POSSIBILITIES was announced by the central government

  POSSIBILITIESAND CHALLENGES OF AFFORDABLE HOUSING IN INDIA  AbstractThere is a fast growth in theurban population and fast growth in urbanisation in India. As there is a hugeunmet demand for housing and the real estate developers are focusing only onthe upper class families’ housing needs, the life of urban poor becameextremely unbearable in the slums and shelters. it became an urgent  need to provide affordable housing to theurban poor and economically weaker sections of the society. There arepossibilities as well as challenges in providinghousing at lower cost.

Here,in this paper, an attempt is being made to analyse the possibilities andchallenges of financing in affordable housing in India. Key word: affordable housing, urbanisation,sustainable cities and communities, sustainable development goals  CONTENTS  SL NO CONTENTS PAGE NO. 1 Introduction 3 2 Significance of the study 4 3 Review of literature 5 4 Methodology of the study 5 5 Definition of affordable housing 6 6 Possibilities of affordable housing 7 7 challenges of affordable housing 8 8 Findings and suggestions 10 9 Conclusion 10 10 Reference 11    IntroductionThere has been an increase in the affordable housingprojects in India as huge unmet demand and favourable  government policies have encouraged manydevelopers to launch new projects in this segment . In 2015, the “Housing for all by 2022” scheme wasannounced by the central government targeting 2 crore homes to be built acrossall urban locations over the next five years. Affordable housing is anattractive proposition both for developers and consumers as the demand is hugeand largely unmet.

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The high focus of central govt. has resulted in theavailability of more funding options for the developers such as ExternalCommercial Borrowings (ECB), Foreign Direct Investment (FDI), and debtfinancing from national financial institutions at highly competitive rates.Affordable housing promoters have been granted more time for projectcompletion, they will get a year’s time to pay tax on notional rental income oncompleted but unsold items, the qualifying criteria have been revised and a newCredit Linked Subsidy Scheme was announced with a provision of Rs 1,000 crore.             How ever there are challenges foraffordable housing projects. The biggest challenge to create affordable housingis the unlocking of land in urban areas. Unless adequate land is madeavailable, creating a 2 crore homes will be a distant dream. High constructioncosts and unfavorable tax environment are the other major challenges faced byaffordable housing segment.

         Significanceof the studyAs per 2011 census,31.16 percentage of Indian population (377.10 million out of 1210.98 million)lived in urban areas. This growing concentration of people in urban areas hasled to housing shortfall, land shortage, and congested transit and has alsoseverely affected basic amenities like water, air and power. Urbanization hasincreased the number of people living in slums and squatter settlements anddeteriorated the housing conditions of economically weaker sections of thesociety.This is primarily dueto the increasing price of land and the real estate in urban areas.

  There exists a wide gap between the demandand supply of housing in urban India. According to the estimates of MHUPA, theurban housing shortage in the country at the end of 10th five yearplan was estimated to be 24.71 million for 66.30 million households.

It wasfurther estimated that 88% of this shortage pertains to houses for EconomicallyWeaker Sections (EWS) and another 11% for Lower Income Groups (LIG).In India privateDevelopers primarily target luxury-end and upper mid housing segment. On theother hand housing for the poor and economically weaker sections is primarilyprovided by the government for welfare purposes. However it is insufficientcompared to the existing shortage in this segment. Thus it’s the housingrequirement of poor and economically weaker sections of the society that aregrossly neglected and there exists a huge deficit in the supply of affordablehoused primarily demanded by this income group in India.

                                                                                                                                              Reviewof literatureJONES LANG LASALLE(2012), in their study, affordable housing in India, An inclusive approach tosheltering the bottom of the pyramid, have discussed the urbanization andhousing shortage, income levels and housing affordability, issues in thedevelopment of affordable housing, policy framework and regulations foraffordable housing and private play to affordable housing in India. Prof. P.S.N Rao, in hisstudy Role of real estate developers in affordable housing and climate change,has demonstrated the structure of population, Affordability and marketstructure, and the affordable housing developers In India. He also discussedthe challenges and the financial and technical barriers in providing affordablehousing.Akeju, in his studytitled “challenges to providing affordable housing in Nigeria” lists out thechallenges of affordable housing in that country.   Methodologyof studyThisstudy is descriptive in nature.

The data used in this study are secondary innature. It involves the collection, presentation and analysis of data fromdifferent sources like articles, websites, news papers books etc      DefiningAffordable HousingThereis no clear cut definition for the term ‘affordable’ as it is a relativeconcept and could have several implied meanings in different contexts.1.      According to the RICS report on Making Urban HousingWork in India, affordability in the context of urban housing means provision of’adequate shelter’ on a sustained basis , ensuring security of tenure withinthe means of the common urban households2.

      According to the KPMG report on ‘Affordable housing–A Key Growth Driver in the Real estate sector’, affordable housing is definedin terms of three main parameters, namely income level, size of dwelling unitand affordability. While the first two parameters are independent of eachother, the third is a dependent parameter that can be correlated to income andproperty prices.3.      As per US Department of Housing and UrbanDevelopment, the generally accepted definition of housing affordability is ‘fora household to pay no more than 30% of its annual income on housing.

