equitable housing

Housing for India’s Urban Population

By: Staff Reporter
India has witnessed a constant surge in the numbers of its urban population. Cities provide endless opportunities to citizens, but to make full use of them, providing equitable housing is imperative.
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India has been witness to an urban revolution in the past century. While mere 26 million people lived in cities in 1901, the numbers have increased to 377 million in 2011 (Census Commissioner, 2011). In the decade between the census of 2001 and 2011, reasons for the growth of urbanisation in India were listed as natural population growth at 44 per cent, reclassification of towns at 29.5 per cent, rural to urban migration at 22.2 per cent and expansion of existing urban boundary at 4.3 per cent (Sreevatsan, 2017).

Housing shortage in urban India

However, tied in with this growing rate of urbanisation has been a rapidly growing problem of housing in urban areas. In 2012, the beginning of the Twelfth Plan Period, the Technical Group on Urban Housing Shortage appointed by the Ministry of Housing and Urban Poverty Alleviation (MoHUPA) found that the total shortage of houses in urban areas amounted to 18.78 million (MoHUPA, 2012). The shortage, while present for all income groups, is most acute in the case of low-income groups (LIGs) (Cushman and Wakefield, 2016).

India’s urban areas are likely to witness substantial increase in the forthcoming decades. The United Nations (UN) projects the urban population to grow to 814 million in the year 2030, as compared to 418 million in 2014. This will give rise to four new megacities—Ahmedabad, Bangalore, Chennai and Hyderabad (UN, 2014). This growth will have to be met with development of housing infrastructure across cities.

The current demand to supply ratio does not present an ideal situation. As of 2016, housing demand is estimated to reach to 4.2 million units during 2016-20 across the cities of Ahmedabad, Bangalore, Chennai, Delhi, Hyderabad, Kolkata and Mumbai. The current supply of houses in urban areas is a mere 1,023,000 housing units. The demand for residential units is highest in the NCR region comprising of Delhi, Noida, Faridabad, Ghaziabad and Gurgaon—1,000,000 housing units. This is met with a paltry supply of just 253,000 houses. The gap is far wider for low income groups (LIG) in India where only 25,000 houses are supplied for a demand of 1,982,000 housing units (Fig. 1) (Cushman and Wakefield, 2016).

Schemes for affordable housing

Three affordable housing schemes have been implemented in India since 2005: the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), Rajiv Awas Yojna (RAY) and the Pradhan Mantri Awas Yojna (PMAY). The JNNURM aimed not only at housing but also sanitation and drinking water. Under JNNURM, the central government specified certain mandatory and optional reforms for cities, and provided assistance to the state governments and cities that were linked to the implementation of these reforms. JNNURM focused on improving urban infrastructure and service delivery, community participation, and accountability of city governments towards citizens (Mishra, 2017). However, in 2016, about 2.17 lakh houses made under JNNURM and RAY were reported to be vacant (PTI, 2016).

In 2015, the previous schemes were discontinued and the PMAY was introduced in their place. As of January 2017, 3,888 cities were selected under the PMAY in 34 states and union territories.  Four verticals have been provided to address the issues of housing requirements of the urban poor, including slum dwellers, where a beneficiary can avail one of following: slum rehabilitation through participation of private developers using land as a resource; promotion of affordable housing for the weaker section through credit-linked subsidies; affordable housing in partnership with public and private sectors; and for beneficiary-led individual house construction or enhancement (Kundu, 2017). The beneficiaries include people who come under the economically weaker sections, lower income groups and middle income groups. EWS are eligible for assistance in all four categories but the LIGs and MIGs are eligible only under the credit link subsidy scheme (CLSS) (PMAY-U, 2015).

CLSS is a central sector scheme implemented through primary lending institutions, as compared to the other three verticals, which are centrally sponsored schemes, implemented through primary lending institutions. Credit linked subsidy is credited to the loan account of beneficiaries through primary lending institutions (ibid). Under the CLSS the beneficiaries are given the full ability to choose the manner in which they wish to design and structure the house. The state governments and urban local bodies are to act only as facilitators and verify sanctioning of land and other documents (Kundu, 2017).

The CLSS provides for a subsidy on interest rates of housing loan to provide for the demand of EWS and LIGs. The loan can be availed for the purpose of building a new house or incremental housing, which includes expansion of housing, addition of rooms, kitchen, toilet, and repair. EWS and LIGs (annual household income up to INR 3 lakh and between INR 3 to 6 lakh respectively) can apply to the scheme wherein they will be provided loans at subsidised interest rate of 6.5 per cent (PMAY, 2015). Subsidy on loan is dependent upon two factors: the loan should be of a maximum amount of INR 6 lakh; and the carpet area of houses should not exceed 30 sq m for EWS and 60 sq m for LIGs. However, both these are not binding. Loans are provided if a beneficiary’s requirements exceed both limits, but in case of any loan in excess of INR 6 lakh, the subsidy will be provided till this amount, while the excess amount will have to be repaid at the market rate (Kundu, 2017).

