Affordable Housing in India: UPSC Social Justice Notes

Affordable Housing, a contemporary buzzword, signifies residences equipped with essential services, economically accessible to marginalized demographics. Affordable housing in India is defined as a house or a flat with carpet area up to 90 square metres in non-metropolitan cities and towns, and 60 square metres in metropolitan cities and having value up to Rs 45 lakh, for both. Affordable Housing for All was first carved as an objective in the National Urban Housing and Habitat Policy (NUHHP), 2007 of India. This term became synonymous with government and NGO initiatives for low-cost housing when free housing schemes were limited, aiming to optimize state expenditure.

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Why is Affordable Housing (AH) Important?

Over the past decade, global trends of increased poverty and urbanization have led to a surge in homelessness. With an estimated 6 out of 10 people projected to reside in urban areas by 2030, the housing market remains beyond the grasp of the urban poor, resulting in nearly 1.6 billion people living in inadequate housing and 15 million facing forced eviction annually.

Ensuring suitable living conditions for all is a basic human right, reinforced by India’s Supreme Court and the United Nations Declaration on Human Rights.
Affordable Housing and Urban Poverty: AH has the potential to fulfill the urban poor’s dream of decent housing. However, its impact on urban poverty varies based on regional definitions. The COVID-19 pandemic disrupted casual employment, affecting AH investments and potentially worsening poverty challenges.

Challenges in Affordable Housing Development:

1. Limited Availability of Low-Cost Land:

Scarcity of suitable low-cost land within city limits poses a significant challenge. Restricts the development of affordable housing projects.

2. Protracted Approval Processes:

Lengthy approval procedures and multiple clearances contribute to delays. Hampers the swift execution of affordable housing initiatives.

3. Restricted Access to Cheap Construction Credit:

Lack of access to economical construction finance inhibits project viability. Developers face challenges in securing low-rate credit for construction.

4. Thin Profit Margins:

Low profit margins discourage large, organized real estate players from participating. Impacts the overall pace of affordable housing development.

5. Limited Involvement of Prominent Real Estate Entities:

Hurdles in land availability, approvals, and credit access limit the participation of major players. Organized real estate faces barriers in contributing to affordable housing projects.

6. Stagnant Sales Despite Conducive Environment:

Affordable housing sales struggle to gain momentum. Possible factors include the need for more government incentives and economic uncertainties affecting buyer sentiments.

7. Post-Covid Impact on Construction:

The pandemic and subsequent lockdowns halted construction activities. Increased costs of inputs like steel and cement post-lockdown. Shortage of construction labor led to escalated construction costs and project delays.

8. Credit Availability Challenges:

Stricter lending norms by banks and financial institutions. Developers find it challenging to secure credit, impacting project finances.

9. Muted Demand and Economic Uncertainties:

Economic fragility affects employment and income levels, impacting buyer decisions. The preference for renting over purchasing among millennials influences the demand.

10. Cash Flow Challenges for Developers:

The combination of credit availability hurdles and muted demand severely impacts developer cash flows. Adds strain to the financial sustainability of affordable housing projects.

Government Initiative for Affordable Housing

Pradhan Mantri Awas Yojana Urban (PMAY-U)

In Situ Slum Redevelopment (ISSR)

Beneficiary-led Individual House Construction (BLC)

Credit Linked Subsidy Scheme (CLSS)

Affordable Housing in Partnership (AHP)

Affordable Rental Housing Complexes (ARHCs)

Global Housing Technology Challenge – India (GHTC-India)

Atal Mission for Rejuvenation and Urban Transformation (AMRUT)

Smart Cities Mission

Dindayal Antyodaya Yojana -National Urban Livelihood Mission (DAY-NULM)

Role of the Private Sector in Affordable Housing:

The private sector plays a crucial role in AH, addressing the limitations of government-provided housing. Challenges faced by the private sector include lower profit margins, land availability, limited capital investment, and high construction costs. The government has introduced policies to promote private sector participation.

Sustainable Affordable Housing:

Investing in easily available construction materials, considering disaster zonation, and exploring self-sustainable off-grid housing are essential for reducing costs and ensuring low-maintenance affordable housing. These initiatives align with Sustainable Development Goal 11, promoting more sustainable, resilient, safe, and inclusive settlements.

Frequently Asked Questions on Affordable Housing

Q1. What is affordable housing?

A. Affordable housing refers to housing units that are affordable to low and middle-income households. These are usually provided by the government or private developers at a cost that is within the financial means of these income groups.

Q2. What is the need for Affordable Housing in India?

A. India faces a significant shortage of housing, especially for low and middle-income groups. Affordable housing addresses this need by providing decent housing options at affordable prices, thus improving living standards and reducing homelessness.

Q3. Who qualifies for Affordable housing in India?

A, Eligibility criteria for affordable housing vary but typically target individuals or families with lower incomes. This includes economically weaker sections (EWS), low-income groups (LIG), and middle-income groups (MIG), as defined by the government.

Q4. How does the government promote affordable housing in India?

A, The Indian government has implemented various schemes such as Pradhan Mantri Awas Yojana (PMAY), Affordable Housing Fund (AHF), and Credit-Linked Subsidy Scheme (CLSS) to promote affordable housing. These schemes offer subsidies, interest rate reductions, and incentives to both developers and homebuyers.

Q5. What are the features of affordable housing projects?

A. Affordable housing projects often focus on cost-effectiveness without compromising on quality. They typically offer smaller-sized apartments, basic amenities, and are located in areas with good access to transportation, schools, and healthcare facilities.

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