NEW DELHI: Rajiv Gauba, a member of Niti Aayog, highlighted significant challenges in housing development due to land constraints. He called for comprehensive reforms to reduce land costs.
“We should allocate a minimum of 10% of residential land for affordable housing in our master plans, increase permissible FARs (Floor Area Ratios) from the current 2-3 to 5-6, promote transit-oriented development, and adopt land pooling. These strategies will help reduce land costs and increase housing supply,” he stated.
Currently, land accounts for 50-70% of total project costs, which is notably higher than in similar infrastructure sectors. Gauba made these comments at an international conference organized by the National Housing Bank.
He added that the limited access to formal credit compels developers to rely on high-cost financing, adversely affecting project viability. Margins in the economically weaker and low-income sectors are particularly narrow, deterring private investment.
Gauba pointed out that nearly 1 crore houses are vacant in the country and emphasized the need to address several issues, including enhancing the rental housing ecosystem.
He suggested reforms in tenancy laws, rationalization of municipal charges, promotion of diverse rental housing models, and the creation of anchor funds and financing mechanisms to attract private investment.
To improve project viability, additional measures may be necessary, such as profit exemptions for affordable housing projects, increasing credit guarantee limits under the risk guarantee fund for low-income housing, waiving profit fees on land for affordable housing, and reducing or exempting stamp duty on affordable housing units.
Gauba mentioned that Niti Aayog has collaborated with the Ministry of Housing and Urban Affairs, the Department of Financial Services, and other stakeholders to develop recommendations based on global best practices and analytical evidence.
He urged the Department of Financial Services and the Ministry of Housing and Urban Affairs to implement these recommendations.
M Nagaraju, Secretary of the Department of Financial Services, shared that the government has approved an additional 3 crore houses under PMAY, with 2 crore in villages and 1 crore in cities, aiming for about 7 crore houses by 2029. Nearly 4 crore houses have already been constructed under the Pradhan Mantri Awas Yojana across the nation.
He noted that the National Housing Bank has disbursed Rs 60,000 crore in concessional refinance under the Affordable Housing Fund until December 2025, benefiting 5.85 lakh dwelling units across India.
Nagaraju emphasized that the Government and the Reserve Bank of India have facilitated policy frameworks and structural reforms to promote housing growth and accessibility. “Our revisions in priority sector lending, including increased housing loan limits and broader definitions, aim to stimulate affordable housing and overall growth,” he stated.
He also noted that significant GST reductions on key construction materials are expected to further contribute to housing affordability in the country.