Familieswho pay more than 30% are considered cost burdened and may have difficultyaffording necessities such as food, clothing, transportation and medical care.4.      According to the Task Force on Affordable housingset up by the MHUPA in 2008, affordable housing for various segments is definedby size of the dwelling and housing affordability derived by the householdincome of the population.5.       The JNNURMMission Directorate of MHUPA has  alsodefined affordable housing in its amended guidelines for  Affordable housing in partnership released inDecember 2011      Possibilitiesof Affordable Housing There is an urgent necessity to provide housing forthe poor and economically weaker sections of the society. But the developersare always focusing on the upper class people which keep the demand for housingby the EWS unmet.

Government is implementing some welfare schemes which are notenough for the large number of population. The following are the possibilitiesfor real estate to provide affordable housing for the urban poor.1.      Huge unmet demandThere is a huge unmet demand forthe affordable houses in urban areas which is arisen due to the increase inpopulation and urbanization.

It is sure that if the developers are able toconstruct houses at lower cost they will get enough demand for earning areasonable profit.  2.      Increase in populationThe population of India as per2011 census is 1210.98 million and out of these 377.10 million lived in urbanareas.

There is an increasing trend in the urban population as well asurbanization. This increase in urban population is creating more and moredemand for affordable houses.3.      Rapid urbanizationThere is rapid growth in theurbanization in India as a huge number of people are migrating to the citiesfor job and studies. The increase in the population is also a reason forurbanization. 4.

      A culture of home ownershipThere is a trend to own a homerather than to rent one in India even among the Economically Weaker Sections ofthe society irrespective of their level of income.It will enhance the scope foraffordable housing in India. 5.      Availability of funding optionsIt’s a big challenge for thedevelopers to arrange the financial resources for the construction of houses.But now a days various funding options are available for providing financialassistances to the developers. Some of these are mentioned below.

            ExternalCommercial Borrowings (ECB)            Foreigndirect investment (FDI)            Debtfinancing from national institutions 6.      Favorable government policiesAs the government schemes are notenough for providing housing for the huge unmet demand, it is essential topromote the private participation in this field. For this purpose the governmenthas implemented the following policies.            Exemptionfrom the tax for notional income            Variouswelfare schemes like Housing for all by 2022 7.      Scope for low cost and  eco friendly construction methods               There are different methods ofconstruction like Laurie Baker model which will result in highly eco friendlyhouses that can be done in lower cost also. Challenges of Affordable HousingThere is a fast growing trend in the housing constructionin India. Still these developers are not focusing on affordable housing or thedemands of the low Income Groups. The following are the challenges that arefaced by the developers in providing affordable housing in India.

 1.      Cost of land Land is a scarce resource and the demand for land isincreasing. So there is a hike in the price of land which makes housingunaffordable 2.      Unavailability of landAs there is an increase in the urban population andthere is no increase in land, land for construction becomes unavailable.  Unlocking the land is the biggest challengein urban affordable housing. 3.

      Titling issuesThere are some titling issues in unlocking the landfor affordable housing which is the biggest problem in providing affordablehousing. 4.      Cost of constructionThere is a hike in the prices of materials and wagewhich leads to high cost of construction which makes house unaffordable5.

      Limited access to home finance for LIGsAccess to the home financing is limited for the lowIncome Groups in India. It makes their housing plans a far distant dream. 6.      Regulatory constraintsIndiaranks 185 out of 187 countries in the Ease of obtaining Construction PermitsIndex released by the World Bank 7.      Lengthy approval and land use conversion8.      Lack of clarity in building bylaws and guidelines.9.

      Lack of clear definition of affordable housing.The government should redefine the term affordablehousing if it is giving tax benefits to encourage the developers who constructaffordable houses          Findingsand suggestionsItis found in this study that,1.     There is a huge unmet demand for affordable housingin India.2.      there aresome  possibilities in providingaffordable housing to the economically weaker sections of the society likefavorable government policies, financial assistances, huge demand, increase inthe population, tax exemption etc.3.     There are many challenges in providing affordablehousing to the economically weaker sections of the society like lack of land,high cost of land, cost of construction, regulatory constraints etc.

4.     My humble suggestion to the real estate developersis to follow low cost and eco- friendly construction methods like Laurie Bakermodel for construction.ConclusionThere is a hike in the urbanpopulation and fast growth in urbanisation in India. As there is a huge unmetdemand for housing and the real estate developers are focusing only on theupper class families’ housing needs, the life of urban poor became extremelyunbearable in the slums and shelters.

it became an urgent  need to provide affordable housing to theurban poor and economically weaker sections of the society. There arepossibilities as well as challenges in providing housing at lower cost. But wehave to find out low cost and eco-friendly measures to provide affordablehouses and unlock the land for this.    ReferencesGopalan, K., & Venkataraman, M. (2015). Affordablehousing: Policy and practice in India. IIMB Management Review, 27(2),129-140.

Leopold, J., Getsinger, L., Blumenthal, P., Abazajian, K.,& Jordan, R. (2015). The housing affordability gap for extremely low-incomerenters in 2013.

 Washington, DC: Urban Institute.Akeju, A. A. (2007, October). Challenges to providingaffordable housing in Nigeria. In Proceedings of 2nd Emerging UrbanAfrica International Conference on Housing Finance in Nigeria (pp.

5-7).Mayank, H. (2012). Affordable Housing in India: Aninclusive approach to sheltering the bottom of the pyramid. AssociatedChambers of Commerce and Industry of India.



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