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Affordable Housing and Urban Poverty

  • 27 Nov 2023

In the wake of rapid, unstructured urbanisation and a global population surpassing 8 billion on 15 November 2022, the housing crisis intensifies. World Habitat Day observed every first Monday in October sheds light on this predicament and the fundamental right to suitable shelter. The worldwide celebration of World Habitat Day, themed "Resilient urban economies: Cities as catalysts of growth and recovery," took place in Baku, Azerbaijan on October 2, 2023.

Affordable housing, a contemporary buzzword, denotes residences equipped with essential services, economically accessible to marginalised demographics. The term 'affordable housing’ signifies a person’s ability to acquire or rent a home without straining their income. It became synonymous with government and NGO initiatives for low-cost housing when free housing schemes were limited, aiming to optimise state expenditure.

Why is Affordable Housing (AH) Important?

Over the past decade, homelessness has surged, mirroring global trends of increased poverty and urbanisation. Approximately 8% of the world population lives on less than US $2.15 per day, with 23% below US $3.65 and 47% below US $6.85. Poverty renders homeownership or renting unfeasible in urban areas. With an estimated 6 out of 10 people projected to reside in urban areas by 2030 (UN-HABITAT), 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, regardless of their vulnerable backgrounds, is a basic human right. India's Supreme Court upholds the right to affordable housing as a fundamental right, stemming from Article 21 of the Indian Constitution. The United Nations Declaration on Human Rights reinforces this principle in Article 25(1).

Scope of Affordable Housing in India

With a significant proportion of the Indian population living in lower and middle-income groups who cannot afford housing on their own, AH schemes have wide scope in the country.

Challenges in Affordable Housing

AH struggles to meet the demands of economically weaker sections (EWSs), lower-income groups (LIGs), and middle-income groups (MIGs). Limited financial support hinders access to low-rate credit for households with fluctuating incomes. Suburban AH units, like those under schemes such as JNNURM and RAY, often remain vacant, imposing extra transportation costs on the impoverished. The scarcity of affordable housing units exacerbates urban poverty. Daily wage workers face challenges in searching for housing due to high brokerage rates, unreliable land deals, and corruption. Housing quality may not meet the needs of large, low-income families. Existing schemes require monthly payments, excluding those with no income capacity.

Affordable Housing and Urban Poverty

AH holds the potential to fulfil the urban poor's dream of decent housing with essential amenities. However, its impact on urban poverty varies based on how it's defined in different regions. Moving to AH can improve living conditions and health for the urban poor but might strain their finances due to increased rent or ownership costs. The relationship is shaped by government definitions of poverty, where distinctions like Low-Income Group (LIG) and Economically Weaker Sections (EWS) are made. Recently, the upper cap for the EWS category has been raised from 1 lakh ₹ per annum to 3 lakh ₹ per annum earning. This shift in the definition of 'poor' may open the doors of AH to a larger population but limit the benefits to ultra poor who need the maximum government assistance in owning a house.

The COVID-19 pandemic disrupted casual employment, affecting migrant and local workers, depleting their savings and hindering AH investments. This situation could lead to unoccupied houses in redevelopment projects, worsening poverty and loan repayment challenges, including potential breadwinners' tragedies.

Government Initiative for Affordable Housing

  • Pradhan Mantri Awas Yojana Urban (PMAY-U) is a centrally sponsored scheme operating through sub-schemes available to States or UTs:
    • In Situ Slum Redevelopment (ISSR): constructing formal housing in place of slums, is accessible to those who own land/house in slum.
    • Beneficiary-led Individual House Construction (BLC): house construction is carried out by the beneficiary on their own land and financial aid for construction is provided by the government in a phased manner as per the progress of work.
    • Credit Linked Subsidy Scheme (CLSS): providing subsidy on loans to EWS, LIG, MIG I and MIG II based on the area of flat and monthly income of the household. To connect all the stakeholders, the government has also functionalised a portal for the same named CLAP.
    • Affordable Housing in Partnership (AHP): provides Central government aid of 1.5 lakh ₹ per EWS dwelling if at least 35% of housing is EWS category.
    • Affordable Rental Housing Complexes (ARHCs): aim to provide affordable rental housing to migrant workers or poor working in informal sectors.
    • Global Housing Technology Challenge - India (GHTC-India): promoting innovative construction technology that is sustainable and disaster resilient. Six flagship Light House Projects have been approved by the government that use alternative climate-friendly technology to provide decent housing (those in Tamilnadu and Gujarat have been successfully accomplished). New technologies applied under the scheme are:
      • Precast Concrete Construction System
      • Monolithic Concrete Construction using Tunnel Formwork
      • Prefabricated Sandwich Panel System
      • PVC Stay-In-Place Formwork System
      • Light Gauge Steel Structural System
      • Pre-engineered Steel Structural System.
  • Atal Mission for Rejuvenation and Urban Transformation (AMRUT): launched in 2015, the housing sector objective of the mission caters to the availability of tap water and sewage facilities in every house.
  • Smart Cities Mission: enabling select cities to improve their core infrastructure and promote inclusive and healthy living, it pursues the motto of "Housing for all" using local area-based development for retrofitting and redevelopment.
  • Dindayal Antyodaya Yojana -National Urban Livelihood Mission (DAY-NULM): entails providing shelter to urban homeless and infrastructural support to urban street vendors. It also includes providing skills to the urban poor in city livelihood centres.

