Rapid urbanisation and rising movement of people from rural to urban areas are leaving as many as 19 million homeless in India’s cities. With land at premium in cities, this has prompted the Government to push affordable housing projects with the RBI opening the External Commercial Borrowings (ECB) window for developers and housing finance companies to raise up to $1 billion.

Yet, much of the effort has remained on paper, except in a few pockets in Mumbai, Delhi, Chennai, Hyderabad and Bangalore where much of the migration has happened over the last decade.

All the talk about the housing bubble notwithstanding, prices have not crashed. According to reports, in hot property markets such as Mumbai, over six months of inventory lies unoccupied. However, prices have remained stubbornly high.

Builders have also cautiously stayed away from the affordable housing sector. The benefits of selling a few houses in the high-end category far outweigh the effort of selling a lot of houses in the low to medium segment.

“The market is catering to the housing needs of the High Income Group and Middle Income Group categories and is yet to percolate to lower strata of society where maximum shortage persists,” according to a Ministry of Housing and Urban Poverty Alleviation report.

This has led to massive shortfall of housing, especially for Economically Weaker Section (EWS) and the Lower Income Group (LIG) categories. According to a report of the Technical Group on Urban Housing Shortage (2012-17) constituted by the Ministry of Housing and Urban Poverty Alleviation, India has a shortage of 18.78 million dwelling units, 96 per cent of it in the EWS and LIG segments.

While there is no standard definition for affordable housing, projects aim to provide low/medium income group the chance to live in 200 to 700 square feet apartments at an average cost of around Rs 5,000 a month. Income level and the size of the housing unit are the key parameters.

A few schemes that were on the anvil to coax builders into constructing affordable houses have not seen the light of the day. For instance, a proposal to exempt profits earned from building and selling affordable houses from the tax net for a period of 10 years is yet to be implemented.

As a result, the scores who migrate to urban India in search of jobs are left homeless and end up in slums. It is quite clear that the authorities have not been able to keep pace with the influx of people.

Nearly a third of the Indians (377 million people) have already moved to urban agglomerations. This figure is likely to rise by 40 per cent by 2030. In other words, in the next 17 years, about 600 million people would have moved to cities.

More construction

The Centre must focus on affordable housing not only because shelter is the basic necessity but also because construction makes for good economics. According to estimates by the Ministry of Housing and Urban Poverty Alleviation, the housing sector supports 250 ancillary industries and the sector is a good employment multiplier. About 16 per cent of the Indian workforce is engaged in construction and transportation sector.

According to the report, about 24 lakh houses are being built in a year. This will have to augmented by at least another 11 lakh houses, if the housing target for 2030 is to be achieved.

High land prices

Also, high land prices have made housing a costly proposition for all stakeholders. In the absence of clear guidelines or formula for calculating land prices, there is much arbitrariness. This has to be fixed on a priority basis if the dream of affordable housing has to be realised.

In short, there is a lot to be done in terms of intent and action if the dream of affordable housing has to be realised.

> satyanarayan.iyer@thehindu.co.in

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