Expanding Urban Horizons: A NITI Aayog Framework for Affordable Housing in India
SDG 1: No Poverty | SDG 10: Reduced Inequalities | SDG 11: Sustainable Cities and Communities | SDG 17: Partnerships for the Goals
NITI Aayog | Ministry of Housing and Urban Affairs (MoHUA) | Department of Financial Services (DFS) | Reserve Bank of India (RBI)
The NITI Aayog Report titled ‘A Comprehensive Framework to Promote Affordable Housing’ proposes a multi-pronged, reform-linked strategy to address India’s persistent urban housing deficit, estimated between 3–7 crore units. As India’s urban population is projected to reach 85 crore by 2050, the framework aims to shift affordable housing from an isolated welfare measure to an integral part of urban economic planning.
The report defines “Affordable Houses” as units up to 60 sq. m in metros (valued <₹60 lakh) and 90 sq. m elsewhere (valued <₹45 lakh). It identifies land costs as a primary barrier, accounting for 40–70% of project expenses in metros, effectively excluding 75–85% of urban households from formal markets.
To bridge this gap, the framework recommends five strategic pillars:
Serviced Land Supply: Mandating at least 10% land reservation for affordable housing in city Master Plans and raising Floor Area Ratio (FAR) to 5–6.
Stock Diversification: Implementing 10–15% mandatory reservation for EWS/LIG in all large projects and promoting PPP-based rental housing near industrial hubs.
Capital Access: Restoring Section 80-IBA for 100% tax exemption on project profits , tax incentives for affordable-housing REITs, raising the buyer credit guarantee limit to ₹40 lakh and exempting stamp duty/land-use charges.
Tenancy Reform: Unlocking 1 crore vacant urban houses by aligning state laws with the Model Tenancy Act 2021 and modernising rent control to enable formal rental markets.
Data Systems: Establishing a National Housing Data Grid to bridge information gaps regarding demand, supply, and vacancy and rental trends using RERA/geospatial integration.
What is the ‘Vacant House Dilemma’? It is a structural paradox where nearly 1 crore completed urban houses remain unoccupied despite massive unmet demand. This is driven by low rental yields (typically 2–3%), fear of litigation due to weak tenancy laws, and archaic rent control frameworks that deter owners from entering the formal rental market.
Policy Relevance
This framework is critical for achieving the vision of Viksit Bharat 2047 and supports the rollout of PMAY-U 2.0, which aims to assist an additional 1 crore households by 2029. It moves beyond demand-side subsidies to address the “broken” land and regulatory systems that inflate housing prices.
Strategic Impact for India:
Reducing Cost Barriers: By exempting land-use conversion charges and stamp duty for affordable projects, the policy aims to significantly lower the “entry price” for the lowest-income categories.
Scaling Up Participation: Reintroducing tax incentives for developers and affordable-housing REITs is designed to “crowd in” private capital to meet the deficit where government schemes alone cannot.
Inclusive Mobility: Leveraging Transit-Oriented Development (TOD) with FAR up to ~8 ensures workers can live near mass transit and job hubs, reducing the hidden economic cost of long commutes.
Reform-Linked Funding: For the first time, central financial support for urban schemes will be tied to state-level progress on zoning and rental reforms, ensuring uniform implementation across India.
Follow the full framework here: A COMPREHENSIVE FRAMEWORK TO PROMOTE AFFORDABLE HOUSING