MINI PROJECT REPORT

ON
"AFFORDABLE ELECTRICITY FOR POOR"

Towards the partial fulfillment of the

requirement
for the award degree of
MASTER OF BUSINESS ADMINISTRATION (MBA)

Dr. A.P.J. Abdul Kalam Technical University, Lucknow

Faculty Guide: Submitted By:

Nisha Singh
Dr. Brijesh Yadav MBA-I Sem.
Roll No. 2301080700057

1
DECLARATION

2
 DECLARATION

I Nisha Singh hereby declare that the information presented is correct to the
best of my knowledge and the analysis is as per the norms and guidelines
provided for the report. I have utilized the requisite concepts and applied the
required methodologies to analyze the primary data collected to reach the
conclusion present in the report.

Nisha Singh
MBA-I Sem.
Roll No. 2301080700057

3
ACKNOWLEDGEMENT

4
 ACKNOWLEDGEMENT

The project work is pursued as a part of RSMT, Varanasi. I would rejoice to

express emphatically with profound sense of gratitude and highest

veneration, my sincere thanks to Dr. Brijesh Yadav for giving me guidance

for this project.

Lastly, I am thankful to all the respondents for their corporation & patience

in filling up the questionnaire and to all those who have directly and

indirectly helped me in completing this survey successfully.

Nisha Singh
MBA-I Sem.
Roll No. 2301080700057

5
ABSTRACT

6
 ABSTRACT

Hydropower offers sustainable, affordable energy for local communities

and offers stability in terms of energy prices and energy security at a

global level. A report released by the International Renewable Energy

Agency (IRENA) in 2022 indicated that the global weighted average

levelized cost of electricity (LCOE) of new utility-scale hydropower in

2021 was 11% lower than the cheapest new fossil fuel-fired power

generation option, making hydropower a cheap and reliable source of

dispatchable power.

The growth in regional energy networks globally has created new

opportunities to widen access to clean affordable electricity and water

services. This interconnectivity is essential for many countries to meet

their renewable energy targets, reduce poverty and boost national

development.

Norway, Sweden and Iceland have some of the lowest average

electricity prices in Europe and they produce at least 40% of their

electricity using hydropower. Norwegian power generation comes

predominantly from hydropower (closer to 96%) which means their

energy supply is flexible and very quick to respond to fluctuations in

demand compared to other major generation technologies. Norway is

7
part of the Scandinavian grid network, which makes it easier to trade

with countries using the same frequency.

Denmark sits across two different multinational power grids, with its

eastern islands connecting to the Scandinavian network. The country

often buys Norwegian power, as does Finland, which otherwise relies on

more costly energy generation than Norway. In 2020, Finland imported

a net total of 20% of its power consumption.

Recently, Norway and Germany connected their power grids for the first

time via a 525 kV subsea interconnector. The NordLink project finished

trial operations in March 2021 and will now carry up to 1.4 GW of

power between the countries. Norwegian grid operator Statnett says that

the cable will enable Norway to absorb excess wind power from

Germany, saving its hydroelectric reserves for periods of lower supply.

Elsewhere in Europe, the North Sea Link connected the Nordic and

British markets directly for the first time in 2021 and provides

additional transmission capacity for electricity to be traded more

efficiently, contributing to downward pressure on electricity prices when

demand is high on one side of the cable.

The North Sea Link enables both countries to maximise the use of their

natural resources for the benefit of consumers in Norway and the UK.

When wind generation is high and electricity demand is low in the UK,

8
North Sea Link allows up to 1,400 MW of power to flow from the UK,

conserving water in Norway’s reservoirs. When demand is high in the

UK and there is low wind generation, up to 1,400 MW can flow from

Norway, helping to ensure secure electricity supplies and provide

everyone with reliable access to affordable sustainable energy.

9
 CONTENT

 OBJECTIVE

 INTRODUCTION

 PROBING AFFORDABILITY

 PROBING URBAN POVERTY

 BEST GOVERNMENT HOUSING SCHEMES IN INDIA

 DISCUSSION

 CONCLUSIONS

 BIBLIOGRAPHY

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OBJECTIVE

11
 OBJECTIVE

 India lacks access to energy more than any other country in the world.

Energy-poor households, mostly located in rural areas, are forced to

use hazardous and expensive sources of energy that pollute the

environment.

 A new technology delivers off-grid and decentralized solar power to

homes where people can pay for electricity in small increments using

the mobile phone’s short messaging service.

 The Asian Development Bank’s $2 million equity investment into

Simpa Networks is expected to provide over 63,000 rural households

with access to electricity by 2015 while lessening carbon dioxide

emission, health issues, expenses, and risks from using hazardous

energy sources

 The world continues to advance towards sustainable energy targets –

but not fast enough. At the current pace, about 660 million people will

still lack access to electricity and close to 2 billion people will still

rely on polluting fuels and technologies for cooking by 2030.

 Renewable sources power nearly 30 per cent of energy consumption

in the electricity sector, but challenges remain in heating and transport

sectors. Developing countries experience 9.6 per cent annual growth

12
 in renewable energy installation, but despite enormous needs,

international financial flows for clean energy continue to decline.

 To ensure access to energy for all by 2030, we must accelerate

electrification, increase investments in renewable energy, improve

energy efficiency and develop enabling policies and regulatory

frameworks.

 733 million people don’t have access to electricity. That’s about one

in ten people worldwide. Energy Access | United Nations

Development Programme

 Access to electricity went from 73% in 1998 to 90% in 2020.Access to

electricity | United Nations Development Programme

 It’s estimated that between US$ 35 billion and 40 billion are needed

annually to reach universal electricity access between 2021 and 2030

to reach universal access to electricity. Access to electricity | United

Nations Development Programme

 The global electricity access has risen from 87% in 2015 to 91% in

2021, but 675 million people, primarily in LDCs and sub-Saharan

Africa, remain without access.

 While progress has been made in improving access to electricity and

clean cooking fuels globally, 675 million people remain unconnected

to grids and 2.3 billion continue to rely on unsafe and polluting fuels

for cooking.

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 Renewable sources power nearly 30% of energy consumption in the

electricity sector, but challenges remain in heating and transport

sectors.

 In 2021, 71% of the global population had access to clean cooking

fuels and technologies, up from 64% in 2015. The region with the

lowest access rates was sub-Saharan Africa, where progress towards

clean cooking has failed to keep pace with growing populations,

leaving a total of 0.9 billion people without access in 2021.

