There is a shortage of 24.7 million dwelling units in Urban area and 99% of the shortage is in the category of Economically weaker section ( EWS) and Low Income Group (LIG) according to the 11th Five Year Plan of Government of India. The latest initiatives by well established real estate developers to build appropriate affordable housing solutions is in the right direction to develop market based solutions for housing needs at the bottom of the pyramid . Omaxe India  www.omaxe.com has formed a subsidiary with the goal of building 1 million houses in the next 5 years in the range of INR 2.99 lakhs ( USD 6600 approx ) to INR 9.99 lakhs ( USD  22,200) . Purvankara Group has also plans to build 60,000 houses in the next 5 years.

Now whether INR 10 lakhs and above houses will be really affordable to low income consumers is debatable but what is encouraging is at the lower end of the spectrum INR 2.99 lakhs is closer to the right price-performance point of low income groups.

The take away here is established developers are now working on market based solutions to address these markets and if these models work it will lead to significant addition of housing stock in the market without government intervention.One of the drivers for established players to move in this space is because in 2008 for the first time in the last 3 years the market for high end and upper middle class segment housing is stagnating . The low income housing market like any other bottom of the pyramid market is about high volume and low margin. The established real estate players now wants to build their presence in this category. 

The government intervention still will be needed for economically weaker sections ( Average household monthly Income less than INR 3300 / USD 73)   as pure market based solutions at this point will not reach them.The Government can play a supporting role in building infrastructure and connectivity to these places where the low income housing will come up as its likely it will be at a distance from city centres.

The private sector players and community organisations can partner to ensure that the housing is allocated to the deserving low income household and not to any surrogate applicant.