Housing and Housing Finance in India (Part-1)


Housing is a significant engine for growth and development of any economy. Safe, hygienic and affordable housing has a direct impact on the quality of life and health of households, leading to a better civil society and higher productivity at work. Moreover, the housing construction sector itself leads to direct and indirect employment to a large number of people in several associated industries. The Government, the RBI and the NHB have been consistently working towards achieving the goal of housing for all.

A major policy concern, however, with respect to housing has been the severe mismatch between the demand and supply of housing units especially for the economically weaker section and lower income groups. As per Technical Group on Urban Housing Shortage (2012-17), more than 95% of such housing shortage in urban areas is in the EWS and LIG category. The Working Group on Rural Housing for the Twelfth Five Year Plan (2012-17) has estimated the total housing shortage in rural areas at 43.67 million units. It is also of major concern that 90% of the rural housing shortage (approximately, 39.30 million units) are in respect of Economically Weaker Sections.

In this backdrop we have to note a few key underlying issues. There has been large scale migration of people from rural and smaller urban centres to a handful of large cities over the past few decades. This has resulted in extremely high demand for housing in these cities leading to escalation of property prices and thereby making most housing in big cities beyond the reach of even the middle class. This has not only led to the peculiar problem of large number of highly priced unoccupied/unsold houses in spite of the country having a large housing shortage, it has also led to severe challenges to the civic infrastructure and service delivery capabilities of these cities adding to the exclusion. It is imperative that for a more inclusive future, in addition to direct measures like improving affordability of housing in the larger cities and enabling easier home finance options, alternate strategies like building rental housing options for economically weaker sections and development of smaller urban centres would be key.

While there are a host of issues to be addressed in order to create an enabling environment in the country that results in adequate and proper housing for all, let us focus on the access to housing finance challenge in the next few posts.

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