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Affordable housing not affordable to buyers, developers

While private developers primarily target luxury, high-end and upper-mid housing segment, it is the housing requirements of the lower middle-income and lower income groups that are grossly neglected in India


Indian cities fall short of planned housing for low income and economically weaker households, resulting in a perennial and an ever-growing housing shortage, alongside compromised living conditions. Whilst this is detrimental to the planned growth of cities, it also gives birth to the demography of “less than equal citizens” forced to live in substandard clusters of slums, says a report.

In a report, “Affordable Housing in India”, real estate services firm Jones Lang LaSalle (JLL) India, said currently the country falls short by 26.5 million housing units. “Indian developers are primarily targeting luxury, high-end and upper-mid housing segment, with value housing being used only as a ‘saviour’ in the low phases of real estate cycles,” the report said.

According to estimates of the technical group constituted by the ministry of housing and urban poverty alleviation (MHUPA), during the 11th Five-Year Plan, the total housing requirement in Indian cities including backlog by end-2012 will be to the tune of 26.53 million dwelling units for 75.01 million households. If the current increase in backlog of housing is maintained, a minimum of 30 million additional houses will be required by 2020, the report added.

Availability of affordable housing in adequate numbers is one of the greatest necessities of urban India today. As per the 2011 Census, the country had a population of 1.21 billion, out of which, 377.10 million or about 31.2% lived in urban areas. The housing stock in urban India stood at 78.48 million for 78.86 million urban households, according to the census data.

“Urbanisation has resulted in people increasingly living in slums and squatter settlements and has deteriorated the housing conditions of the economically weaker sections of the society. This is primarily due to skyrocketing prices of land and real estate in urban areas that have forced the poor and the economically weaker sections of the society to occupy the marginal lands typified by poor housing stock, congestion and obsolescence,” the report pointed out.

Developing affordable housing in Indian cities faces significant challenges due to several economic, regulatory and urban issues. Whilst the lack of availability of urban land, rising threshold costs of construction and regulatory issues are supply-side constraints, lack of access to home finance is a serious demand-side constraint, which impacts the ability of low-income groups to buy housing in the organised sector. Whilst some of these are gradually being mitigated, concerted efforts are required by multiple institutions to facilitate mass development in this sector.

During 2009–2012, real estate developers have launched projects in the affordable segment across Indian cities, with units priced between Rs5–Rs10 lakh. Several of these projects have been sold on an application model due to huge demand, with multiple takers for the same unit.

With high prices of land within the city, the low-income housing projects are being developed at “leapfrogged locations”, which offer land parcels at suitable price points for such developments. Mumbai and the national capital region (NCR) have affordable housing projects located 65 km to 75 km from the city centre. On the other hand, Ahmedabad and Kolkata provide better proximity, with projects located at a distance of 15 km to 20 km from the city centre. Bangalore, Pune and Chennai also have projects after a distance of 25 km to 30 km from the city centre, the report said.

Estimated construction costs for low income housing
Whilst price of premium residential projects are largely guided by land costs, construction costs have a significant share in the price of affordable housing. If land is acquired at a reasonable cost of Rs150–Rs250 per sq ft, an affordable housing project with basic amenities (construction cost of Rs800–Rs1,000 per sq ft) would result in a minimum selling price of Rs1,400–Rs1,700 per sq ft. Thus, construction costs form nearly 50–60% of the total selling price for affordable housing.

On the other hand, luxury housing projects in South Mumbai have construction costs of nearly Rs4,000–Rs5,000 per sq ft, which is nearly 18–20% of the selling price of Rs20,000–Rs25,000 per sq ft. Affordable housing projects get more affected by rising costs of construction than premium projects. Hence, it becomes important that costs are minimised for construction of low-income housing whilst balancing the amenities provided as well as ensuring the safety and serviceability of the built structure during its lifecycle, the report added.

According to Monitor Inclusive Markets, the loan market of Rs3-Rs10 lakh is worth almost Rs11 lakh crore or around $220 billion. Despite this, majority of the loans disbursed by housing finance companies (HFCs) are to mid-income group (MIG) and high-income groups (HIGs) in a loan bracket above Rs10 lakh. The key issue that deprives people from availing housing loans in the Rs3-Rs10 lakh bracket is the perceived high risk i.e. apprehensions of loans turning into non-performing assets (NPAs) and uneven payment patterns. As per the ministry of labour and employment, 65%-70% of the workers in urban areas are employed in the unorganised sector. Since they are paid in cash and lack formal documents of identification, address and income, they remain underserved by HFCs.

