Affordable Housing In India- Explained Pointwise

The issue of affordable housing remains a major challenge in India. According to 2011 Census, India has around 1.7 million homeless people who are in dire need of affordable housing. The quality of build, congestion and inadequate infrastructure remains a major concern for even those people with houses.

What is affordable Housing? What is the extent of requirement of affordable Housing in India?

Affordable Housing- According to the definition of government, affordable housing properties are those properties with an area not more than 60 sq.m and their price capped at ₹45 lakh. The right to housing has been held to be a part of the fundamental right to life under Article 21 of the Constitution by the Supreme Court.

Requirement of Affordable Housing in India

a. According to a Government of India report in 2012, an estimated 18.78 million more houses were required to cater to the housing demand in the country.

b. A study done by the Indian Council for Research on International Economic Relations (ICRIER) in 2020 has found that India’s urban housing shortage rose by 54% from 2012 to become 29 million in 2018. (This included homeless populations, inadequate houses that could not be upgraded, obsolete houses and congested households).

c. According to the 2011 census, about 5% of India’s total population (over 65 million people), lived in slums.

What are the government interventions for the development of affordable housing sector?

State Govt schemes for Affordable Housing- Andhra Pradesh government has undertaken schemes such as the Navaratnalu-Pedalandariki Illu.

What are the Challenges in Affordable Housing Sector in India?

Despite government’s intervention for affordable Housing sector in India, there multiple challenges associated with them:

1. Non achievement of targets of PMAY(U) and PMAY(G)-  PMAY(U) promised houses for 1.18 crore families by December 2024. However, as of March 2024, it has only achieved around 67% of its target-around 80 lakh. There are several constraints attached to these schemes, such as PMAY(U) is applicable only for families having access to capital and land, and not for urban landless poor.

2. Higher cost of affordable housing units- The high cost of land and construction materials make the affordable homes economically unviable for low-income people. The low-income class cannot afford the house without subsidy.

3. Unaffordability of Vacant units- According to an analysis done by the Centre for Social and Economic Progress of the 2011 Census data, despite the urban housing shortage of 19 million units, there are 11 million vacant units. However, these vacant units are unaffordable for the lower middle class.

4. Limited Availability of Low-Cost Land- Scarcity of suitable low-cost land within city limits poses a signifiant challenge for the development of affordable housing projects.

5. Lack of easy access to Finance- The affordable housing developers lack the access to institutional finance for affordable housing development.

6. Delays on the part of affordable Real estate Developers- The real estate developers operating in the affordable housing sector suffer from the challenges of lengthy approval procedures, multiple clearances and thin profit margins. These contribute to delays and hamper the swift execution of projects.

What should be the Way Forward?

1. Addressing Demand side constraints- The provision of subsidies, funds for affordable infrastructure development and provision of basic services/amenities around these housing projects, will help in rejuvenating the affordable housing sector in India.

2. Matured rental market for affordable housing- Development of a matured rental market that specifically enhances the robustness of affordable rental housing will enable the holistic development of the affordable housing sector.

3. Promotion of Rental Vouchers- The National Urban Rental Housing Policy’s rental voucher scheme must be implemented more broadly to help urban poor and migrants afford private rentals in suitable locations.

4. Administrative efficiency- The regulatory authorities must proactively speed up the process of regulatory clearances for the affordable housing projects, to spur growth in this sector.

5. Increase focus on Urban Housing Needs- We must also aim to redirect some resources from rural to urban housing projects. This will support the workforce in urban and semi-urban settings, and would in turn enhance labour mobility and economic productivity.

Policy reforms for the affordable housing sector should be participatory. They must also take into account other stakeholders and the reality of the real estate market.