Large-scale affordable housing in cities has been the greatest necessity of urban India today. What we have seen so far is that Indian cities have a severe shortfall on this front, and the result has been the proliferation of slums and unorganised real estate.
These are detrimental to planned growth of our cities. Large-scale urban developments – the only way to create affordable housing in the required magnitude in our major cities – had been becoming increasingly difficult due to lack of land parcels, congested transit routes, lack of finance, rising input costs and regulatory hurdles. So far, if we took a birds-eye view of the problems plaguing this sector, the vision of Housing for All by 2022 appeared a hazy one at best.
The issues that have been plaguing this sector needed to be addressed on a priority basis so that a comprehensive framework can be established for ensuring the development of affordable housing. Because of the fact that it has been given infrastructure status, affordable housing will now benefit from cheaper sources of finance including, but not restricted to, ECBs (external commercial borrowings). Also, re-financing of housing loans by NHBs (National Housing Bank) can give a leg up to the sector.
Considering the dire need for low-cost homes in India, the demand for affordable housing will sustain for decades to come. In a country like India, where 80% of the population cannot afford to buy the kind of homes that even a normal middle-class citizen could, there has always been a huge mismatch between demand and supply for affordable housing.
Realty developers preferred to cater to the high-margins bracket, with an emphasis on the IT/ITeS set and top management echelons. We are hoping that with the new provisions and incentives that affordable housing has been given, more developers will now become interested in this sector.