Indian Government Initiatives to Boost Affordable Housing in India

Affordable Housing in India is going through some interesting times. Realty developers are constructing apartments with smaller configurations with an aim of offering low budget houses by reducing average sizes of an apartment and thus bringing down the prices of apartments. They are focusing on consumers requirements rather than offering premium apartments by launching the right kind of apartment at the affordable price.

With the continued rise in house prices across India between 2005 and 2008, consumer’s affordability has been challenged and the situation continues even now despite lower home loan interest rates and more supply due to high land prices and other charges. Based on real-time feedback from property buyers, developers have also been tweaking their strategy to attract good response from homebuyers.

The most significant development in this segment was the grant of infrastructure status in the Union Budget 2017-18 which is expected to boost realty developers by giving access to cheaper sources of funding and reducing the price of borrowing. Another push by the government was the new public-private partnership (PPP) policy announced to capture an eye of private investments. These initiatives have been taken by the Government clearly indicates the vision and mission of “Housing for All” by 2022. However, the real estate sector still needs several necessary policies and regulations for promoting better coordination between housing stakeholders and rationalization of several fees and taxes.

Many measures have been taken to encourage realty developers through various incentives, tax benefits, subsidies, and crucially, institutional funding and are therefore likely to spur growth in the affordable housing sector in India. This Sector reflected a growth of 27% between January to September 2017 as compared to an overall residential housing reduction of 33%. This is probably because of an implementation of the PMAY-HFA;

The finance of affordable housing is estimated to be a 6 lakh crore business opportunity by the year of 2022, by when the Indian Government seeks to accomplish housing for all Indian citizens. The Government has launched several initiatives to boost this segment across India. Data show a sharp increase in loan disbursements and launching of new real estate projects in this segment in 2016-17. The Credit linked subsidy policies proved to be quite helpful in improving the affordability factor among the Economically Backward Section. Undoubtedly, the Indian Government initiatives taken to boost the affordable housing sector in India will lend new impetus to the real estate industry.


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