What Affordable Housing Really Means In India

Affordability, especially in the Indian real estate sector, can mean a wide range of things. Specifically, the term holds different meaning for different categories of demographics. Further, there are also several socio-economic variables governing a city or location to consider. Generally, ‘affordable housing’ refers to residences that have been especially designed for the economically weaker section (EWS) and Lower Income Group (LIG) who are looking for the same comfort and security of a self-owned property/home that the more fortunate middle class enjoys. In the earlier years of real estate development in India, the EWS and LIG categories did not get much attention to their needs. However, with changes in administration and especially with the current government coming to power, a significant amount of changes has taken place in this respect. These two sections make up the thickest segment of the demographic for India, and form the base of the country’s economy. It has been overdue that their requirements are looked into. Thankfully, there have been several initiatives by the BJP government under the leadership of PM Modi that have boosted affordable housing sector. For example, it is seriously looking into is the betterment of accessibility - read reduced commute times. Lack of accessibility has been one of the top reasons why low-cost housing was inaccessible. Even if such housing is outside of the main city periphery, improved connectivity makes distances shorter and such areas more viable and desirable as residential destinations. Why is affordable housing important? Creating affordable housing is not just about helping a certain demographic to achieve their dream of home ownership. True, from a political viewpoint it is obviously important to cater to the demands of a massive vote bank. But there is an important economic angle to be considered, as well - the working class must have a good- enough reason to not move out of their city to be able to work and earn. It is important to understand that we are not just talking about people living on below or on the edge of the poverty line. In 2012, the Housing and Urban Poverty Alleviation Ministry made an upward revision on the criteria that define EWS. With this revision, families with an annual household income of up to Rs. 1 lakh now come under the classification of Economically Weaker Section (EWS). This was a significant change from the earlier limit of Rs. 5, 000/month or Rs. 60,000 annually. The category of Lower Income Group or LIG also saw an upward revision - now, families with an annual income of between Rs. 1-2 lakh came under the LIG category. Previously, the definition applied to families earning Rs. 5001-10000/month or Rs. 60012-1,20,000 annually. The people who fall under both these categories are extremely important for the country's economic progress. They provide myriad services which our cities can simply not do without, but are very prone to migrating out of cities which do not support their needs. For them, as for everyone else, home ownership provides not only a strong psychological anchor but also financial security and a better lifestyle - important incentives to stay put rather than migrate elsewhere. What about affordable housing for the middle class? This is an important question, and calls forth the real definition of affordability in the Indian context. Affordable housing also comes under the ambit of a much wider local meaning, wherein it constitutes homes that are affordable to the maximum segment of demographics. It can also apply to the local population in a city which, despite being more economically fortunate and flexible than the EWS and LIG segments, are sensitive to high home prices within their city. Such buyer groups will have sufficient funds to buy a decent-sized property on the outskirts, but face challenges when buying a home closer to the employment hubs and conveniences available within the city limits. Another way to understand this situation is the deficiency of properties within the city locations for buyers in the budget groups of Rs. 35-50 lakh. Thus, a city would be said to be deficient of affordable housing even if it has enough homes in the outskirts within a price range of Rs. 20 lakhs. In this case, the potential buyers are those who can pay beyond Rs. 20 lakhs and are not interested in living on the outskirts. Affordable housing as a whole is a profitable business because of its high rate of absorption. However, such housing also advances socio-economic growth both at a locality and city level, because it invites in higher earning groups. Overall, if the majority of a city’s working class does not find suitable homes meeting both their needs and budgets, it can be said that there is a dearth of affordable homes.