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 plan.
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 room
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.