14
INTRODUCTION

15
 INTRODUCTION

Affordable housing has become the new buzzword in the field of urban

housing provisioning, particularly for the poor. The idea that the house

should be ‘affordable’ was dear to all during the phase of the unregulated

real estate ‘boom’ marked by skyrocketing prices. India’s humongous

housing shortage, concentrated essentially in the Economically Weaker

Section (EWS) and Low Income Group (LIG) households, poses a great

challenge to the government. The ‘affordable’ housing approach has

appealed to the government too and has become its core approach to

providing ‘housing for all’ in urban India. The National Urban Housing and

Habitat Policy (NUHHP) 2007 categorically stated the intent of the

government that ‘the core focus of this Policy is [the] provision of

“Affordable Housing for All” with a special emphasis on vulnerable sections

of society such as Scheduled Castes/Sheduled Tribes, Backward Classes,

minorities and the urban poor’ (Ministry of Housing and Urban Poverty

Alleviation [MoHUPA], 2007). However, the policy did not lay down any

norms. Later in 2008, the government constituted a committee under the

chairmanship of Deepak Parekh to prepare an affordable housing policy for

the country. The Parekh Committee did detail some affordability norms. The

Rajiv Awas Yojana (RAY), Rajiv Rinn Yojana (RRY), later changed to the

Credit Linked Subsidy Scheme (CLSS), Affordable Housing in Partnership

16
(AHP) and the Pradhan Mantri Awas Yojana-Urban (PMAY-U) have all

been rolled out to achieve the intended goals of the NUHHP (2007) to

provide affordable housing for the urban poor in India. Currently, all

programmes have been subsumed under the PMAY-U for meeting the

housing needs of the urban poor in the country.

While the approach of ‘affordable housing’ is useful in the case of LIG and

Middle Income Group (MIG) households, it has severe limitations in terms

of providing housing to the urban poor in India. Urban poor categorisation

under the EWS is further problematic, more so when the income cap has

been increased from ₹1 lakh to ₹3 lakh. We elaborate on this issue further in

later sections to argue that the level of poverty among urban poor in India (as

reflected from the official statistics), affordable housing policy (demanding a

dedicated proportion of monthly income of the poor to be spent on their

housing for twenty long years) and the real estate reality of the country show

a great deal of mismatch. We in fact agree with the argument that ‘affordable

housing’ is a market-based concept and its use has, of course, been inevitable

since housing, and its provision in the age of globalisation has been

increasingly seen as a free-market issue (Sendi, 2011). The transfer of

housing provisions to the market has been described by some as the

commodification of housing (Allen, 2006; Chiu, 2001; Forrest & Murie,

1990; Malpass & Murie, 1999; Sendi, 2014). Housing is one of the three

basic needs of human survival, along with food and clothing which the

17
Supreme Court of India has linked with the right to life under Article 21 of

the Indian Constitution.1 Such a fundamental need of millions of poor people

cannot be left to market forces and it is crucial that the government will have

to realistically assess the contribution of the poor or think of some

provisioning of free housing for the neediest.

The article is structured in the following manner. Besides the introduction in

the first section, the second section probes the term ‘affordability’––both in

terms of its literal meaning and its relevance and applicability to the housing

sector––to show that it is a market-based concept and how it is problematic

to providing housing for the poor. In the third section, the study critically

examines the approach of the government to understand how it envisages the

idea of ‘affordable housing’ in India. By using the National Sample Survey

Office (NSSO) 68th round consumption experiment data and India’s

Consumer Economy (ICE 360) income data, the urban poor’s capacity to

spend on housing has been analysed in the fourth section. This section also

deals with Engel’s law to determine the disposable income of the poor for

housing. In the fifth section, the current minimum market rate of the houses

in 22 cities of India has also been collated from a property website 2 to show

the mismatch in the government’s approach and current market situation.

Finally, in the last section, we conclude the discussion.

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PROBING AFFORDABILITY

19
 PROBING AFFORDABILITY

The term ‘affordability’ came into vogue in the 1980s as part of the retreat

from public responsibility for the plight of the poor (Stone, 2006). Literally,

the term ‘affordability’ indicates a price or rent which does not impose an

unreasonable burden on household income. Maclennan and Williams (1990)

clarified that ‘affordability is concerned with securing some given standard

of housing (or different standards) at a price or rent which does not impose,

in the eyes of some third party (usually, the government), an unreasonable

burden on household incomes’. A number of judgements and assumptions

are made in putting the concept into practice, and in broad terms,

affordability is assessed by the ratio of a chosen definition of housing costs

to a selected measure of household income in some given period (Maclennan

& Williams, 1990). Affordability is also dependent upon defining other

factors in advance such as adequacy, decent and sanitary … and is a

normative, vague and relative concept (Edgar et al., 2002). In short, housing

affordability means ‘the capacity to pay for purchasing a house’ or ‘pay rent

for a rented dwelling’ (Sendi, 2011). The fundamental difficulty remains that

many households in all societies cannot afford adequate housing, either at

some stage of their housing careers or at any stage (Forrest & Lee, 2003).

Sendi (2011) argues that affordability is a market concept related to one’s

capacity to pay. Those who cannot afford to pay will not gain access to it. If

20
housing is good, those who cannot afford to pay, cannot gain access to

housing. The implementation of neoliberal policies whose principal aim is to

achieve optimum efficiency, market competitiveness, cost-effectiveness and

profitability has forced governments to withdraw welfare state policies,

including those that were previously intended for guaranteeing access to

adequate housing for the disadvantaged and vulnerable (Sendi, 2011). It has

further been argued that accessibility, a humanitarian concept, implies the

objective to guarantee the right to housing for every individual. It recognises

that housing is not a market commodity, but a right that must be guaranteed

for every human being (Kasyap, 2016).

For some people, all housing is affordable, no matter how expensive it is; for

others, no housing is affordable unless it is free (Stone, 2006). Sundaram and

Krishnamurthy (1978) critically examining the employment and poverty

reduction figures in the draft Five-Year Plan argue that the benefits of any

asset improvement and the programme can accrue only to those who have

the particular asset in question. In the housing context, the eligibility criteria

such as having a house (in the case of ISSR [In Situ Slum Redevelopment],

land (in the case of BLC) [Beneficiary-led Individual House Construction] or

disposable income (in the case of CLSS and AHP) as a precondition of

getting the benefit of the PMAY-U is problematic. In India, millions of

households do not have any such assets or disposable income. How does one

ensure that they too get housing? We further add to this argument that not

21
only the absence of assets poses a challenge to the affordable housing

approach, but also the premise on which affordable housing is based is in

contravention to the market reality. This raises the question as to how

‘housing for all’ will be fulfilled by the 75th anniversary of India’s freedom.

