Like Health and education, housing has seen subject of debates on whether universal approach or targeted approach is the way out for providing housing to all in a country. Universal approach, where housing is provided by the state irrespective of social or economic status has been followed by small countries whilst larger economies have tended to follow a mix veering towards targeted approach for providing affordable housing to a larger and economically less prosperous strata of population who need state intervention for providing housing   either on ownership or on rental or a combination.

Good, safe and hygienic housing is a necessary input for all developed and developing economies if they are to achieve good health standards and economic growth for it’s citizens. Past studies have revealed that housing has significant impact on morals and productivity of the citizens of a country.

Post-independence, India embarked on a socialistic model of planned development where housing was to be provided to citizens through state led intervention as part of budgetary allocation. It was soon realised that, in a vast and culturally/economically divergent country like India housing needed funding intervention from private sector in order to be to meet the crying needs. This effort was initiated with the formation of HUDCO in 1970 followed by HDFC Ltd in 1977.

Financialisation of housing happened in many sense post liberalization in 1991 and real estate started becoming a separate asset class for rich investors which led to housing gradually becoming unaffordable for a large section of the middle and lower middle class. Hygienic and good housing went out of their reach and remained the preserve of the rich and the wealthy. This led to slum based urbanization as India integrated with the global markets and urbanization started moving at a rapid pace as India grew. That the sector was completely unregulated till some sort of regulation was conceived in 2013 and enacted in Parliament in 2016 helped in skewing the property market towards unaffordability.

The Pandemic , the migrant crisis and the disruption of global and local supply chains have now bought into focus the crying need for regulated growth of the housing finance sector and the needed for orderly financialization of housing , if India is to achieve it’s goals of “make in India” and “Housing for all.” There is a need for financial resources to build some 62.5 million affordable homes in India targeted at the lower and lower middle class. The government does not have the financial resources to build the homes in urban centre and upcoming growth centres. Private financial resources is the only way to meet this huge resource gap. This calls for deeper, orderly and well regulated real estate sector which offers multiple investment opportunities complete with appropriate returns to compensate for the risk – for building rental and ownership housing. Setting up of investment trusts and creation of a deep MBS market calls for stronger and well regulated financialization of housing. This will lead to revolution in housing and urbanization in India. It will speed up economic growth.

Housing and construction has very strong linkages with other sectors of the economy like steel, cement, ceramics, employment, consumption   etc and can lead to tremendous multiplier effect. The national rental housing policy announced by the government is a good step in that direction. The PMAY schemes though well intended has not been able to meet the desired objectives given the paucity of resources – affecting the demand as well as the supply side.

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