NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, June 29, 2012

Mr Om Prakash Bhansali, 32, has a big dream. He wants his own house. This textile worker with a steady job and a monthly income of Rs 12,000 from Ahmedabad has been scouting for a 250-300-sq.-ft house that he can buy with his meagre resources. But he has been unable to find one.

“I am willing to make 20 per cent down payment and pay as much as 35 per cent of my monthly income as EMI but still I can’t find one which suits my budget,” he rued. Mr Bhansali, who has been living in a rented premise, says rents, too, have been increasing by 45-50 per cent, adding to his woes.

No political will

Industry experts say that there is a huge untapped opportunity at the bottom of the pyramid. However, lack of political will and incentives are hampering the growth.

According to the Union Government data, there is a shortage of 26.53 million units, primarily in the economically weaker section and lower income group category across the country.

“Government is in the process of catalysing policies for the affordable sector. There is a scope for lending to the sector and all that needs to be done is to create an ambience for growth,” Mr Susheel Kumar, Joint Secretary, Ministry of Housing Development and Poverty Alleviation, said.

Observing that the business model needs to be framed with the help of market forces, he said, “Market forces would mean some efforts from the builders in providing affordable housing, efforts from the banks in providing access to credit for the poorer sections as half of those 27 million have the ability of pay off loans and the rest need to bank on the rental housing only.”