Affordable Housing in India

Affordable Housing in India

The concept and importance of affordable housing takes on a whole different meaning in a country like India.  In India, this issue has taken center stage as the rough estimate research says that there is an extreme shortage of millions of housing units.   Some estimates put the number at 20 million.  Add on top of this the huge migration to urban areas and it is clear that affordable housing is an important subject.

At a federal level the Department of Rural Development concerns itself for affordable housing in those areas while the Department of Housing and Urban Poverty Alleviation is concerned with the urban areas.  The estimates above about the need for housing include 15 million affordable housing units for those earning $250 a month or less.


Limitations to Developing Affordable Housing in India

There are many structural and bureaucratic issues slowing down the development of affordable housing in India. Without going into great detail here are some of the top issues:

  • Lack of availability of urban area in India
  • Construction fees and taxes are restricting the of growth of affordable housing
  • Lack of involvement of large real estate development companies
  • Inefficient permitting processes
  • High cost of construction
  • Low return values
  • Lack of funds to keep up on maintenance and capital funds after affordable housing is built


Affordable Housing Development

Prime Minister Modi stated an ambitious goal of providing housing for all residents of India by 2022.   India’s Finance Minster also recently gave affordable housing “infrastructure status” which makes funding and borrowing much more accessible to those who wish to get into the business.  The issues stated above are still in place but some new players are arriving on the market. “The World Bank’s private arm, the International Finance Corporation (IFC), recently agreed to invest up to $38 million in several affordable housing finance firms along with a $30 million injection in Shapoorji Pallonji & Company for the development of affordable housing projects.” Click Here to See Article  The government is taking additional measures to increase the development of affordable housing. In rural areas the spending has been increased from 150 billion rupees a year to 230 billion rupees.  Low interest loans will also be made available to the poor of both urban and rural areas in the upcoming years.

Some believe this initiative by Prime Minister Modi will unleash a wave of real estate development with a value of 1.3 trillion dollars when it is all said and done. Others are not quite so optimistic.  A recent article in the Economic Times of India stated that over 60 million units of housing could be developed in the next several years that could create 2 million jobs.  Click Here to Read

Other private development companies with the help of the World Bank are becoming more involved in the development of affordable housing in India. The Shapoorji Pallonji Group is building 20,000 units around India while several other companies are aggressively either building or searching for land to build on.

Continued Pessimism:

Despite the enormous resources being put towards affordable housing, many doubt that it will make the needed impact.  A recent article in Reuters showed some of this negativity.  An estimated 37 million people live in informal housing including the slums.  Many believe that the people living in these situations will not have the documents and or expertise to navigate the bureaucracy and access the newly developed housing.  Read more here


The issue of affordable housing will continue to be complicated and hard to judge for quite some time.  With billions of inhabitants in the country and urban areas growing, the need for safe, decent and affordable housing will continue to grow.  It will be interesting to see how Prime Minster Modi’s plan to house all citizens by 2022 ends up.


2 thoughts on “Affordable Housing in India

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  1. Fantastic and well written on the state of housing in India. I especially enjoyed the point you made on about the mayor’s promise to provide national housing by 2022 contrasted with the lack of space in urban areas to place these residential buildings.


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