Annual Report 2002-2003

Housing and Related Issues

Housing is one of the basic needs of mankind in terms of safety, security, self-esteem, social status, cultural identity, satisfaction and achievement. It is one of the major determinants of economic well being. The development of satisfactory housing has always been the priority in both policy formulation and its implementation.

A rapid rise in population results in higher demand of dwelling units for residential purposes. This coupled with the growth in household formation and increased rural-urban migration resulting from non-availability of opportunities in rural areas has resulted in severe pressure on urban infrastructure in recent years. The consequence has been overcrowding and unhealthy living environment, shortages of basic amenities and finally social and economic deprivation. All major urban centers in our country are gradually becoming victims of such civic deficiency.

As per the latest census 2001, India has population of over 1027 million, which is second highest after China, with an unfavourable land-man ratio. As the country enters an era of economic growth, economic liberalisation and prosperity, cities seem not yet ready to accommodate the growing population and provide work and services and environmental infrastructure for all. The twin problems of affordability and availability continue.

The housing problem should not be envisaged as a mere demand-supply problem. Because of inequitable income distribution in our country, there is bound to be a wide gap between the demand for the houses and the need for house, because the need is translated into demand only when it is backed by the purchasing power. Only a supply side intervention will not solve the problem, though it can alleviate the same.

The housing finance sector, however, continued to grow during the year 2002-03, with the banking sector evincing keen interest which in turn could have been fueled by the lack of preferable alternative avenues for investment. As per the preliminary reports, the banking sector crossed Rs. 30,000 crore mark in housing finance disbursal whereas the housing finance companies also came close to disburse Rs. 18,000 crore in the year 2002-03. However, the fierce competition among the various players trying to share the pie of the housing finance business has resulted in relaxation of sanctioning norms causing regulatory concerns. The Reserve Bank of India has asked commercial banks to be more vigilant while disbursing housing loans.