Affordability Approaches

Stone (2006) has identified five broad approaches to define house

affordability. The relative approach which is measured in terms of changes

in the relationship between summary measures of house prices or costs and

household incomes; the subjective approach whether individual households

are willing to spend; the family budget approach––a monetary standard

based on aggregate housing expenditure patterns; the ratio approach which

considers maximum acceptable housing cost/income ratios; and the residual

approach which is when normative standards of a minimum income are

required to meet non-housing needs at a basic level, after paying for housing.

The gross use of housing expenditure to income approach is gradually used

as an indicator of ability to pay for housing. Housing units can be classified

affordable if the ratio is less than some cut-off value. A housing affordability

problem emerges when a household pays more than a certain percentage of

its income to obtain adequate and appropriate housing. Hulchanski J. David

(1995) in his paper, questioning the concept of affordability, shows that

families at the same income level spend widely varying amounts for housing.

22
As an alternative, Stone (2006) dwells upon the residual income approach

which recognises that true affordability is sensitive to differences in

household composition and income. The residual income approach to

housing affordability is one that looks at what different household types can

afford to spend on housing after taking into account the other necessary

expenditures of living.

Another approach which has been used widely is the disposable income

approach. Disposable income is the remaining income saved by the

household after spending on all their essential needs, including taxes.

Households that are economically well-off in society are considered to have

more disposable income than their poor counterparts. The disposable income

of the urban poor is only minimal or nil. They also do not have enough

income to purchase essential commodities. They spend a greater share of

their income on basic needs, such as food, transportation, healthcare,

clothing and housing (Schanzenbach et al., 2016).

Government of India’s Approach to Affordable Housing

India’s urban housing shortage is being primarily driven by the EWS and

LIG categories. However, the majority of the housing supply built across

urban India by the private real estate developers is beyond the affordability

of the EWS and LIG segments. The Government of India has pursued an

23
approach of affordable housing to cater to the huge housing shortages of the

EWS and LIG segments.

After Independence, the government has played a direct role in providing

housing and facilitating housing ownership by organising and promoting

housing finance. The emphasis for housing of the poor was only laid in rural

areas (Kumar et al., 2016). The government made budgetary provisions in its

five-year plans––the financial planning system in India––and implemented

several programmes in each plan to facilitate housing (Parashar, 2014).

The Government of India in 2007 declared the NUHHP. The policy sought

to promote various types of public-private partnership (PPP) models for

realising the goal of ‘Affordable Housing for All’. The NUHHP is

essentially a guiding document which promotes measures like reserving 10–

15 per cent land and 20–25 per cent floor area ratio (FAR) in upcoming

housing projects for affordable housing. This policy has also provided

opportunities to the private sector for the creation of such housing stock

through land assembly and strived for in situ development.

A high-level Task Force under the chairmanship of Deepak Parekh was

constituted by the MoHUPA to ‘look into various aspects of providing

Affordable Housing for All’ (Parekh et al., 2008). Recognising that in a

country like India a ‘one-size-fits-all’ approach would be counter-productive

in defining affordable housing, the Task Force defined affordable housing

for EWS/LIG categories of households as ‘a unit with a carpet area most

24
likely between 300 and 600 square feet with (a) the cost not exceeding four

times the household gross annual income (b) equated monthly installment

(EMI)/rent not exceeding 30 per cent of the household’s gross monthly

income’. For the MIG, the carpet area was increased to 1,200 square feet and

the cost increased to five times of the household gross income and EMI/rent

not exceeding 40 per cent of the household’s gross monthly income. This

definition relied upon the gross use of the housing expenditure to income

approach. While this approach has held good for developed countries,

applying it to developing countries and that too for their lowest strata is both

troublesome and far from the reality.

The affordability criteria as suggested by the Parekh Committee were later

revisited by Wadhwa (2009) in a paper prepared by the National Resource

Centre of the School of Planning and Architecture, New Delhi, and

supported by the Ministry of Housing and Poverty Alleviation, Government

of India. The paper endorsed separating the EWS and LIG, since in most

government and institutional programmes, these are taken as separate

categories. Besides, a newer criterion of affordable housing for below the

poverty line (BPL) people was also prescribed. For BPL households, it was

proposed that the cost should not exceed two times of the household’s gross

annual income and EMI/rent should not exceed 5 per cent of the households’

gross monthly income. The paper also reduced the EMI/rent for EWS from

30 per cent (as recommend by the Parekh Committee) to 20 per cent and

25
housing cost not to be more than three times against the four times of the

annual income as suggested by the Parekh Committee. The LIG and MIG

categories were left untouched. This approach was criticised on the ground

that although affordable housing guidelines aimed at providing decent

housing to all, the practical implementation of these guidelines was found to

be challenging, thereby missing all three criteria together, especially for

LIGs where the gap between the household income and house price was

extremely high (Tiwari & Rao, 2016). Wadhwa’s approach to affordable

housing was much close to reality than what the Parekh Committee

prescribed. But we argue that it is better not to use the ratio approach in the

case of BPL. In the later sections, with the help of data, we show why it is

problematic to use the ratio approach in the case of BPL.

Earlier schemes such as the RAY, AHP and the RRY have all been

subsumed under the new mission ‘Housing for All’ by 2022. On 25 June

2015, under the ‘Housing for All’ mission, a new scheme PMAY-U was

launched. envisions a multitude of strategies such as tax rebates, monetary

support, relaxed development regulations, discounted interest rates and so on

to provide the goal of housing for all by 2022 (The Hindu, 2017). PMAY-U

has four verticals: To repeat, In Situ Slum Redevelopment (ISSR), Credit

Linked Subsidy Scheme (CLSS), Affordable Housing in Partnership (AHP)

and Beneficiary-led Individual House Construction or Enhancement (BLC).

Affordability remains the core of this approach.3 All four verticals of PMAY-

26
U fundamentally attempt to provide affordability to the people, though it is

not explicit except in vertical three. ISSR, for instance, attempts to bring

slum residents into formal housing using the latent power of land. In this

scheme, a slum rehabilitation grant of ₹1 lakh per house is given on average.

There is an element of flexibility to states/cities to deploy this central grant

for other slums being redeveloped. The states/cities are to provide additional

floor space index/FAR or Transfer of Development Rights to make projects

financially viable and the land cost is not to be charged by central

government agencies. The CLSS attempts to improve the affordability

through a credit-linked subsidy, whereas the AHP directly supports the

affordable housing programme. Under the BLC vertical, cash support is

provided to households in order to construct/renovate houses. The scheme

originally was meant to cover people in the EWS (annual income not

exceeding ₹3 lakh) and LIG (annual income not exceeding ₹6 lakh)

sections, but since 1 January 2017, it has also been covering the MIG. The

MIG has been categorised into two groups: MIG-I (₹6–12 lakh annual

income) and MIG-II (₹12–18 lakh annual income) [MoHUA, 2018].