Housing loan disbursals by HFCs
The present models on which affordable housing is being created to concentrate on the ability of people to buy. This model does not guarantee that the beneficiaries of such projects are the actual needy people or speculative investors, the report said.




5 years ago

Basically it is a demand and supply gap. It will be difficult to believe but about 40 years ago in Delhi all vacant land belonged to Delhi Development authority. DDA used to sell both Plots and Flats. a 600 SFT flat used to cost Rs 25000/- ( then usually salaries would be around Rs 1,000/- to 1,200/- and house sold on hire purchase used to charged interest at 8% p.a. and EMI used to be around Rs 200/- repayable over 18-20 years and only condition was that prospective applicants already should not have any flat or plot in name of self or spouse in Delhi. So in Delhi u have maximum number of DDA colonies with flats of Janata, LIG,MIG,HIG with with well laid out parks, shops , schools, religious worship places etc. Janakpuri was one such dream colony planned, built and delivered by DDA when Jagmohan IAS who was its Vice Chairman till end of Emergency. Jagmohan IAS is a man of vision but likes of Ram Jethmalani and Shah Commission targetted him for cleaning up of Turkman Gate during Emergency( a mini Pakistan in Delhi)but no one can deny he a getter housing to more than a lakh of slum dwellers by relocating them into trans Yamuna colonies. Unfortunately after him the decline of DDA started and now any public fraud is called DDA-420. Jagmohan was subsequently adopted by BJP and was Urban Development Minister but wheeler dealers like Pramod Mahajan ( a shady chacracter patronised by L.K.Advani)ensured he was moved out from Urban Development. So unless a visionary like Jagmohan comes with a vision for at least 10 years, housing for the needy will remain a mirage.

Maruti Suzuki sales up 20% in June

Maruti Suzuki's total passenger car sales in June in the domestic market increased by 23.11% to 70,977 units from 57,653 units in the same month of 2011

New Delhi: The country's largest carmaker Maruti Suzuki reported 20.30% jump in total sales at 96,597 units in June.The company had sold 80,298 units in the same month last year, Maruti Suzuki India said in a statement.

In June, Maruti recorded domestic sales at 83,531 units, compared to 70,020 units in the year-ago period, registering a rise of 19.30%.

Similarly, Maruti's exports went up 27.13% to 13,066 units last month from 10,278 units in the year-ago period, the company said.

Total passenger car sales in the domestic market increased by 23.11% to 70,977 units from 57,653 units in the same month of 2011, it added.

Sales of the company's mini-segment cars, including the M800, A-Star, Alto and WagonR, fell by 10.44% to 34,198 units during the month from 38,183 units in June, 2011.

However, in the compact segment (comprising the Estilo, Swift and Ritz models), Maruti witnessed a 39.32% jump in sales to 22,624 units from 16,239 units in the same month a year ago.

Sales of Maruti's DZiRE model increased by over five-fold to 13,741 units in June from 2,486 units in the same month last year, it added.

Maruti's mid-sized sedan SX4 sales slipped 42.78% to 408 units last month from 713 units in June 2011.

Luxury sedan Kizashi witnessed 81.25% fall in sales at 6 units as against 32 units in the year-ago month.


Tata Cards allegedly shortchanges a loyal card customer

A loyal Tata Cards customer and a former tata employee was unable to redeem his points due to ‘faulty’ EDC machines at Tata partner outlets. Instead, of solving the problem, Tata Cards deducted his rewards points and shows no signs of engaging with the customer

A Moneylife reader and former Tata Group employee has been using the Tata Credit Card as a primary card for six years and had accumulated significant number of reward points, and therefore wished to redeem some of the points earned. Apparently, there is no online interface for redeeming points for Tata Cards, and it has to be redeemed at a store. So, he tried to redeem at some Tata partner outlets in the Mumbai/Thane region in recent months, but was unable to do so. Some of the stores he visited were Croma (Mulund, Mumbai), Westside (Korum Mall, Thane), Tata DoCoMo brand store (Naupada, Thane) and World of Titan showroom (Naupada, Thane). He thereafter lodged a complaint on 17 March 2012 and was assured that his complaint would be resolved within seven working days. After a few days a representative claimed that that its rewards Electronic Data Capture (EDC) machines at the Tata partner outlets may have been temporarily 'faulty'. How would it be possible that several Tata rewards EDC machines were faulty at the same time? He had been facing the problem of redeeming his reward points since March 2012.

