Affordable Housing in India: Policies and Challenges

This article discusses the policies and challenges of affordable housing in India. It covers the concepts of monopolistic competition, oligopoly, and collusive oligopoly in the housing market. It also explores the important issues in the housing department, such as shortage of land, administrative limitations, and inadequate marketable land parcels. Additionally, the article delves into the concept of affordable and bearable housing, including the costs of housing and the importance of hard and social infrastructure.

Running Head: POLICIES IN HOUSING
AFFORDABLE HOUSING IN INDIA
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Monopolistic competition
This is the model of a defective rivalry which is marked by numerous makers distributing
recognized items. The products are not perfect substitutes.in this kind of competition, a firm is a
price maker as it makes prices. Given that there is a coercive business, a monopolistic
competitive market will have some market power due to the differentiation of products. (Frazer,
2014).
A monopolistic competition has a demand curve that is downward sloping. The MR for a
pure monopoly is hence always not higher than the prices in the market since it can only
heighten the demand through bringing down the prices. Monopolistically competitive firms
maximize their gains or minimize their losses through the production of goods up to the point
whereby the marginal revenue will be equal to the MC in both the short run and also the long run
(Sharkey, 2012).
In the short run, a monopolistic market which is competitive will minimize its losses
through the production of the quantity that gives correspondence when marginal revenue is equal
to marginal cost. Given that average total cost is not above the market price, then there will be
some economic gains (Dimitrova & Schlee, 2013).

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(Dimitrova & Schlee, 2013)
(Dimitrova & Schlee, 2013)

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Given that the ATC is not below the market price, the industry will then be operating
under a loss which is equal to the ATC subtract from the price in the market then multiplied by
the quantity of the product. There will still be the minimization of losses through the production
of goods where the marginal revenue is equal to the marginal cost. However, in the long run the
industry will be required to either reverse the losses or exit the industry. The coal India Company
is an example of a company that enjoys the power of monopolistic competition (Dimitrova &
Schlee, 2013).

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(Fraja & Delbono, 2015).
OLIGOPOLY
Oligopoly structures refer to the market in which a company is controlled by couple of
huge scale shippers. Oligopolies rise because of various intrigues making a decrease in rivalry
and subsequently driving expanded cost for the clients (Caves & Porter, 2013). Since it has not
very many dealers, an oligopolist knows about the activities of the others. Here, the choice of
one firm will henceforth influence the choices of alternate firms and the other way around (this is

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generally alluded from the diversion hypothesis). Vital arranging which is finished by
oligopolists needs to take into inspections the no doubt reactions in which the other market will
react.an oligopoly advertise structure can carry on in various ways. The outline beneath
demonstrates a crimped request bend (Katsoulacos & Xepapadeas, 2014).
The above table shows profit maximization in the short run.
(Caves & Porter, 2013).
Here, the firm will maximize its gains at the point where MR=MC (Q1, P1).Any change
in MC will therefore not affect the market price.
Assumptions in a kinked demand curve

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Firms maximize on profits
Given one firm increases prices, then the other similar firms follow the case and hence demand is
said to be price elastic (Sharkey, 2012).
If a given firm cuts prices, then the other firms will also do the same since they do not want a
reduced market share and therefore demand is price inelastic for the case of a price cut.
COLLUSIVE OLIGOPOLY
In occasions whereby oligopolies collude to form a cartel, they will end up fixing prices
at the levels where the industry will be maximizing profits. Finally they will set quotas that will
keep the output at the profit maximizing levels (Asch, 2013).

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(Dimitrova
& Schlee, 2013)
Prices and outputs in an oligopoly give a reflection on the price and output in a
monopoly. Qm is the quantity that will finally be split among the cartels. The diagram below
shows the economies of scale for the cartels.

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Efficiency of firms in oligopoly
The big firms enjoy the economies of scale, the relatively low average costs and therefore
the latter outweighs other inefficiencies.
The industries that are operating under a kinked demand curve will end up setting prices which
are higher than the marginal cost (Hay & Liu, 2015).
Firms can successfully collude and set prices which are higher than the marginal cost.in the case
where oligopolies are competitive, the prices will be lower and more allocative adequate.
In the case of a dynamic efficiency, industries have the profits which they can in turn use to
invest in new products (Fraja & Delbono, 2015).

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Examples of oligopolistic competition in the Indian market is are many since any given
two firms that are producing types of products or services that are the same and competing for
the same customers who are in the same market. For instance, the people doing retouch will have
several salons each and in the same area that is meant to satisfy their quest for money. The
businesses will be similar just to entice the customer so that he or she uses them. If any of the
businesses has a pretty added advantage, it will hike its prices (Hay & Liu, 2015).
Housing affordability
Affordable housing has been a challenge faced by the Indians and world at large.in the
country (India) the problem is much more since there is a shortage of housing which goes to an
estimate of roughly 18 million.99% of the people here will be seen living in the weaker sections
of the society (Smets, 2013). Affordable housing is a phrase that is used to refer to any kind of
housing that meets the criterion of affordability which includes the level of income for the
family, the size of the domicile and the ration of rent to the annual income.
Important Issues in the Housing Department
Shortage of land
The high population density, high rates of urbanization and the regulations which are
poorly conceived have led to the shortage of land which is capable for development. The latter is
caused by the much control over the central districts. The excessive control results to a push
towards the outskirts of the cities. The issue of acquisition of land has been thorny for a long