Despite trying to cater to the needs of different groups of people, the scheme

has failed to keep pace. What is interesting to observe is that the government

has revised housing shortages from 18 million to 12 million on the basis of a

needs-assessment survey.4 Despite five years of its implementation, only

3.67 million houses have been completed till 14 August 2020 (Table 1).

27
Against a revised target of 12 million, in the next two years, the government

will have to build the remaining 8.39 million houses which is a big

challenge. There is also no publicly available data on the breakup of the 3.67

million completed houses across the four verticals of PMAY except CLSS.

As on 21 January 2020, only 8,31,899 households have availed of CLSS

subsidy benefits.5 Data also does not reveal which part of the city these

houses have been built in. The meagre budgetary allocation is also leading to

delays in the subsidy payout under the scheme which is a cause for concern.

Whether the government fulfils its promises or not will be tested in the

future. But now we turn to highlight the problem in the approach by showing

the level of consumption among the poor, their disposable income for

housing and the current real estate realities in 22 cities in order to reflect the

disparities that exist in the approach.

Table 1. State-wise Progress (since 2014) of Pradhan Mantri Awas Yojana

(Urban)—Housing for All (HFA) (14 August 2020)
Physical Progress (Nos.)
Project
Name of the
Proposal Houses
State/UT Houses Houses
Considered Groundeda for
Sanctioned Completeda
Construction
Andhra Pradesh 1,023 2,015,891 688,119 342,255
Bihar 505 359,280 201,669 72,555
Chhattisgarh 1,639 257,886 207,049 99,147
Goa 10 1,240 1,182 1,181

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 Physical Progress (Nos.)
Project
Name of the
Proposal Houses
State/UT Houses Houses
Considered Groundeda for
Sanctioned Completeda
Construction
Gujarat 1,350 693,111 603,912 422,875
Haryana 538 273,840 54,556 27,611
Himachal Pradesh 159 10,656 8,838 3,798
Jharkhand 388 201,825 149,767 82,054
Karnataka 2,603 657,740 410,002 187,290
Kerala 510 120,983 107,034 78,425
Madhya Pradesh 1,463 799,900 697,116 339,476
Maharashtra 1,014 1,234,231 581,875 345,387
Odisha 616 156,384 110,939 72,878
Punjab 885 96,742 54,148 29,102
Rajasthan 404 212,587 126,414 101,275
Tamil Nadu 3,454 682,462 549,389 308,385
Telangana 286 195,072 186,963 121,448
Uttar Pradesh 4,286 1,747,926 1,229,367 600,680
Uttarakhand 209 39,084 22,651 15,932
West Bengal 466 466,988 350,281 209,723
Arunachal Pradesh 48 7,262 7,214 2,862
Assam 340 122,089 63,239 20,691
Manipur 37 50,154 33,031 4,364
Meghalaya 36 4,702 1,606 1,025
Mizoram 44 35,222 11,815 3,448
Nagaland 64 32,002 21,290 4,193

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 Physical Progress (Nos.)
Project
Name of the
Proposal Houses
State/UT Houses Houses
Considered Groundeda for
Sanctioned Completeda
Construction

Sikkim 11 553 525 260

Tripura 82 85,591 62,658 42,955
A&N Island (UT) 4 1,168 37 21
Chandigarh (UT) - 651 5,611 5,611
UT of DNH & DD 9 6,398 5,929 3,815
Delhi (NCR) - 20,200 60,780 44,180
J&K (UT) 332 55,088 29,703 8,569
Ladakh (UT) 8 1,777 910 370
Lakshadweep (UT) - - - -
Puducherry (UT) 30 13,645 14,398 3,793
Grand Total 22,853 10,660,330 6,660,017 3,607,634
Note: aIncluded incomplete houses of earlier NURM.

Probing Urban Poverty

Poverty in India has been estimated by the erstwhile Planning Commission

of India with poverty figures being made available for rural and urban India.
In 2012, an expert group under the chairmanship of S.R. Hashim submitted a
detailed report on urban poverty which suggested using the multi-
dimensional poverty for urban areas (Planning Commission, 2012).
However, the report was put to rest. We, therefore, turn to two of the recent

30
poverty estimates made by the Rangarajan Committee and Tendulkar
Committee to understand the level of urban poverty in India.
The Rangarajan Committee (2014)6 estimated that there were 26.4 per cent
urban poor in India. In absolute terms, it turns out to be 102.5 million people.
The poverty line in terms of monthly per capita expenditure was fixed at
₹1,407, out of which ₹656 constituted food expenditure, ₹407 constituted
four essential non-food items (education, clothing, shelter and conveyance)
and ₹344 was for other non-food items. Interestingly, the proportional share
of expenditure on shelter (rent) is the lowest (5.1 per cent) among the four
essential non-food items (Planning Commission, 2014). The Tendulkar
Committee (2009)7 kept rent and conveyance together and accounted it in the
poverty line on the basis of actual expenditure share for these items for each
state by rural and urban areas. The budget shares around the poverty line
class for rent and conveyance together were 5.3 per cent. According to this
committee, urban poverty was 13.7 per cent, and the total number of urban
poor was 53.1 million. Both committees, therefore, could give around five
per cent share of the shelter (rent) in calculating the poverty line (Planning
Commission, 2009).
Homelessness or living in slums, inadequate access to water, poor sanitation,
illiteracy and unequal distribution of income are the outcomes of urban
poverty. Most urban poor are involved in informal sector activities where
there is the constant threat of eviction, confiscation of goods and almost non-
existent social security cover. Under these circumstances, to consider that
they will use 30-50 per cent of their income on housing is based on wrong
premises.

Engel’s Law and Housing

31
Although people spend their income in different ways, there is a remarkable
similarity with regard to the general pattern of their expenditure. Ernst Engel
(1857) was the first to identify this pattern when he found that poor
households spend a larger proportion of their income on food, and as their
income increases, the proportion of income spent on food decreases. Engel’s
second law observed that the percentage expenditure on clothing, house rent,
light and fuel remained the same for any income level. However, it was
found in later studies that the identification of such a relationship was easy
with regard to food, but very difficult in the case of more complex budget
categories (Hulchanski, 1995). Nevertheless, since a major proportion of
poor people’s income is spent on necessary items like food, any approach of
house provisioning through shelving off a considerable proportion of their
income is bound to fail. Engel, in his third law, further propounded that the
percentage expenditure on education, health and recreation increases with an
increase in the income of the family. So, free provisioning of housing will
allow households to have more disposable income for education, health and
recreation.

