Urban housing crisis

According to Ministry of Housing and Urban Affairs data, around 19 million households have a shortage of decent housing in cities leading to a slum population of 65.5 million living in 13.7 million slum households in million-plus cities such as Mumbai, Delhi, Hyderabad, Bangalore, etc.

Reasons for the Urban housing crisis in India

  • High population density- Rural distress has led to huge out-migration towards million-plus cities causing a crunch of housing space.
  • Sub-Optimal Utilization of Urban Land: paradoxically land parcels of high urban densities co-exist with those which are sub-optimally utilized. Because,
    • Fragmented and poorly recorded ownership of urban land
    • Multiple public sector organizations—ports, railways, ULBs, etc.— own land under their jurisdictions
  • Restrictions on Floor Space Index/Floor Area Ratio create an artificial scarcity of land, pushing up prices.
  • Rent control regime: rental laws have lowered returns on rental properties and made eviction of tenants particularly difficult, it has led to the stagnation of new investment in rental housing and thereby creating a shortage of affordable housing in the city.
  • Inadequate housing finance: Inadequate housing credit to Low-Income groups (LIG) because of their weak creditworthiness and low disposable incomes, since urbanisation in India is associated with growing informal employment, which failed to provide social security or formal credit to the growing urban population.
  • Weak land records: Property rights are weak as land records do not guarantee ownership (In India, land titles are presumptive in nature), constraining the housing supply.

Pradhan Mantri Awas Yojana (Housing for All – Urban)

Objective: The Mission addresses urban housing shortage among the EWS/LIG and MIG categories


Beneficiaries: Economically weaker section (EWS), low-income groups (LIGs) and Middle-Income Groups (MIGs). The annual income cap is up to Rs 3 lakh for EWS, Rs 3-6 lakh for LIG and Rs 6 -18 lakhs for MIG.

  • In-situ Slum Redevelopment (ISSR): This vertical will be implemented with the concept of “Land as a resource” with private sector participation for providing houses to eligible slum dwellers. Central Assistance of Rs. 1 lakh per house is admissible for all houses built.
  • Credit Linked Subsidy Scheme (CLSS): Beneficiaries of EWS, LIG and MIG seeking housing loans from Banks, are eligible for an interest subsidy of 6.5%, 4% and 3% respectively.
  • Affordable Housing in Partnership (AHP): Central Assistance of Rs. 1.5 Lakh per EWS house is provided by the Government of India for houses built by private players. States also extend other concessions such as land at affordable cost, stamp duty exemption etc. A housing project will be eligible for Central Assistance if at least 35% of the houses in the project are for the EWS category.
  • Subsidy for Beneficiary-led individual house construction: Central Assistance up to Rs. 1.5 lakh per EWS house is provided to eligible families belonging to EWS categories for individual houses constructed by themselves.

Challenges in the implementation of PMAY (Urban)

  • Scarcity of land: Urban centres have become hubs of commercial and residential activity because of radial development, leaving little to no room for additional construction. Government-led housing projects were compelled to relocate to the outskirts of urban areas due to a lack of available land. Lack of accessibility to transportation and other infrastructural resources led to a lack of demand for these housing units.
  • In-situ development of land pockets locked under slums through private developers, though successful in metro cities, failed in smaller cities since developers were unable to recover their construction costs in the wake of low land prices.
  • Land acquisition: Tedious land acquisition process made it difficult to initiate affordable housing projects.
  • Insufficient subvention: The subvention amount provided to the beneficiaries, under the CLSS component, is insufficient for private housing in major urban centres, which are characterised by high housing prices.
  • The rising cost of raw materials and labour: Appreciation in the price of raw materials and labour coupled with higher GST slab on elementary products such as cement, tiles and bricks have led to a spike in overall construction costs.

Steps to be taken:

  • Easing land acquisition process, or the government acquiring land and handing over the same to developers at a higher subsidy/incentive.
  • Designating specific land parcels for real estate developers in the states’ land banks.
  • Tax rebates on construction material for PMAY projects.
  • Digitialisation of land records and awarding conclusive titling.
  • Increasing the FSI.
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