rental agreements, or employer letters, making it difficult to prove eligibility. Activists argue that self-declaration mechanisms should be expanded.
2. Implementation Delays:
– Bureaucratic Hurdles: Several states have yet to finalize property conversions, citing land title disputes, zoning issues, and lack of funds. In Uttar Pradesh and Bihar, progress has been particularly slow, with only 10–15% of identified properties being repurposed so far.
– Private Sector Hesitation: While some developers are participating, many remain wary of low profit margins and regulatory risks. A 2026 CREDAI report noted that only 30% of private projects under the scheme have broken ground, with the rest stuck in approval pipelines.
3. Rental Affordability:
– Subsidy Gaps: While rents are capped at 10–15% of income, some states have not yet finalized subsidy mechanisms, leaving tenants to pay market rates in certain cities. In Mumbai and Bengaluru, where rents are 20–30% higher than the national average, this could price out low-income migrants.
– Short-Term Leases: The 1–3 year rental agreements may not provide long-term stability for migrants who need permanent housing solutions. Critics argue that the scheme should transition to homeownership options over time.
4. Urban Planning Challenges:
– Location of Units: Many government-owned properties earmarked for conversion are located on the outskirts of cities, far from employment hubs. This could increase commute times and transportation costs for tenants.
– Infrastructure Deficits: Some repurposed properties lack basic amenities like water supply, sanitation, and electricity, raising concerns about livability.
What to Watch Next: Key Milestones and Potential Roadblocks
As the ARH scheme moves into its second year of implementation, several critical developments will determine its success:
1. State-Level Progress:
– Maharashtra and Gujarat are leading in property conversions, with over 50,000 units expected to be ready by 2026. However, Uttar Pradesh, Bihar, and West Bengal—states with high migrant populations—are lagging.
– Watch: Will lagging states accelerate implementation, or will the central government intervene with additional funding or incentives?
2. Private Sector Participation:
– Bengaluru and Hyderabad have seen strong private sector interest, but Delhi-NCR and Mumbai—where land costs are highest—remain challenging markets.
– Watch: Will the tax exemptions and fast-track approvals be enough to sustain private investment, or will developers exit the scheme if profits remain low?
3. Eligibility Reforms:
– Civil society groups are pushing for relaxed documentation requirements, including self-declaration for income proof and Aadhaar-based verification.
– Watch: Will the government amend eligibility criteria to include more informal workers, or will bureaucratic rigidity limit the scheme’s reach?
4. Rental Subsidies and Affordability:
– Some states, like Tamil Nadu and Kerala, have introduced rental subsidies to make units more affordable. Others, like Karnataka and Rajasthan, have yet to finalize subsidy mechanisms.
– Watch: Will subsidy gaps
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Story synopsis gathered from: Times of India – Top Stories — source.
