India’s affordable housing dream cannot be achieved unless land becomes easier, cheaper, and smarter to use. This was the key message delivered by Niti Aayog member Rajiv Gauba, who highlighted how land constraints remain one of the biggest barriers in developing housing projects across the country.
Speaking at an international conference organised by the National Housing Bank (NHB), Gauba stressed that India urgently needs comprehensive land reforms to unlock housing supply and reduce the overall cost of homes, especially for low-income and economically weaker sections.
Land Costs Are the Biggest Roadblock
Gauba pointed out that land today accounts for a massive 50% to 70% of total project costs, which is far higher than what is typically seen in other infrastructure sectors. This heavy burden makes housing expensive even before construction begins, leaving developers with limited flexibility to reduce final home prices.
According to him, these high land costs are directly restricting the growth of affordable housing in urban and semi-urban areas.
Key Reforms Suggested to Reduce Housing Prices
To tackle this issue, Gauba proposed multiple reforms that can improve land utilisation and bring down costs. These include:
- Allocating at least 10% of residential land in master plans for affordable housing
- Increasing permissible Floor Area Ratio (FAR) from the current 2–3 to 5–6
- Promoting transit-oriented development, ensuring housing projects grow around metro and transport corridors
- Adopting land pooling mechanisms to create large, planned housing zones without excessive land acquisition costs
He explained that these changes can significantly reduce land-related expenses and help unlock new housing supply.
Developers Struggle Due to Costly Financing
Gauba also highlighted another major challenge, limited access to formal credit. Many developers, especially those building in affordable segments, are forced to rely on high-cost financing options.
This increases project risk and reduces profitability, making affordable housing less attractive for private players. He noted that profit margins in the Economically Weaker Section (EWS) and Low-Income Group (LIG) segments are already low, which discourages private investment further.
Nearly 1 Crore Vacant Houses Raise Bigger Questions
In a striking observation, Gauba mentioned that close to 1 crore houses are lying vacant in India, indicating that the problem is not only about construction, but also about better planning and utilisation of existing housing stock.
He stressed that India must strengthen its rental housing ecosystem to ensure vacant homes can become usable housing options.
Need for Stronger Rental Housing and Tenancy Reforms
To improve housing accessibility, Gauba recommended reforms such as:
- Updating and reforming tenancy laws
- Rationalising municipal charges
- Promoting diverse rental housing models
- Creating anchor funds and dedicated financing mechanisms to attract private investment into rental housing
These measures, he said, can help make rental housing more structured, stable, and reliable for both tenants and investors.
Additional Incentives Needed for Affordable Housing Viability
Gauba further suggested that improving the financial feasibility of affordable housing projects may require additional support measures, such as:
- Profit exemptions for affordable housing projects
- Increasing credit guarantee limits under the Credit Risk Guarantee Fund Trust for Low-Income Housing
- Waiving profit fees for land allocated to affordable housing
- Reducing or exempting stamp duty for affordable housing units
Such incentives could encourage private builders to enter the affordable segment more actively.
Niti Aayog Working on Policy Recommendations
Gauba revealed that Niti Aayog has recently worked closely with the Ministry of Housing and Urban Affairs, the Department of Financial Services, and other stakeholders to create a set of policy recommendations based on global best practices and evidence-based analysis.
He urged the relevant government departments to consider implementing these reforms to accelerate affordable housing development across India.
Government Targets 7 Crore Houses by 2029
During the same event, Department of Financial Services Secretary M Nagaraju shared updates on the government’s housing progress. He announced that the government has sanctioned 3 crore additional houses under the Pradhan Mantri Awas Yojana (PMAY).
This includes:
- 2 crore houses in rural areas
- 1 crore houses in urban areas
With this expansion, the government expects that by 2029, nearly 7 crore houses will be constructed under PMAY.
So far, nearly 4 crore houses have already been built under the scheme.
NHB Disburses ₹60,000 Crore Under Affordable Housing Fund
Nagaraju also stated that under the Affordable Housing Fund, the National Housing Bank has disbursed concessional refinance worth ₹60,000 crore till December 2025.
This funding has benefited approximately 5.85 lakh dwelling units across India, helping improve affordability and access to housing finance.
Policy Support and GST Cuts to Boost Housing Affordability
Nagaraju highlighted that both the Government of India and the Reserve Bank of India have supported housing growth through reforms and credit expansion.
He pointed out that revisions in priority sector lending norms, including higher housing loan limits and broader definitions, were introduced last year to boost credit flow into underserved areas.
Additionally, he noted that significant GST rate reductions on key construction materials are expected to reduce construction costs and improve housing affordability.
Conclusion
Rajiv Gauba’s remarks underline a critical truth; India’s housing affordability challenge is deeply linked to land costs and policy inefficiencies. While schemes like PMAY have made massive progress in increasing housing supply, structural reforms in land allocation, FAR limits, financing access, and rental housing models may be the key to making homeownership realistic for millions more Indians.
If India successfully implements these recommendations, it could unlock large-scale affordable housing development, reduce project costs, and help build more sustainable, well-planned cities.
