The Constitutional Promise:

Although the Indian Constitution does not expressly recognise housing as a Fundamental Right, the Supreme Court has read aspects of shelter and livelihood into Article 21, which protects the Right to Life and Personal Liberty. In Olga Tellis v. Bombay Municipal Corporation (1985), [1] the Court held that the right to livelihood is integral to the right to life because forced eviction without procedural safeguards can destroy the means by which people survive. Later judgments further developed the idea that shelter is part of a dignified life. Internationally, India is also a party to the International Covenant on Economic, Social and Cultural Rights (ICESCR), which recognises adequate housing as part of the right to an adequate standard of living. Yet these commitments remain aspirational. The gap between legal recognition and the ground reality has widened as markets have deepened.

The Scale of Crisis:

The Ministry of Housing and Urban Poverty Alleviation’s Technical Group estimated India’s urban housing shortage at 18.78 million units at the beginning of the 12th Five-Year Plan period, with the overwhelming share concentrated among Economically Weaker Sections (EWS) and Low-Income Groups (LIG).[2] This figure should be used carefully because it is based on 2012 estimates; more recent studies suggest that the shortage may have evolved in both scale and composition. At the same time, Indian cities also show a paradox: housing units may remain vacant or unaffordable while low-income households continue to live in overcrowded, insecure, or informal settlements. The problem, therefore, is not only a shortage of physical units but also a mismatch between what is built, where it is built, and who can afford it.

The demand for affordable housing in India has been significantly shaped by rapid urbanisation and large-scale migration to cities such as Mumbai, Delhi, Bengaluru and Hyderabad in search of educational & employment opportunities. Due to this large-scale migration, MoHUA launched Affordable Rental Housing Complexes (ARHCs) as a sub-scheme of Pradhan Mantri Awas Yojana – Urban (PMAY-U) in July 2020[3] to provide dignified living to urban migrants/poor near their workplace. The Scheme got implemented through two models and as of December 2024, 5,648 government-funded vacant houses had been converted into ARHCs, while 82,273 rental housing units had been sanctioned through public and private sector participation, of which 35,425 units had been completed.

Building on this initiative, the Government has incorporated Affordable Rental Housing as one of the four verticals under PMAY-U 2.0[4], which is a demand driven scheme where states/UTs have been given the authority to approve projects that are identified through a demand survey. The Affordable Rental Housing (ARH) version 2.0 aims to promote the creation of rental housing for Economically Weaker Section (EWS)/Lower Income Group (LIG) beneficiaries, including migrant workers and other poor people who do not want to own a house but require housing for a short-term basis.

Urban land supply is constrained by a combination of physical scarcity, fragmented ownership, restrictive land-use rules, low or unevenly applied Floor Space Index norms, outdated master plans, inadequate public transport connectivity, and slow approval processes. These constraints raise the cost of serviced land and formal housing. In the absence of adequate public rental housing, serviced land supply, and affordable finance, speculative capital can push prices further away from the reach of middle- and low-income households.

Over the years, real estate has moved beyond shelter and become a major investment asset class. Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs)[5] allow investors to participate in income-generating real estate and infrastructure assets without directly owning physical property. These instruments can bring transparency, liquidity, and institutional capital into the sector, but they also reinforce the broader shift toward treating land and built space as financial assets.

Since liberalisation in 1991, and particularly after foreign direct investment in construction development was liberalised in the mid-2000s, Indian real estate has become increasingly integrated with domestic and global capital markets. REIT regulations were introduced earlier, but India’s first listed REIT came to market in 2019. To date, REIT activity in India has been concentrated largely in commercial office and retail assets rather than mainstream affordable residential housing. Therefore, the article’s core concern is not that REITs alone have transformed housing affordability, but that the broader financialisation of real estate has shifted market incentives toward investors, higher-value assets, and faster capital returns.

Developers are often incentivised to prioritise premium and luxury projects because these typically offer higher margins, stronger buyer profiles, and better access to finance than affordable housing. As a result, even when overall construction activity rises, the supply that reaches low- and moderate-income households may remain inadequate. For readers, this distinction is important: a housing boom does not automatically translate into housing access.

