Cost-benefit analysis of housing vertical interventions for urban poor in large cities of Rajasthan

Amitabh Kundu, Arjun Kumar | Copenhagen Consensus Center

Providing ownership housing to all houseless households and those living in unacceptable dwelling units on account of the temporary or obsolete structure, congestion, privacy factors, slum and squatter settlements, etc. has been in the policy domain for past few decades. The Union Government has launched the Pradhan Mantri Awas Yojana (Urban) (PMAY U) mission promising to provide acceptable dwelling units to all by 2022.

The Technical Group on Urban Housing Shortage, 2012–17 (TG-12) noted that the households from Economically Weaker Sections (EWS- income up to Rs. 5,000 per month) and Lower Income Groups (LIG-income between Rs. 5,000 and Rs. 10,000 per month) account for 56.18 percent and 39.44 percent, respectively, of the total shortage of 18.8 million (MoHUPA, 2012).  EWS & LIG category account for almost 80 percent of households in urban areas. The figures for the households living in obsolete houses, non-serviceable katcha house and the homeless are 12 %, 5 % and 3 % respectively. 

This study tries to bring in empirical evidence in the context of alternative perspectives, based on an evaluation of three centrally sponsored verticals viz. Beneficiary-led Construction or enhancement (BLC) (individual led), Affordable Housing in Partnership (AHP) (private developers led) and In-situ Slum Redevelopment (ISSR) (public private partnership and community engagement) launched under Housing for All by 2022 – Pradhan Mantri Awas Yojana Urban (PMAY U).

The idea is also to propose re-allocation of the funds available under PMAY U across verticals so as to maximize the impact on social welfare.

Although the total target of the housing shortage has been brought down from 20 million to 12 million, apparently based on demand survey, the progress towards achieving the revised target has, at best, been sturdy. It is also interesting that the importance given to the four verticals deigned under the mission has undergone changes in the process of implementation. The progress under ISSR has been extremely low, which was supposed to meet about 90% of the housing shortages. 

BLC has made significant progress because the public institutions have found it easier to deal with households with access to land in providing housing assistance. The progress towards AHP, too, has not been satisfactory because of the low level of participation of private sector and their reluctance to adhere to various stipulations, as envisaged under PMAY U. Across verticals, the houses sanctioned under BLC, AHP, and ISSR were 55, 37 and 2 percent respectively. ISSR vertical has not kicked off with 0.07 million houses sanctioned so far. Despite the Mission acknowledging the need for a sharp focus on slums, the progress under ISSR vertical has so far been abysmally low.

Rajasthan has reported very low proportion of houses (less than 1 percent of national, 26,411 houses) sanctioned under PMAY U centrally sponsored schemes. The vertical wise composition was 180 and 26,231 houses for BLC and AHP respectively, and none under ISSR.

The analysis carried out for the cities in Rajasthan clearly reveals that AHP enjoys a distinct advantage over BLC in terms of the BCR. This implies that any resource reallocation from BLC to AHP will result in greater net social benefit. Similarly, the ISSR has much higher BCR than the other two. However, more than 50 percent of the sanctioned projects and housing units are under BLC which would lead to suboptimality in overall housing scenario.

Size of the dwelling unit for Affordable housing to the urban poor is taken to be 300 sq. ft. for all the three verticals- BLC, AHP and ISSR in large cities of India for the purpose of comparisons. Time of completion of house/project is taken to be 1.5 years for all the verticals. For Rajasthan, Jaipur city has been selected as a proxy for large cities, primarily because it is the Capital of Rajasthan, a Metropolis having about 3 million population. Estimation of benefits have been computed taking time horizon of 10 years after house possession.

Research Summary

Housing Rajasthan

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  • Ritika Gupta

    Ritika Gupta is a senior research assistant at Impact and Policy Research Institute. Her research Interests include Gender Studies, Public Policy and Development, Climate Change and Sustainable Development.

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