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time (Hay & Liu, 2015). It gave rise to the land mafias and land encroachments which were
illegal and hence reduction of land availability at a considerable price.
Inadequate marketable land parcels
Public entities such as the railways, ports and defense own large tracts of land in the
central district. The latter institutions lend themselves to the propagation of squatter settlements
since those in authority are not able to control their holdings. The settlements which are scattered
and poorly planned for makes it uneasy for the authorities to provide land for mass housing
(Katsoulacos & Xepapadeas, 2014). Apart from the quality of the project and cost, the buyers of
property tae various considerations before buying land including; basic utilities and
infrastructure among many others. Affordable housing demands a good supply and also a land
that is well serviced and at the long run this is what affects the prices of land and also the
willingness of a buyer to pay.
Administrative limitations
Assignment approvals can take a significant extended period of time, and ought to be
cleared by upwards of forty divisions over the domestic levels which include; the earth, fire,
wage and marine workplaces, the action crime squad and so forth. The consequent time and trade
costs obstruct various specialists. Further, nonattendance of direct and clear control bothers the
condition (Sengupta & Tipple, 2013). For instance, coming up with by-laws, rules for floor space

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record, and zoning and change outlines of city neighborhood bodies as often as possible need
clearness and there are covering rules.
Inadequate marketable land parcels
Public institutions like ports and defense own large tracts of land in the central district.
The latter institutions lend themselves to the propagation of resident settlements since those in
authority are not able to control their holdings. The settlements which are scattered and poorly
planned for makes it uneasy for the authorities to provide land for mass housing (Katsoulacos &
Xepapadeas, 2014). Apart from the quality of the project and cost, the buyers of property tae
various considerations before buying land including; basic utilities and infrastructure among
many others. Affordable housing demands a good supply and also a land that is well serviced
and at the long run this is what affects the prices of land and also the willingness of a buyer to
pay (Smets, 2013).Universal confirmation on AH is fixated on two expansive subjects: a)
worldwide meanings of reasonableness, and b) global prescribed procedures and approach
intercessions in AH.
Purchase sensibility: an alternative measure of cabin moderateness is "purchase
sensibility" which checks if families can finance the buying of their homes. Normally,
acquisition sensibility is evaluated as an extent of cabin outlays (or month to month contract
portions) to month to month pay of the family. Purchase sensibility is exceedingly affected by
the ability to get the chance to contract and other home financing choices. The residency of the
home credit and the cost of the cabin structure affect purchase sensibility.
Rent payment sensibility and procurement moderateness expect that hotel and
fundamental non-lodging stock are legitimize items, obtaining a publicly appealing slightest

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portrays moderateness as the limit of families to make payments on the costs of cabin without
driving impediments on everyday costs (Katsoulacos & Xepapadeas, 2014). Researchers use a
relative measure of cabin utilization and family pay, and give a hypothetical preface to relative or
aggregate measures of sensibility in perspective of the extent approach of hotel use to family pay
(Katsoulacos & Xepapadeas, 2014).
A couple of authorities also find out the repayment moderateness measure which
perceives that while hotel may be sensible at the period of obtainment, the repayments towards
cabin may wind up too much costly subsequently in light of market and financing cost danger
(Katsoulacos & Xepapadeas, 2014). A related thought is that of sensibility through home
advance plans. Moderateness augments via access to contract financing. The nonattendance of
credentials for meeting know your client (KYC) measures, weakness to give remuneration slips
and show wage affirmation, lacking info on contract choices, and uncertainty of the sparing cash
structure are inside and out filed as purposes behind the low-wage total not getting to contracts
Moderateness augments through access to contract financing (Sivam & Karuppannan, 2012).
The nonattendance of certification for meeting know your client measures, weakness to give
remuneration slips and show wage affirmation, lacking information on contract choices, and
uncertainty of the sparing cash structure are inside and out filed as purposes behind the low-wage
total not getting to contracts (Katsoulacos & Xepapadeas, 2014).
Measure number three is zone sensibility which considers the conveyance expenses of
hotel selection. Direct cabin is a tradeoff between arrive costs, which are bring down in the
edges, and the transportation costs to the nearest business center, which frequently augments as
partition from downtown zone increases (Sivam & Karuppannan, 2012). As cabin gets pushed
out to the periphery, arrive costs are diminished and holding up all things considered is more

