Govt of India


Apathy floors affordable home aspirants

24 Jul 2018

While the sound bites on affordable homes is through the roof, things have not got off the floor

Many Indians face untold hardships due to lack of good shelter including health issues. Those in cities live in a slum close-by or stay far-away where there is no livelihood and few commuting options.

According to the State of the Low-Income Housing Finance Market 2018 report, with increasing urbanization and the lack of planning for housing, there is an estimated shortage of 10-12 million low-income homes, along with 26-37 million urban poor who live in poor quality informal homes. .

Ironically, the huge demand is not translating to queues for homes as supply side issues seem untenable. From developers to innovators, the stakes have been simply unaffordable for the many participants in this segment.

Developer’s dilemma

Take the case of Sanjay Bansal, Founder of Affordable Homes India, based in Gurugram. He lists the many issues faced by developers. “Land cost is the first hurdle. Next, the license process takes very long and your capital is locked. When you get through that and build the places where you can get something built for Rs. 800 per sq ft, there are no buyers as there is no livelihood, transport or other infrastructure,” he says.

Bansal says that there is no strategy and policy to help develop affordable homes in urban areas. “You see statistics that say 10 lakh affordable homes are under construction. I have also taken a license to develop but it is not economically viable to build”, he emphasises. He says that many homes that have been built remain unsold and those sold are not occupied. “Buyers cannot get a loan, and many do not want to move as they may lose their livelihood. Developers bear the brunt as they are expected to manage their capital, handle construction, sell, arrange money for buyers”, he says.

Small scale

Larger scale developments have been an uphill task. A recent report by FSG and National Housing Bank shows that only 1 per cent of the housing supply in this segment comes from large and branded developers, and 90 per cent of the supply of low-cost homes is met by small and informal developers. Ground-level experience shows that most of them build incrementally, says Sanjiv Ray, India Fellow, The Terwilliger Center for Innovation in Shelter (TCIS).

The report notes that projects by large and mid-sized formal developers have largely been unsuccessful as they tend to be expensive and located in less desirable locations that are further away from the city. This has been the experience of developers such as Bansal.

“Corporate developers cannot deal with the myriad local issues – politics, land approval and other realities such as local goons”, says Rajesh Krishnan of Brick Eagle Group. “You need a different mind-set in business model, funding, sales channels, interior design and livelihood management. You cannot just take the same methods used in the premium segment and apply here; it does not work”, he explains.

Fumbling foundation

While small developers are doing the heavy-lifting to build low-cost homes, they lack the skills to meet the demand and do not have anyone supporting them. For example, investing in innovation and building scale are not the skill-set of many local developers. They do not have all the pieces of the puzzle but when ideas are given to them, they can adapt it to local conditions and implement a better solution.

Lack of ecosystem is an inhibitor for innovation says Ashwin Joshi, Senior Vice Present (Ecosystem) at the Center for Innovation Incubation and Entrepreneurship at IIM Ahmedabad. “For a recent national level programme, we received around 3,100 applications representing the wide spectrum of idea to growth stage; however, only 2.4% were under the two segments of low cost housing and environment friendly housing, combined. Too few people are attempting to solve this behemoth problem”, he says.

As a result, most innovation in this segment is only in the periphery – such as in temporary shelters. “Innovation always starts at the fringes. You need catalysers such as supportive policy, to make it spread,”he says.

Tech travails

That said, the role that innovation and technology can play in fixing the woes in this segment is unclear. Unlike the problem of financial inclusion, technical advances in material, construction methods and marketing channels have not taken-off in a big way. Solutions such as using bamboo have not seen traction as buyers prefer a pukka concrete home and changes in mind-set take time. While 3D printed homes are built in China and recently in the Netherlands, we may be some years off from such disruptions.

Even in reliable and proven technology, adoption has been slow. The case in point is pre-fabrication technology that has seen good technical improvements and can be used to reduce costs and construction time. For instance, glass fibre reinforced Gypsum wall panels technology was modified and improved at the IIT Madras to build a full house using panels and successfully piloted. Researchers constructed an 800 square feet two-bedroom house for under INR 10 lakhs in 2013. But it has not seen mass adoption yet.

“Pre-fabrication technology gives better quality at lower cost and reduced time. There are also lean construction practises that reduce inventory and waste. These can save upto 40 per cent of the construction cost”, says Ashwin Mahalingam, Associate Professor, Building Technology and Construction Management Division, IIT Madras.

“While the technology exists, there is reluctance to adopt this. Builders worry if this will work. Buyers are concerned if this is low quality. These cultural issues need to be overcome. And in larger projects where tendering is done, the building code needs change to allow newer technology”, he says. “Unlike the IT sector, there is more inertia to changes. They want to see it really working before they adopt,” he adds. Ray notes that typically if a technology is adopted by high/middle income households, it will be aspirational for low income households a couple of years down the road.

Proof in the roof

Some adoption of newer solutions has been happening, in some segments. One such is a low-cost roof developed by Hasit Gantara, Founder of Re-materials, based in Ahmedabad. “Low-income homes typically have asbestos, thatched or tarpaulin roofs. These lead to various health issues such as breathing problems

for the residents,” he says. His Modroof is made from recycled material, is durable and easy to install compared with concrete roof, and costs much less.

Gantara says that there is good demand and buyers get loans from micro-finance companies to fund the purchase. “It is heartening to see our customers expanding their business as they do not have to worry about leaky roofs and resting well at night during summer heat, as it is cooler inside the home,” he says.

But his journey has not been easy. “Housing is a problem for which solutions do not involve developing apps. You need to spend time in the villages and in slums. You need to understand their life, their behaviour. Your education, skills or technology do not help much,” he says.

And there is also the scramble for capital – to put up a factory, buy raw material – and operational issues such as finding space. He says that hiring employees has not been easy.. “Venture Capitalists do not see this segment as an opportunity. That makes it tough to raise funding,” he says.

Rays of hope

While the general picture is bleak, there are signs of hope. Brick Eagle, for example, incubates local developers and provides them access to capital, technology, management expertise to help them scale-up and deliver affordable homes for the low-income segment. It has delivered 2,000 homes so far and aims to incubate 20 developers in 20 cities by 2020 and deliver one million affordable homes by 2030 – about 5,000 homes per developer per year.

A new accelerator focussed on shelter solutions for low-income people is also in the works. TCIS, an arm of Habitat for Humanity International (a non-profit that works on human shelter solutions) has partnered with The Centre of Innovation Incubation and Entrepreneurship (CIIE) to launch the ShelterTech India Accelerator for early stage companies working to bring shelter solutions for low-income people.

Ray says that besides driving innovation in truly affordable and sustainable shelter development the goal is to address other key constraints such as access to finance and skilling that will help significantly reduce the housing deficit.

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Government Housing Scheme



  • Prime Minister Awas Yojana
  • Prime Minister Awas Yojana ( Gramin )
  • Samajwadi Awas Yojana
  • Deen Dayal Jan Awas Yojana
  • Mukhya Mantri Awas Yojna Rajasthan
  • Affordable Housing Policy 2013
  • Smart Cities Mission
  • DDA Land Pooling Policy 2018

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