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August 12, 2015

Since the announcement of what is arguably Prime Minister Narendra Modi’s most ambitious project, experts are trying to gauge the viability of the ‘Housing for all by 2022’ initiative, a vital component of the government’s vision for the country. The PM’s recent visit to the US and the declaration of his ambitious plans on the international forum have suddenly put the spotlight on the rising need for affordable housing, especially in urban India.

With the country projected to add 404 million urban dwellers from 2014 to 2050 and the already highly stressed population density of our cities, some radical measures would need to be adopted by the government to achieve its targets.

The government’s initiative to formulate a National Affordable Housing Policy could encourage the private real estate developers to invest in the sector and provide quality housing at affordable prices. Affordable housing policies, however, are not new to the country. Rajasthan launched its affordable housing policy in 2009 with well laid-out regulations geared towards more equitable availability of housing. Similarly, Affordable Housing Policy 2013 launched by the Haryana government was aimed at incentivising the highly-demanded affordable segment of housing for buyers and developers as well as reviving the realty market in the state.

While both these policies are geared to reduce housing shortage especially EWS and LIG categories, their real success lies in making affordable housing a viable business proposition for developers. Importantly, implementing affordable housing policy in these states is increasingly being viewed with interest by developers and no longer viewed only as a mandatory requirement that needs to be fulfilled.

Illustrating the trend, a recent Knight Frank report shows about 10 per cent of the total launches in Gurgaon in the affordable housing segment in the past six months, a phenomenon never witnessed before as the micro city is particularly known for the dominance of premium housing segments. According to the data from Haryana Town and Country Planning department, the number is bound to increase with about 20 new licenses being issued to various developers under the affordable housing scheme in the past two months.

Although limited in their capability to address the massive and growing housing demand, the affordable housing schemes of these two states offer important insights into what problems the National Affordable Housing Policy would need to address and what can and cannot function to resolve these. While making affordable housing mandatory for builders looking at developing housing, these policies have adopted business-friendly measures such as relaxing FAR and increasing density and ground coverage and created a well-rounded policy which better represents the spirit of the Public Private Partnership model of development.

While studying the success of policies by states could prove meaningful, wholistic urban planning is crucial to successfully developing an outline for the implementation of Affordable Housing Policy. In this regard, the Planning Commission in a report suggests that; “India needs to make urban planning a central, respected function, investing in skilled people, a rigorous fact base and innovative urban form. This can be done through a ‘cascaded’ planning structure in which large cities have 40-year and 20-year plans at the metropolitan level that are binding on municipal development plans. Central to planning in any city is the optimal allocation of space, especially land use and Floor Area Ratio (FAR) planning. Both should focus on linking public transportation with zoning for affordable houses for low-income groups. These plans need to be detailed, comprehensive, and enforceable.”