Role of the Private Sector in Affordable Housing

The private sector plays a crucial part in AH as housing provided by the government on subsidised rates is limited as compared to the population of urban poor. For example, in Delhi LIG and MIG flats provided by the Delhi Development Authority are limited and hence a lottery is followed.

Challenges faced by the private sector:

  • Lower Profit Margins: lead them to focus on middle and higher sectors with better profit returns.
  • Land Availability in Cities: the high cost of large open land in prime city areas raises the overall cost of the project.
  • Limited Capital Investment: For builders, private financing institutions show minimal interest in financing projects with low returns.
  • Construction Cost and Taxes: The construction material costs have also risen high with the ongoing Ukraine-Russia war. High GST on construction materials makes AH unprofitable for private sectors.

Government Policies to Promote Private Sector Participation

The Government of India has launched a 'public-private partnership in affordable housing' which attracts private players wherein it will provide incentives in the form of payment or relaxation in permissions in exchange for building affordable housing:

  • Increased access to low-cost land: redirecting private land at low cost in exchange for easing government permissions.
  • Facilitating unused government land.
  • Redevelopment of underutilised urban areas.
  • Policy reforms for change of agriculture sector land use.
  • Allowing direct relationship between builder and allottee in case of ownership or rental housing.

Sustainable Affordable Housing

Investing in easily available construction materials in nature while taking care of the disaster zonation of an area may help reduce the cost of affordable housing and keep them low maintenance for poor households. Self-sustainable off-grid housing emerging in foreign countries where affording a traditional house may be very costly (tiny houses, alternative building materials like cob, reclaimed wood, hempcrete, recycled steel, recycled plastic, bamboo etc) is a very good opportunity to explore. This will help towards a better fulfilment of Sustainable Development Goal 11: more sustainable, resilient, safe and inclusive settlements and the New Urban Agenda (Habitat III). It also helps assimilate climate change adaptation best practices in the housing sector.


To make policies for poor AH, a comprehensive assessment of their housing needs, aspirations and bottlenecks they face in accessing housing should be carried out periodically. This should include strata that can't currently afford even AH: the homeless sleeping on footpaths, etc. Policy reforms should be participatory; also taking into account other stakeholders and the reality of the real estate market. Livelihood programs for ultra poor to grant them purchasing power. Improvising new AH schemes for areas with rapid urbanisation trends. Reduction of construction cost-related taxes for AH private players may as well be helpful.


  1. https://fukuoka.unhabitat.org/en/urbanisation/
  2. https://www.worldbank.org/en/results/2019/04/02/affordable-housing-for-indias-urban-poor
  3. https://journals.sagepub.com/doi/full/10.1177/00490857211040249
  4. https://unhabitat.org/topic/housing
  5. https://www.citiesalliance.org/newsroom/news/urban-news/un-habitat-initiative-fund-pro-poor-housing-six-countries
  6. https://www.un.org/development/desa/dspd/2020/03/resolution-homelessness/
  7. https://blogs.worldbank.org/developmenttalk/half-global-population-lives-less-us685-person-day
  8. https://pmay-urban.gov.in/
  9. https://www.sciencedirect.com/science/article/pii/S0970389615000336
  10. https://ghtc-india.gov.in/Content/LHP.html
  11. https://transformingindia.mygov.in/scheme/deen-dayal-antayodaya-yojana/
  12. http://www.jllrealviews.com/places/tackling-indias-affordable-housing-challenge/
  13. https://www.sciencedirect.com/science/article/abs/pii/S2214785321070322
  14. https://www.sciencedirect.com/science/article/abs/pii/S0378778819336898
  15. https://www.sciencedirect.com/science/article/abs/pii/S0197397522001849
  16. https://www.tandfonline.com/doi/full/10.1080/07352166.2021.1969244
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