India’s affordable housing dream cannot be achieved unless land becomes easier, cheaper, and smarter to use. This was the key message delivered by Niti Aayog member Rajiv Gauba, who highlighted how land constraints remain one of the biggest barriers in developing housing projects across the country.
Speaking at an international conference organised by the National Housing Bank (NHB), Gauba stressed that India urgently needs comprehensive land reforms to unlock housing supply and reduce the overall cost of homes, especially for low-income and economically weaker sections.
Land Costs Are the Biggest Roadblock
Gauba pointed out that land today accounts for a massive 50% to 70% of total project costs, which is far higher than what is typically seen in other infrastructure sectors. This heavy burden makes housing expensive even before construction begins, leaving developers with limited flexibility to reduce final home prices.
According to him, these high land costs are directly restricting the growth of affordable housing in urban and semi-urban areas.
Key Reforms Suggested to Reduce Housing Prices
To tackle this issue, Gauba proposed multiple reforms that can improve land utilisation and bring down costs. These include:
- Allocating at least 10% of residential land in master plans for affordable housing
- Increasing permissible Floor Area Ratio (FAR) from the current 2–3 to 5–6
- Promoting transit-oriented development, ensuring housing projects grow around metro and transport corridors
- Adopting land pooling mechanisms to create large, planned housing zones without excessive land acquisition costs
He explained that these changes can significantly reduce land-related expenses and help unlock new housing supply.
Developers Struggle Due to Costly Financing
Gauba also highlighted another major challenge, limited access to formal credit. Many developers, especially those building in affordable segments, are forced to rely on high-cost financing options.
This increases project risk and reduces profitability, making affordable housing less attractive for private players. He noted that profit margins in the Economically Weaker Section (EWS) and Low-Income Group (LIG) segments are already low, which discourages private investment further.
Nearly 1 Crore Vacant Houses Raise Bigger Questions
In a striking observation, Gauba mentioned that close to 1 crore houses are lying vacant in India, indicating that the problem is not only about construction, but also about better planning and utilisation of existing housing stock.
He stressed that India must strengthen its rental housing ecosystem to ensure vacant homes can become usable housing options.
Need for Stronger Rental Housing and Tenancy Reforms
To improve housing accessibility, Gauba recommended reforms such as:
- Updating and reforming tenancy laws
- Rationalising municipal charges
- Promoting diverse rental housing models
- Creating anchor funds and dedicated financing mechanisms to attract private investment into rental housing
These measures, he said, can help make rental housing more structured, stable, and reliable for both tenants and investors.
Additional Incentives Needed for Affordable Housing Viability
Gauba further suggested that improving the financial feasibility of affordable housing projects may require additional support measures, such as:
- Profit exemptions for affordable housing projects
- Increasing credit guarantee limits under the Credit Risk Guarantee Fund Trust for Low-Income Housing
- Waiving profit fees for land allocated to affordable housing
- Reducing or exempting stamp duty for affordable housing units
Such incentives could encourage private builders to enter the affordable segment more actively.
Niti Aayog Working on Policy Recommendations
Gauba revealed that Niti Aayog has recently worked closely with the Ministry of Housing and Urban Affairs, the Department of Financial Services, and other stakeholders to create a set of policy recommendations based on global best practices and evidence-based analysis.
He urged the relevant government departments to consider implementing these reforms to accelerate affordable housing development across India.
Government Targets 7 Crore Houses by 2029
During the same event, Department of Financial Services Secretary M Nagaraju shared updates on the government’s housing progress. He announced that the government has sanctioned 3 crore additional houses under the Pradhan Mantri Awas Yojana (PMAY).
This includes:
- 2 crore houses in rural areas
- 1 crore houses in urban areas
With this expansion, the government expects that by 2029, nearly 7 crore houses will be constructed under PMAY.
So far, nearly 4 crore houses have already been built under the scheme.
NHB Disburses ₹60,000 Crore Under Affordable Housing Fund
Nagaraju also stated that under the Affordable Housing Fund, the National Housing Bank has disbursed concessional refinance worth ₹60,000 crore till December 2025.
This funding has benefited approximately 5.85 lakh dwelling units across India, helping improve affordability and access to housing finance.
Policy Support and GST Cuts to Boost Housing Affordability
Nagaraju highlighted that both the Government of India and the Reserve Bank of India have supported housing growth through reforms and credit expansion.
He pointed out that revisions in priority sector lending norms, including higher housing loan limits and broader definitions, were introduced last year to boost credit flow into underserved areas.
Additionally, he noted that significant GST rate reductions on key construction materials are expected to reduce construction costs and improve housing affordability.
Conclusion
Rajiv Gauba’s remarks underline a critical truth; India’s housing affordability challenge is deeply linked to land costs and policy inefficiencies. While schemes like PMAY have made massive progress in increasing housing supply, structural reforms in land allocation, FAR limits, financing access, and rental housing models may be the key to making homeownership realistic for millions more Indians.
If India successfully implements these recommendations, it could unlock large-scale affordable housing development, reduce project costs, and help build more sustainable, well-planned cities.