Testing Engel’s Law in India’s Urban Households

To understand the share of expenditure on food, clothing, housing and other

non-food items among different quintiles in urban India, the Consumer
Expenditure Survey (CES) data (Type 2) of the NSSO for the year 2011–
2012 (68th Round) has been analysed. With this, we test the working of
Engel’s law in the Indian urban situation and also show that the capacity of
the bottom quintile to spend on housing is too low to be accounted for any
EMI/rent-based housing provisioning programme such as PMAY.
Overall, the average monthly per household expenditure (MPHE) in urban
India during 2011–2012 was ₹10,622. MPHE for the poorest quintile was

32
₹4,783 and for the richest quintile it was ₹15,744. In urban India, in the total
MPHE, 44.2 per cent was being spent on food, 5.1 per cent on clothing, 24.3
per cent on rent and 26.4 per cent on other non-food items (Table 2).
Table 2. Quintile-wise Share of Food and Non-food Items in the Total
Monthly Per Household Expenditure in Urban India (2011–2012)
Other Non-
Food Total HH
MPHE food
Expenditure Clothing Rent Expenditure
Quintile Expenditure
(MMRP) (MPHE -MMRP)
(MMRP)
Poorest 2,917 301 849 717 4,783
(61.0) (6.3) (17.8) (15.0) (100.0)
Poor 3,691 384 1,195 1,160 6,429
(57.4) (6.0) (18.6) (18.0) (100.0)
Middle 4,166 444 1,609 1,511 7,729
(53.9) (5.7) (20.8) (19.5) (100.0)
Rich 4,708 519 2,110 2,270 9,606
(49.0) (5.4) (22.0) (23.6) (100.0)
Richest 5,763 712 4,331 4,939 15,744
(36.6) (4.5) (27.5) (31.4) (100.0)
Total 4,699 538 2,582 2,805 10,622
(44.2) (5.1) (24.3) (26.4) (100.0)
Source: Computed from unit level NSSO 68th Round Consumption
Expenditure Survey Data (Type 2), 2011–2012.
Notes: MPHE = monthly per household expenditure; MMRP = modified
mixed recall period Figures in parentheses are percentage share.
As far as MPHE on food is concerned, ₹4,699 (44.2 per cent share) was
being spent in urban India. The poorest quintile spent 61 per cent of their
MPHE on food (₹2,917), whereas the richest quintile spent 36.6 per cent

33
(₹5,763). There is also a pattern of a gradual but steady decline in the share
of food in MPHE as one moves from the poorest to the richest quintile. So,
Engel’s first law plays robustly in the Indian urban situation.
The share of MPHE on clothing is 5.1 per cent. The proportional share
marginally decreases from 6.3 per cent for the poorest to 4.5 per cent for the
richest. As far as shelter is concerned, urban India spent 24.3 per cent of
their total MPHE (₹2,582).8 The richest spent 27.5 per cent of their MPHE
(₹4,331) on rent, whereas the poorest spent only 17.8 per cent ( ₹849).
Engel’s second law, therefore, holds true in the case of clothing, but not in
the case of shelter. Even the poor quintile (lowest 2nd) spent only 18.6 per
cent of their MPHE (₹1,195) on their shelter (rent). So, on average, the
bottom 40 per cent of the urban population spent only an average of ₹1,000.
It is, therefore, argued that any shelter scheme which demands from the poor
more than their average monthly expenditure on shelter will not be
welcomed. Moreover, this figure is an average, and according to our
calculation, there were more than 22 million poor households who spent
even less than this average expenditure on rent. They too require shelter if
we envision providing ‘housing for all’. These poorest households then
require greater support from the government.
Table 3. Average Monthly Household Disposable Income and Monthly Household
Consumption Expenses by All India PCI Quintile and by Place of Residence in India
(2016)

34
 Total Urban

All Percent
India Monthly Monthly of Monthly Monthly Percent of
PCI Household household MPHE household household MPHE to
Quintile Disposable consumption to HH disposable consumption HH income
Income expenditure income income expenditure (%)
(%)
Q1
(Bottom 7,742 7,238 93.5 7,952 7,678 96.6
20%)
Q2 10,457 8,751 83.7 11,594 9,969 86.0
Q3 12,704 9,862 77.6 13,909 11,280 81.1
Q4 17,037 11,765 69.1 18,399 13,266 72.1
Q5 (Top
29,772 15,878 53.3 32,582 17,740 54.4
20%)
Total 16,840 11,213 66.6 22,305 14,180 63.6
Source: ICE 360 Survey, 2016.
Notes: PCI = per capita income; MPHE = monthly per household
expenditure; HH = household.

Disposable Income of the Urban Poor

In 2016, ICE 360 conducted a household survey on India’s Consumer

Economy and India’s Citizen Environment covering 61,000 households. This
dataset allows us to see both the disposable income and consumption
expenditure by a different quintile. Overall, in India, the average monthly
household disposable income (MHDI) of a household is ₹16,840, and it
spends 67 per cent of it on consumption expenditure (₹11,213) ( Table 3).

35
However, the gap between the poorest and the richest quintile is wide. The
richest quintile MHDI (₹29,772) is nearly four times higher than poorest
quintile households (₹7,742). The richest quintile households spend 53 per
cent of their MHDI on MPHE, whereas the poorest quintile spend 93.5 per
cent, suggesting a very low MHDI among the poor to spend on their
housing.
In urban areas, this gap between the poorest and the richest further
accentuates. In urban areas, the MHDI is ₹22,305 whereas, MPHE is
₹14,180. The percentage of MPHE to MHDI is 63.6 per cent. The poorest
quintile households spend almost 97 per cent of their MHDI on MPHE and
virtually do not have any disposable income which could have been spent on
purchasing a house. On the other hand, the richest quintile has 45.6 per cent
disposable income which can be used for purchasing a house. Therefore, we
argue that one cannot assume that the poorest will have a disposable income
to spend on housing.

