Why real estate industry does not build affordable housing in India?

Emerging economies are saddled with deficient core infrastructure of housing more particularly for lower income category, India is no different either. Efforts of past 50 years to create a sustainable housing stock for lower income households has not yielded desirable results. Several policy initiatives by past and present governments did show resolve to address this issue conclusively but they did not succeed as well. Although within federal structure of India, land and housing rests with respective state (provincial) governments who act as per their own political ideology that results in inconsistent approach sending confusing signals to real estate industry. Certainly this is an unhealthy situation and it has so far kept the real estate industry at bay and their participation has been minimal in lower income housing. So what is going wrong? We have demand for millions of affordable houses (size below 600 sq.ft. of builtup area), we have several policy initiatives by state and federal governments, we have a hyper active real estate industry, we have notable intellectual pool to address engineering and other technical issues, but India is making a very slow progress in supply of affordable housing supply despite ambitious target of building 20 million houses by 2022, in urban area. There are two critical pieces of puzzle, first – real estate industry has not embraced affordable housing sector despite understanding the opportunity, second – lack of mortgage finance to target customers. In last five years there has been significant changes in both these fronts that might make affordable housing darling asset of real estate industry. Author intends to analyze current policy regime towards affordable housing, with focus on its connect with real estate industry. Author would highlight the roadblocks on highway of affordable housing supply with market perspective and how improved access to credit for target customers would accelerate the process of housing supply. Author would document the real time opinion of industry and target customers through primary survey whereas policy review would be based on secondary research. Research would conclude with an appropriate business case based on market fundamentals to speed up affordable housing supply in north India.