The Real Estate (Regulation and Development) Act, 2016 (RERA Act), has improved transparency, consumer protection, and accountability in registered projects. However, the RERA Act primarily addresses project-level conduct such as delays, disclosures, and buyer protection rather than the structural causes of unaffordability. Meanwhile, short-term rental platforms, corporate leasing, and investor-owned rental units can add pressure in high-demand neighbourhoods, especially where housing supply is limited. In Bengaluru, for instance, multiple market reports since 2023 have recorded sharp rent increases in technology corridors such as Whitefield, Sarjapur Road, Bellandur, and the Outer Ring Road. These increases are linked to return-to-office trends, limited rental supply, and the premium placed on proximity to employment hubs.

The flagship government response to housing inequality has been the Pradhan Mantri Awas Yojana (PMAY), launched in 2015 with the objective of “Housing for All.” Under PMAY-Urban, the government has used interest subsidies, affordable housing partnerships, in-situ slum redevelopment, and beneficiary-led construction support.[6] PMAY has enabled a large number of sanctioned and completed houses, especially when PMAY-Urban and PMAY-Gramin are considered together. However, the programme has also faced important critiques. Migrant workers, casual labourers, and renters are often difficult to reach through ownership-led models. Many units are located on urban peripheries where transport costs and livelihood distance reduce practical affordability. Completion delays, land availability, and weak integration with jobs, schools, health services, and public transport further limit impact. Most importantly, subsidies alone cannot solve a market structure that makes affordable housing commercially unattractive without public support.

In Karnataka, the Karnataka Real Estate Regulatory Authority has amended the Karnataka Real Estate (Regulation and Development) Rules, 2017, in 2021 and inserted Rule 3(3)(e), providing that no registration fee is payable for Affordable Housing in Partnership (AHP) projects under PMAY-Urban. The amendment aims to reduce compliance costs and encourage participation in affordable housing. However, the more important policy question is whether such exemptions translate into lower end-user prices, better project viability, and increased supply in locations where low-income households actually need housing. Without transparent data on uptake, completion, occupancy, and affordability outcomes, the effectiveness of such exemptions remains difficult to assess.

The right to housing and the commercialisation of real estate need not be irreconcilable. The challenge is to design markets so that they serve public purpose rather than displace it. Several strategies deserve serious consideration: mandatory inclusionary zoning that requires a share of new residential development to be affordable; stronger use of land-value capture and Transferable Development Rights (TDR) with binding accountability; vacancy taxes or higher holding costs for long-term vacant units in high-demand areas; expansion of professionally managed public and social rental housing; and better integration of housing policy with mass transit, employment centres, schools, health services, water, and sanitation. Legal reform is also worth debating. Making the right to adequate housing more explicit and enforceable could strengthen accountability, but it must be paired with realistic fiscal commitments, urban planning reform, and institutional capacity at the state and city levels.

Conclusion

India’s housing question is ultimately a question about the kind of society it intends to build. If housing is treated only as a vehicle for wealth creation, market systems will continue to produce efficient but exclusionary outcomes. If, however, a home is understood as the foundation of dignity, security, health, education, and livelihood, then the role of the state must go beyond subsidising ownership. It must actively shape land, rental, finance, planning, and regulatory systems so that housing supply aligns with social need. The way forward is not to reject private investment but to discipline it through clear public-interest obligations. A more valuable housing policy would measure success not only by units sanctioned or capital deployed but also by whether people can live affordably, safely, and close enough to opportunity.

[1] Olga Tellis v. Bombay Municipal Corporation 1986 AIR 180

[2] Real estate and construction bridging the urban housing shortage in India, https://www.naredco.in/notification/pdfs/Urban-housing-shortage-in-India.pdf

[3] https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=2086105&utm_&reg=48&lang=2

[4] https://pmay-urban.gov.in/uploads/guidelines/Operational-Guidelines-of-PMAY-U-2.pdf

[5] https://investor.sebi.gov.in/understanding_reit_invit.html?utm_

[6] Urban PMAY, https://pmay-urban.gov.in/