Current Market Price of House

Having discussed the levels of urban poverty and the capacity of the urban
poor to spend on housing, we now turn to discuss the current market price of
urban housing. Price data has been collated from a popular property
website (99acres.com). The website provides data on minimum and
maximum house prices in 2,274 different localities of 22 cities, representing
13 states of India. Only the minimum price of a house for all the 22 cities has
been collated for this article because it was considered that the poor will only
be able to purchase a house from the poorest locality of the city where the
prices would be at their most minimum. However, this dataset has two
limitations. First, it does not provide the rate of a house in the slums, but it
does provide the rate of a house in unauthorised localities. Second, the data

36
is available only for relatively mega or million cities, and information on
smaller cities is missing in the analysis. Having considered these limitations,
the minimum prices of different localities have been averaged out at the city
level. The average price thus obtained has been multiplied by 323 square feet
(30 square meter norms of the PMAY) to get the minimum price of a house
in a city. According to the PMAY, the government has approved a 6.5 per
cent interest subsidy on loans of ₹6 lakh which turns out to be ₹2,67,280 for
the EWS and LIG categories. This subsidy amount has been subtracted from
the house price. EMI has been calculated for the remaining value considering
the 9 per cent rate of interest for a 20-year-period. According to this
calculation, based on 5 March 2020 data, Vadodara at the rate of Rs ₹2,618
per square feet is the cheapest city, whereas Mumbai at the rate of ₹11,789
per square feet is the most expensive city out of the 22 cities in terms of
house price (Table 4).
Table 4. Current Average Minimum Housing Rate and EMI (in INR) after
PMAY Subsidy for EWS and LIG Category Households in 22 Cities in India (2020)
Average Loan EMI After
Price of 323 PMAY
S. Minimum Amount Subsidya (at
City sq ft House subsidy for
No. Price per sq After 9% for 20
(30 sq m) EWS/LIG
ft Subsidy Years)
1 Vadodara 2,618 8,45,628 2,67,280 5,78,348 5,204
2 Indore 2,728 8,81,144 2,67,280 6,13,864 5,523
3 Surat 2,916 9,41,889 2,67,280 6,74,609 6,070
Greater
4 3,318 10,71,787 2,67,280 8,04,507 7,238
Noida
5 Nagpur 3,322 10,73,029 2,67,280 8,05,749 7,250
6 Bhubaneswar 3,452 11,15,014 2,67,280 8,47,734 7,627
7 Jaipur 3,517 11,35,841 2,67,280 8,68,561 7,815

37
 Average Loan EMI After
Price of 323 PMAY
S. Minimum Amount Subsidya (at
City sq ft House subsidy for
No. Price per sq After 9% for 20
(30 sq m) EWS/LIG
ft Subsidy Years)
8 Lucknow 3,730 12,04,925 2,67,280 9,37,645 8,436
9 Ahmedabad 3,741 12,08,315 2,67,280 9,41,035 8,467
10 Faridabad 3,756 12,13,303 2,67,280 9,46,023 8,512
11 Ghaziabad 3,797 12,26,309 2,67,280 9,59,029 8,629
12 Coimbatore 3,953 12,76,695 2,67,280 10,09,415 9,082
13 Kolkata 4,163 13,44,750 2,67,280 10,77,470 9,694
14 Hyderabad 4,164 13,45,127 2,67,280 10,77,847 9,698
15 Noida 4,595 14,84,143 2,67,280 12,16,863 10,948
16 Chandigarh 5,196 16,78,394 2,67,280 14,11,114 12,696
17 Bengaluru 5,226 16,88,041 2,67,280 14,20,761 12,783
18 Chennai 5,253 16,96,731 2,67,280 14,29,451 12,861
19 Pune 5,315 17,16,674 2,67,280 14,49,394 13,041
20 Gurugram 6,260 20,21,921 2,67,280 17,54,641 15,787
21 Delhi 7,521 24,29,405 2,67,280 21,62,125 19,453
22 Mumbai 11,789 38,07,821 2,67,280 35,40,541 31,855
Source: Property website 99Acres (https://www.99acres.com/real-estate-
property-rates-index (retrieved 5 March 2020).
Note: aCalculated EMI from SBI home loan calculator
(https://homeloans.sbi/calculators). PMAY = Pradhan Mantri Awas Yojana;
EWS = Economically Weaker Section; LIG = Low Income Group; EMI =
equated monthly installment.
Though indicative, what is important to note from Table 4 is that the
minimum EMI after the PMAY subsidy is ₹5,204 (Vadodara) among 22

38
cities for which data is available. The EMI to own a house in Mumbai is at
the other extreme at ₹31,855 which even a middle-class Indian family may
not be able to afford. One wonders if poor urban Indians can afford to pay
this EMI to get their own houses through a market-based affordable housing
programme. Having seen the pattern of their consumption expenditure and
their disposable income, this appears quite unlikely.

39
 Best Government Housing Schemes in India

1. Pradhan Mantri Awas Yojana (PMAY Urban)

The Indian government introduced PMAY to help the Economic Weaker

Section (EWS) of society to afford a home. PMAY-Urban would help via a

subsidy of up to ₹2.67 lakhs for eligible people. Based on the sub-section

eligibility, the loan amount and the house's size, the scheme's eligibility is

determined.

Features of Pradhan Mantri Awas Yojana (PMAY Urban)

 Beneficiaries receive a 6.5% interest rate subsidy on house loans,

depending on the income slab.

 The maximum repayment period is 20 years.

 Loans can be obtained to build or buy a home off the market.

 For the buildings, sustainable and eco-friendly technologies will be

employed.

 Additionally, essential services, including connections for electricity,

water, and gas will be provided.

 Senior citizens and people with disabilities will be given preference

for ground-floor housing.

40
2. Pradhan Mantri Awas Yojana (PMAY Gramin)

PMAY Gramin was initially introduced as the Indira Awaas Yojana. This

govt housing scheme was introduced to help homeless families and give

them pucca houses with all the necessary basic facilities by 2024. The

PMAY Gramin programme is just one of the several government

programmes designed to end poverty. This programme halves the cost of

building new homes with the state while providing financial assistance to

low-income families. Families living in kutcha or decaying houses will

benefit from this plan.

Features of Pradhan Mantri Awas Yojana (PMAY Gramin)

Given below are the features of the PMAY Gramin program:

 In plain regions, the Central and State governments will split the total

cost incurred while providing housing benefits in the ratio of 60:40,

providing ₹1.20 lakh of assistance.

 The ratio is 90:10, with up to ₹1.30 lakh in support for each unit in the

northeastern states, the Himalayan states, and the Union Territory

(UT) of Jammu & Kashmir.

 100% financing is available for The Centre for Union Territories,

which includes the UT of Ladakh.

41
  The National Rural Drinking Water Program under PMAY- Gramin

supplies drinking water.

 Beneficiaries will receive high-quality cooking fuel.

 PMAY- Gramin manages residential waste and solid waste.

 Money is transferred electronically via a bank or post office account.

3. Rajiv Awas Yojana

The Rajiv Awas Yojana is a govt housing scheme that the central

government started to eliminate slums in India. It is a Central Sector

Scheme, also known as the Rajiv Housing Scheme, that intends to provide

low-cost housing facilities to the urban poor and essential social amenities,

basic shelter, and civic infrastructure to every citizen.

