“There is an ongoing housing crisis in India, especially affecting low and middle-income households. To tackle these problems, state and central governments have also set up several schemes. As an example, one of the key programs is the Pradhan Mantri Awas Yojana (PMAY) program which encourages home ownership in the form of government subsidies and direct funding programs. ”
Due to India’s rapidly growing urban population the demand for affordable housing has risen significantly. To respond to such demand there are various government schemes in place that will help broaden access to housing for economically weaker sections (EWS), low-income groups (LIG), and middle-income groups (MIG) in India. These efforts come in the form of interest subsidies, financial assistance, and partnerships with developers to increase supply for affordable housing
Major Affordable Housing Schemes
Pradhan Mantri Awas Yojana (PMAY – Urban):
PMAY (Urban) was launched in 2015 as a scheme that will see the construction of more than 2 crore affordable homes. PMAY operates on four different components:
- In-situ Slum Redevelopment
- Affordable Housing in Partnership (AHP)
- Credit Linked Subsidy Scheme (CLSS)
- Beneficiary-led Construction:
while the MIG-I and MIG-II segments receive 4% on loans of ₹9 lakh and 3% on loans of ₹12 lakh respectively.
Delhi Development Authority (DDA) Housing Scheme:
Provides subsidized apartments for all income levels in Dwarka, Narela also for war widows, SC/STs, and persons with disabilities.
Current Landscape (2025)
Demand for affordable homes is increasing, including in Tier 1 and Tier 2 cities, with market hot spots (for housing price not above ₹50 lakh) including Mumbai, Delhi-NCR, Chennai, Hyderabad, and Ahmedabad. At the same time, PMAY is the cornerstone of India's housing strategy, with the support of its evolving policies and digital framework
Government Policies and Financial Support
India’s vision ‘Housing for All’ is aiming to build 30 million affordable homes that could represent a commercial opportunity of USD 500 billion. Many State driven schemes, namely Haryana's Affordable Housing Policy, now force developers to share their sales quota for Low-Cost Housing. In addition to sharing the costs, further incentives such as tax incentives, regulatory relaxation, and the upgrading of new infrastructure can help generate investments and ultimately, demand
Technological Innovations
Digital transformation is is fundamentally driving affordable housing through:
- Virtual inspections and e-signatures,
- Modular construction, pre-fabricated methods and sustainable materials.
These technologies reduce costs of construction, increase delivery speed and improve accessibility for consumers.
Investment Outlook
The affordable housing sector has been resilient amid adversity, and it is observed that investors' interest in the sector is also growing. Regarding the mortgage-to-GDP ratio being at 12.5%, developers are beginning to view affordable housing as a viable and profitable housing sector. It is expected that the Union and State Budget 2025 will include more incentives for induced developers and home buyers, leading to an even greater level of affordable housing development.
Emerging Trends
- Increased digitization of home purchase/financing
- Sustainable construction
- Financial innovations to facilitate credit access to underserved markets
Conclusion
Government schemes underpinning affordable housing, with significant support from digital technologies and within private capital, have helped to advance affordable housing in India. Although there remains plenty more to do, we are finally beginning to reap the benefits from the combination of policy, technologies, and partnerships towards affordable housing being an important aspect of India's inclusive development journey.