On the Tata Cards website, it was mentioned that it was 'easy' to redeem points. It said, "Swap your Tata Empower Card on a Tata EDC machine only for accrual of the reward points. Redeeming of the points is the easiest in the industry. Just walk to any Tata brand outlet, pick a product or products of your choice and redeem the points instantly. So, no calling to services, no visit to a website and no courier charges. It is simple, just earn it and burn it then and there." Yes, this is what mentioned on its website.

Rewards EDC machines are devices used by retailers when the merchant swipes the credit card through an electronic card reader or terminal in order to display the number of bonus/rewards points accrued and utilise it. The information on the card's magnetic strip is entered into the processor's database electronically and the information is promptly displayed.

Meanwhile, he was intimated by Tata Cards that his reward points accumulated till April 2012 points would 'expire' if not redeemed by 31 May 2012. Since the rewards EDC machines were 'faulty', he could not redeem it. Instead of trying to solve the problem, Tata Cards deducted the points that were to be expired. How could they do this?

Further, the e-statements of May 2012 and June 2012 intimated him of further 'expiry' of points if not redeemed by 30 June 2012 and 31 July 2012 respectively. If there are faulty rewards EDC machines, where's the question of redeeming? If Tata Cards was unwilling to help a loyal customer redeem his points, again, where is the question of redeeming? It is conveniently ignoring customers' grievances while mechanically deducting all the rewards points accrued. What is most pertinent is that it is doing this to a loyal customer who has worked with the Tata Group before. He had complained to all concerned including the head of Tata Cards, but all of them went unanswered. It is not known how many other Tata Cards customers are having the same problem. If you are one, let us know. Moneylife sent emails to Tata Cards to verify the story and received an automated reply from one generic id which replies to all customer complaints.



Bapoo Malcolm

5 years ago

The major problem is with the boiler room pressures put on the staff to perform. Listed prices are often not charged, usually at Westside Army & Navy outlet, complaints unanswered, vague excuses given. Some outlets are better handled like under Chudasma at Hughes Road. Cannot paint all with the same tar brush.

BUT, the Tata name is taking a beating. Imagine a 65 year old Parsi woman unwilling to touch a Tata product after these experiences! When at one time the joke was that if you saw a Nano, it had to be a Parsi colony.

Bapoo M. Malcolm

Parag Mehta

5 years ago


I am a IndusInd Bank credit card customer. I was owning a Deutsche Card since 2007. As long as the portfolio was with Deutsche Bank, services were upto the mark.
Sighting you one of the experiences with IndusInd. I called up their IVR system to have a word with customer care executive. I was held on for 20 minutes or so. Atlast, I just gave up. This happened twice. I have accumulated substantial points on the card.
With Deutsche Bank the service was prompt.

Parag Mehta

Kumar Jagtiani

5 years ago

Tata cards operations represent the dark side of Tatas. Their card operations are typically anti-customer, insensitive, unresponsive, uncommunicative, unapproachable, uncaring, opaque, obtuse and secretive. Probably run by a bunch antagonistic misanthropes who are also socially and commercially challenged.

Having a Tata card is like suffering from an incurable disease.

Kumar Jagtiani

5 years ago

The operations of Tata Credit Cards represents the dark side of the Tata group. The Card operations are most intractable, unapproachable, uncommunicative, insensitive, unresponsive in corporate history probably run by some socially and commercially challenged people having a deep-seated hatred for mankind.

Having a Tata card is like having an incurable disease.

avaneesh gupta

5 years ago


It is not only Tatas who are cheating this loyal customer out of his duly accumulated reward points.
I have faced the same problem today with IndusInd Bank Credit card. I have been using a Deutsche Card since 2006 dec and my usage has been reasonably high on this card. Around 18 months back, Deutsche Bank sold their card portfolio to IndusInd Bank and last year, I got a new IndusInd Bank card also. As per my statement dated 18th June 2012. I had 26700 reward points in my card account. As Indusind does not have a decent card redemption scheme, I was not able to redeem these points.
Today when i decided to redeem these points against my card outstanding, I was told by the call centre executive that now I have only 17000 points as some 9000 odd points have expired in last 10 days.
The most shocking aspect is that there is no communication to me of this regard that the points are getting expired so I should hurry to redeem these points. If I convert these expired points to money term, its a loss of around INR 4500 to me as each point is equivalent to 50 paise. The executive further told me that this expiry clause was mentioned in the joining kit of Deutsche Bank when I would have received the card first time.
The last communication which I received from Indusind bank, my current card statement does not mention about expiring points but the bank expects me to remember terms and conditions mentioned in a document sent to me some 5-6 years back.
Can moneylife please explain me where can i take my grievance for redressal as it is not a question of losing INR 4500 but more of taking a stand against a bank which is trying to cheat me in such a shameless manner

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