Features of Rajiv Awas Yojana

The Rajiv Awas Yojana's features and benefits are detailed below :

 The Rajiv Gandhi Housing Yojana has two methods for

implementation. These include creating a plan for a city devoid of

slums and creating projects for specific slums

 This programme offers financial support to the central government,

the states, the UTs, and ULBs

42
  Furthermore, as part of the Rajiv Awas Yojana, this housing scheme

provides financial assistance for developing affordable housing stock

through public-private partnerships.

 The Central Government offers financial support of ₹75,0000 per

Economically Weaker Section/Low Income Group for Dwelling Units

of Sizes 21 to 40 sq. mt. under Affordable Housing in Partnership.

4. Delhi Development Scheme

The DDA housing plan, introduced in December 2018, provides homes for

low-income groups and additional benefits for the economically weaker

section(EWS) group. You must be registered under the relevant categories of

the Housing Registration Schemes. First come, first-served is how

apartments are distributed. The eligibility requirements determine the final

allocation. You become eligible at 18, provided you do not possess a

residential unit or plot larger than 67 square metres in Delhi's metropolitan

area in your name, your spouse's name, or the name of any dependents. On

the DDA website, you can register and apply through a bank.

Features of the Delhi Development Scheme

The features of the Delhi Development Scheme are discussed below-

 Delhi's low-income citizens who cannot afford a home would receive

housing assistance under the DDA.

43
  Flats at reduced prices would be made available to Delhi NCR

residents.

 This plan uses an online draw system to determine allocation,

reducing the possibility of fraud.

 Newly developed apartments would receive discounts of up to INR 5

lakh. The apartments will feature a parking lot and elevators.

5. Haryana Housing Board

An affordable housing initiative has been started by Haryana Shehari Vikas

Pradikaran (HSVP), previously the HDA, Haryana Development Authority.

The body manages the state's 6200 housing sites. Cities like Sirsa, Karnal,

Rohtak, Faridabad, and others have scattered plots. A draw procedure is used

to allocate the houses. The draw can be accessed on the HSVP website.

Features of Haryana Housing Board

The features of the housing plan include-

 The Haryana Housing Board will collaborate with the central

government initiative (Pradhan Mantri Awas Yojana) to provide

medium homes to economically weaker people.

 The Haryana Housing Board would provide necessities, including

transportation, power, water, sanitation, and correspondence.

44
  Around 6200 plots will be sold for those from economically weak

sections and those in the BPL category.

6. Maharashtra Housing and Area Development Authority

The MHADA lottery programme is designed for people in Mumbai, Pune,

Konkan, and Aurangabad with various economic classes. A set amount is set

aside for the less fortunate population groups. Residents of Maharashtra who

are employed and over 18 and have valid documents are eligible. Incomes

between ₹25,001 and ₹50,000 fall into the LIG category, ₹50,001 to

₹75,000 falls into the MIG category, and ₹75,000 and above fall into the

HIG category. For application, visit the city's official MHADA website.

7. Tamil Nadu Housing Board Scheme

The goal of the Tamil Nadu Housing Board is to provide a home for every

resident, and it plays a significant part in meeting this objective. It fulfils the

requirement of the economically different sections of people using modern

construction techniques. As a matter of policy, it ensures that construction

uses high-quality materials at prices that people in these groups can afford.

Summing up

The Indian government is actively working to provide suitable housing for

all citizens. Government housing projects are based on an individual's basic

needs. The state administration has made a significant effort to give the

45
citizens all the necessary facilities. Check out different affordable housing

schemes the government offers if you're considering investing in a home.

Even if you don’t qualify for any of these schemes and are thinking of taking

out a loan to buy a home, look at Fi’s EMI calculator to understand exactly

how much you will be paying depending on the tenure and loan amount

taken.

46
 Discussion

A poor person is seen in terms of income and is categorised under the EWS

category. But now, the EWS category has been broadened to include

households with an annual income up to ₹3 lakh per annum. Referring

to Table 3, one can calculate that the average annual disposable income of up

to ₹3 lakh is found in Q1-Q4, covering 80 per cent of the urban households

in India. The same can also be roughly calculated with the help of Table

2 where the NSSO consumption expenditure data can be multiplied with the

ratio of disposable income of Table 3 to get an average annual income of the

households. Even this indicates 80 per cent of the households with an

average annual income below ₹3 lakh in urban India. The cap of ₹3 lakh

annual income per household is even beyond the poverty line of the World

Bank which places the line at $1.09 per person per day. Considering more

people under EWS categories is not a problem. What is problematic is the

fact that better-off households within the ₹3 lakh bracket will take the

maximum benefit of the programme. The government can claim to have

catered to a large number of beneficiaries under EWS, but the poorest still

remain excluded. The government’s justification to increase the cap from ₹1

lakh to ₹3 lakh is to provide the benefit of the programme to more and more

people. But what is tacit in the increase of the income cap is the fact that

people with an income of ₹1 lakh and below are not showing a demand for

47
housing as their paying capacity and disposable income, as shown in Tables

2 and 3, are far below the expectation of the government’s affordable

housing scheme. Considering that the poorest whose annual income is less

than ₹1 lakh per annum, whose food expenditure alone accounts to 61 per

cent of their total expenditure, will be able to pay 30 per cent of their income

for the house is also far from the reality.

Let us now turn back to the PMAY-U and critically assess which of the four

verticals will be able to fulfil the dreams of the poor of owning a house. The

first vertical of ISSR, where it is envisaged to use land as a resource, is not

successful in non-mega cities where land value is not commensurate with the

project cost and therefore private builders are not bidding to take up the

project. This has been reflected in several media reports. According to a

report, only 2 per cent of all PMAY-U beneficiaries are getting any benefit

under ISSR (Vikram, 2017). Several challenges are being faced in

implementing ISSR. The states need to implement land reforms to ensure

that beneficiaries have valid land documents, and they should put in place a

single-window, time-bound clearance system for layout approvals and

building permissions (Vikram, 2017). Additionally, the eviction of the slum

dwellers and their rehabilitation is a sensitive issue. In many states the courts

have put a stay on such evictions. For instance, in Bathinda, the Punjab and

Haryana High Court has ordered a status quo on some part of a site located

in Dhobiana Basti (The Tribune, 2017). The slum dwellers’ major concern is

48
losing the right of land and rights of roof in case they are shifted into a multi-

storey slum redevelopment plan. In September 2017, the government

announced eight new PPP models for urban affordable housing, opening the

doors for private players to the scheme. As a result, PMAY-U now has a

high reliance on non-budgetary funding which has not been forthcoming. As

is typical of PPP models, the PMAY-U has failed to draw in private entities

who are not too inspired by its profitability. The housing and urban affairs

ministry informed Lok Sabha in March 2018 that only 210,000 units have

been sanctioned under the component, of which some 67,000 were

completed and only 43,574 occupied by the owners (Das, 2020). Therefore,

the PMAY-U started slow, and that is how things remain. However,

according to the Union Housing and Urban Affairs Minister, the Delhi

Development Authority (DDA) will redevelop 378 JJ clusters under the slum

rehabilitation programme of the PMAY-U. The minister said that work is

already in progress to provide modern homes conforming to green standards

to the families of 2,800 talented artists and artisans of Kathputli Colony in

the national capital (PTI, 2019).

