Rs 3.61 trillion to solve housing
Dr. M.S. Kapadia
The Technical Group on Estimation of Housing Shortage set up
by the ministry of housing and urban poverty alleviation has placed the total
housing shortage in urban areas at 26.53 million dwelling units for the 11th
Five-Year Plan, including a backlog of 24.71 million units at the beginning of
The estimate for backlog covers dwelling units required for shelterless
households, for removing congestion, and for taking care of dilapidated housing
units. This includes housing shortage for EWS and LIG sections, which usually do
not translate into economic demand due to lower affordability by the poor, and
hence lead to slums.
Maharashtra leads the states in urban housing shortage with 3.72 million units,
followed by Uttar Pradesh with 2.38 million units and West Bengal with 2.04
million units. These three states together account for one-third of the total
housing shortage at the beginning of 2007.
The total investment needed for eliminating the shortage over the 11th plan
period would be around Rs 3.61 trillion. Housing for shelterless would require
Rs 63,765 crore, the same for relieving congestion (broadly ensuring a separate
for married couple) Rs 55,470 crore, and rehabilitation of dilapidated houses Rs
19,613 crore. Investment for LIG housing is estimated at Rs 39,920 crore, for
MIG housing Rs 69,765 crore, and for HIG category Rs 76,041 crore.
Housing finance from banks, housing finance companies and cooperative sector
institutions is expected to grow 15 per cent per annum, taking the total finance
over the plan period to around Rs 7.75 trillion. Assuming that around
one-quarter of this would go for rural housing and the remaining half would
finance new houses (the remaining half netted out for multiple counting and
resale financing), the net fund flow from these institutions for new urban
houses would be around Rs 2.9 trillion. This would take care of 80 per cent of
the urban housing investment required over the 11th plan.
The Government of India has permitted 100 per cent FDI for development of
townships, including housing, built-up infrastructure and construction of
development projects, subject to conditions. However, to encourage FDI, there is
need to minimise procedural delays in project approvals.
[18 June 2007]