Weaknesses in PMAY

While PMAY is an ambitious scheme that seeks to mitigate the shortage of housing in urban areas, it is not without shortcomings. Shivani Chaudhry, Executive Director at Human Land Rights Network, points out a glaring inadequacy in the implementation of the PMAY: “On announcement a target of 20 million houses was set. Then the MoHUA suddenly revised the national housing shortage from 18.78 million to 10 million in 2017, without a rational explanation for the same. An adequate assessment is required to frame targets. They cannot be arbitrarily determined and numbers cannot be manipulated just to meet set targets.”

equitable housing

There are some economic disadvantages in the CLSS under PMAY that might prove a hindrance to achieving housing for all. For example, income limit for households belonging to EWS and LIG categories have been increased without providing any rationale.  Under previous schemes, such as the RAY, the annual income limit was INR 1 lakh for EWS and INR 2 lakh for LIG. However, when the PMAY was announced in 2015, it increased the income limits to three times of the limit under RRY. This rise in income limits for EWS and LIGs poses the risk of mistargeting of the subsidised funds to the middle- and upper-middle-income households instead. This will lead to a dilution of the pro-poor agenda and focus on ‘housing for all’ (Kundu, 2017).

The loan recovery terms stipulate that subsidised amount will be deducted from the principal amount and the beneficiary will have to pay EMI on the reduced loan amount. But in cases where the construction or reconstruction of the said house is stalled for any reason like a natural disaster, then the subsidy will be recovered from beneficiary’s account. This requires that the construction must not be stalled under any circumstance (PMAY, 2015).

Further, the PMAY has formalised the procedure through engaging banks, state governments and requirement of land title related documents and has brought in the private sector to play an active role in the implementation of the scheme. In earlier schemes for housing, the focus was instead on the people, processes and incremental housing, which was in turn linked with economic affordability of houses. Basic shelter and a small loan was provided to a beneficiary so they could incrementally construct their houses. The current scheme, through the commodification of housing, is likely to strengthen an exclusionary model of urbanisation, making it more difficult for LIG households, slum dwellers and distress migrants to access housing in cities.

As of 2018, the progress of the PMAY scheme has been slow. Only 10 per cent of projected numbers of houses have been completed. While a target of 4.65 million houses was to be achieved, only 350,000 were completed till March 22, 2018. (Makkar, 2018)

Speaking with G‘nY, Niranjan Sahoo, Senior Fellow at Observer Research Foundation, notes, “the PMAY scheme can be a major boost for urban affordable housing, although it will not be enough. The bigger question is how such a gargantuan scheme will be financed and what the implementation road-map will be, considering the lacklustre record India has had in such schemes.”


Growing urbanisation is an opportunity for India to achieve economic prosperity by becoming an activity hub. However, in order to use it as an asset, we need to ensure that the most basic of requirements—adequate and decent housing, are made accessible to the citizens. The government has no doubt introduced ambitious schemes that seek to provide housing to all. But it is not the intention of the schemes, but the outcome they will produce in the long run that can alone measure their usefulness. Currently, scheme weaknesses and implementation pose a challenge for the objective of equitable housing. Addressing weaknesses, followed by rigorous execution are the need of the hour to ensure housing for India’s growing urban population.


Cushman and Wakefield, 2016. Housing  Demand Estimated at 4.2 Million for top 8 Cities in the Next 5 Years, November 11, Available at: https://cushwk.co/2sqIEkd

Kundu A., 2017, Housing for the Urban Poor? Changes in Credit-linked Subsidy, Economic and Political Weekly, 52: (30)

Makkar S., 2018. Government’s ‘Housing for All’ Project Is Running Behind Schedule, The Wire, May 18.

Mishra P., 2017. Financing urban development, PRS Legislative Research, June 30.

Office of the Registrar General and Census Commissioner (Census Commissioner), 2011. Provisional Population Totals Urban Agglomerations and Cities, Census of India, Available at: https://bit.ly/2IBcqgZ

Press Trust of India (PTI), 2016. 2.17 lakh houses made under JNNURM, Rajiv Awas Yojna vacant, Business Standard, July 21.

Pradhan Mantri Awas Yojana-Housing for All (Urban) (PMAY-U), 2015. Scheme Guidelines 2015, Available at: https://bit.ly/2xba17f

Sreevatsan A., 2017. How much of India is actually urban? Livemint, September 16.

United Nations (UN), 2014. World Urbanization prospects, The 2014 Revision: Department of Economic and Social Affairs, Available at: https://bit.ly/2GMpqLk

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