The second vertical of CLSS, which is a centrally sponsored scheme, and has

the highest assistance out of four verticals of PMAY-U, is under even more

stress. The tepid response by banks and housing financing agencies for the

poor finance seeker still persists. Collaterals, tangible assets, problems

pertaining to documentation—such as the ownership of land, duration of stay

49
and other eligibility criteria—stringent processes, besides the capacity of

loan repayment, make it difficult for the poor to opt for the CLSS vertical.

All these demotivate the poor even to apply for such a scheme. It is further

argued that EMI even at zero rates of interest is beyond the paying capacity

for the poor when the loan is higher than ₹3 lakh ( Kundu & Kumar, 2017).

Given the real estate situation in the country, we add to this argument that it

is nearly impossible for poor households to get a house in a ₹3 lakh budget

(Table 4). There is a risk, therefore, that the subsidy meant for the poor will

be cornered by real estate developers, private builders and the urban middle

class (Kundu & Kumar, 2017) while the urban poor will remain houseless.

The third vertical is AHP, an exclusive affordable housing scheme which

expects beneficiaries to buy an affordable house and pay through EMIs. It

expects the poor to put out 30 per cent of their income on getting a house.

This vertical is based on two premises, both unfounded. The first premise is

that the poor will spend up to 30 per cent of their income. This premise is

problematic on two counts. First, the poor do not have a regular income, and

second, they cannot bear 30 per cent of their disposable income on housing

as envisaged by the PMAY-U and the Deepak Parekh Committee. The

second premise is that affordable housing will be under the budget of what

the poor can pay. Even when land is being provided by the government and

₹1.5 lakh per unit cost is given as assistance through AHP of PMAY-U, the

unit cost of a house is beyond the paying capacity of the poor. The current

50
challenges in affordable housing therefore include the following: a limited

supply of affordable land, high capital costs, a lack of attractiveness for

private players, the dearth of suitable technology and a lack of clarity and

transparency in the system (Shankar, 2017).

The last vertical of BLC is meant for only those who have their own house

or land. The fund of BLC can be used for the enhancement of their existing

house. The problem with this vertical is that it is meant only for those who

own their house. In most cases of the poor, the house title or land title is

problematic and therefore they do not qualify to get funding under BLC.

Houseless and landless, those who live in shanties on government lands,

therefore, will not get any benefit out of the BLC. Sundaram and

Krishnamurthy’s (1978) argument that the benefits of any asset improvement

programme can accrue only to those who have the particular asset in

question holds particularly true in the case of BLC. This vertical has has

shown a good response from its beneficiaries, but only from those who have

their own house.

Three verticals, other than CLSS, are to be implemented through local

bodies/state agencies, whereas CLSS alone remains a centre-sponsored

scheme and is to be implemented by banks. Given the weak urban local body

capacity to implement programmes in different states, there is also some

doubt in its overall implementation even if it benefits the non-poor. The

progress by the government as displayed on the MoHUA website shows that

51
till 16 July 2018, 5.1 million houses were sanctioned, 2.9 million houses

were grounded for construction and only 800,000 houses were actually

constructed.9 What appears from the progress data is the fact that Gujarat,

Madhya Pradesh, Maharashtra, Tamil Nadu, West Bengal, Karnataka and

Andhra Pradesh have implemented this scheme better than the states of north

India and the Northeast. The PMAY-U emphasis has been on the land title,

state agencies and formalised procedures, where housing is being treated as

‘marketable commodity’ with a massive subsidy component. This shift has

the propensity to strengthen the exclusionary model of urbanisation which

would make it increasingly difficult for the poor and LIG households, the

homeless, slum dwellers and distress migrants to access shelter and live in

the cities (Kundu & Kumar, 2017).

52
 CONCLUSIONS

We conclude that though the current approach of ‘affordable housing’ can be

successful for LIG and MIG households, it will not be able to cater to the

need of millions of poor households whose annual income is less than ₹1

lakh. We recommend that the poor should be made a separate category from

the EWS. The larger category of the EWS, in which as we have shown

nearly 80 per cent of India’s households fall, should be further bifurcated

into poor and EWS. The annual income of the poor should not be more than

₹1 lakh. According to the Rangarajan Committee (2014), the total monthly

household consumption for those who fall below the poverty line is nearly

₹7,000 which equals to ₹84,000 per annum. Even under this category, there

are more than 20 million households. To expect them to spend nearly ₹3,000

of their income on housing is simply unreal. This poor category, therefore,

needs to be separated from the EWS. The separated poor households should

be facilitated with a realistic assessment of EMIs not totalling more than

their average monthly expenditure on housing which comes up to nearly

₹849 (Table 2). Any scheme which demands more than this will not be able

to reach out to the poor in meeting their housing needs. The government

must come out with a special scheme for this group. The programme meant

for this group should not be left to market approaches such as ‘affordable

housing’. The government should consider it as a social provisioning either

53
through free housing or through a modest EMI-based programme which

attracts them to own a house. If the government does not look into these

aspects, most of the subsidies which government is providing through

PMAY-U will be cornered by the better off among the EWS categories and

poor will remain houseless. Besides, the government will have to provide a

lot of other support in order for them to get credit from banks,

documentation, tenurial rights and so on. Even after three years of PMAY-U,

getting credit from the banks by the poor is still a difficult if not an

impossible task. The government must actively sensitise banks to provide

credit to the poor households. It should also be ensured that bureaucratic

procedures should not come in the way of owning a subsidised/free house.

54
BIBLIOGRAPHY

55
 BIBLIOGRAPHY

Philip Kotler : Marketing Mix

Philip Kotler : Marketing segmentation

Magazines and News papers

https://fi.money/blog/posts/what-are-affordable-housing-schemes

https://journals.sagepub.com/doi/10.1177/00490857211040249

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