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direct, however the costs of conveyance goes up and there is a replacement among carriage and
hotel costs. The H+T measure of sensibility tends to cabin moderateness from a total cost
perspective (Katsoulacos & Xepapadeas, 2014).
Reasonable and bearableness:
Affordable reasonableness alludes to the thought that moderate structures ought to be
upheld by accessibility of hard framework (physical foundation, for example, water, power,
correspondence, and transportation, and additionally social foundation, for example, schools,
healing centers, police headquarters, administration instruments, et cetera. Group attributes and
also luxuries consolidate to give moderate decency (Sengupta & Tipple, 2013). A valid example
is that of ghetto occupants who are migrated to lodging in zones where work is rare as well as
foundation is poor. In these cases, the decency of the house is traded off, and recipients either
decline to move, or let out the reasonable houses that have been developed for them. For
example, ghetto inhabitants in Kolkata declined to move since they had no place for animals and
poultry in their recently built condos (Katsoulacos & Xepapadeas, 2014).
Costs of lodging incorporate continuous/routine support costs and additionally
installments for conveniences, for example, water, control and so on. Add up to costs consider
buy costs and in addition operational expenses. A repeating issue among low salary assemble
occupants who move into AH, ordinarily flats, worked as a feature of redevelopment endeavors,
is the cost of upkeep, property assess and other related expenses. Exchange costs, for example,
stamp obligation, holding expenses, et cetera are seen to be higher on formal lodging (Fraja &
Delbono, 2015). On the off chance that these components are sorted out, reasonableness turns
into a solitary static assume that does not represent the varieties in arrive costs crosswise over

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urban areas, nor does it consider the varieties in pay and use (the real moderateness) of the
populace living in that particular city. This asks the requirement for more up to date measures
which go past the reasonableness proportion and give points of view on individuals' ability to
expend lodging as an element of their area decision (Katsoulacos & Xepapadeas, 2014).
Housing affordability in India
Ultimatum for reasonably priced housing in India
The points for reasonable lodging in India are many. The main driver is the liberal
suburbanization which is combined with urban populace. The last expanded from roughly 110
million in the year 1971 to around 377 million in the year 2011.the gauges show that the already
talked about will proliferate in future to 590 million by 2030.the results of increased convergence
of individuals who live in the urban regions is knowledgeable about the lack for houses and the
congested travel and furthermore on the fundamental necessities which incorporate sustenance,
water and power. The service for lodging gave a gauge of lodging lack to be 18 million houses in
the thirteenth arrangement and 99% of this originated from the gatherings with bring down
salaries (Sharkey, 2012). In 2011, the ghettos were assessed to remain at 65 million. Close by the
development in urban populace, expanding salaries have made it feasible for the extension of the
white collar class. This has prompted the expansion popular for moderate lodging with
fundamental conveniences.
The land is one of the real segments in the economy of India. Evaluations demonstrate
that the land part made a commitment of around 6% of the GDP in the year 2013/2014 with an
expected 7.6 workers. Lodging is the most well-known and by and large the biggest component

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in the money related part and furthermore the development area. Any push in reasonable lodging
will prompt better quality life and furthermore offer a lift to the GDP of the nation. Effects of
affordable housing on the households
Arrangement of reasonable lodging is an imperative move in the national level, the
metropolitan level and furthermore the individual level. Municipals are the premise of the
development in the economy. For a city to pull in and hold work moderate lodging ought to be
there and this will likewise reflect in the financial development. From the national view,
reasonable lodging is an essential pointer of a development that is adjusted in a nation's
economy. With houses being excessively expensive, there is a much rise in the lodging market
which has extremely consultant impacts to the monetary strategy and different awkward nature
in the economy (Sengupta & Tipple, 2013). Moderate lodging has other direct connections with
the prosperity of people. Research demonstrates that there is dependably a positive externality
that is collected to wellbeing because of arrangement of reasonable lodging prompts the
lessening of wrongdoing and furthermore has exceptionally critical impacts that influence the
occupants because of strength in business.
Actions taken by government and also the private sectors
Moderate lodging in India is a term utilized as a part of the setting of urban centers.in the
national class, the country lodging factor lies under service of provincial improvement while that
in urban focuses exists in the locale of the service of Housing and urban destitution Alleviation
(this is the service that has prompted the strategy of urban lodging (Sengupta & Tipple, 2013)).
The reasonable lodging system approach is offered by the National urban lodging arrangement

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together with the fundamental administrations for urban poor, the ghetto improvement program
and Rajiv Awas Yojana.
Private Sector Players
The purview of the state has been affordable housing for a very long period of time.in the
recent past, the private sector started building houses for the lower and middle class income
earners. This development was propelled by various factors. Need to slow down the 2008/2009
high end residential sector in real estate made it possible for the exploration of options to
diversify the segments which were already affordable (Katsoulacos & Xepapadeas, 2014).
The availability of land in the suburb area, connectivity to infrastructure, presence of
financing agencies which includes banks, non-governmental organizations, the microfinance
institutions and private equity players have spearheaded this interest. Since 2009, the developers
of real estate have started special schemes all over the cities in India including Mumbai, Narol,
and Karjat among others. The prominent developers include TVS Housing, Nirman Group and
Usha Breco Realty (Sengupta & Tipple, 2013).
Conclusion
These difficulties refer to the precondition for a far-reaching and wide-ranging thought of
AH. The trademark eccentrics of the term is brought out in the Habitat Agenda definition:
"Adequate asylum infers more than a housetop over one's head: It moreover suggests tasteful
assurance; adequate space; physical transparency; adequate security; agreeable lighting, warming
and ventilation; adequate basic system.

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