Pre-Program Environment
Low-income housing programs in India have long been viewed as an area that only the government can tackle. But government has been unable to fill a yawning need: India’s urban slum population is growing at an unprecedented rate. Research has identified more than 20 million households that earn 7,000 to 15,000 rupees ($140 to $300 US dollars) per month and pay up to 4,000 rupees ($80) per month to rent tenements in slums and low-income neighborhoods. These 100- to 300-square foot tenements may house families of five or more people in a single room. They are typically are poorly constructed, and located in neighborhoods that lack basic amenities and have deplorable sanitation. The families living in these tenements have almost no legal protection and may be kicked or priced out of their homes at any time; they consequently have almost no incentive to improve their residences.
Program Accomplishments
In 2006, Monitor Inclusive Markets (MIM), part of the Monitor Group, began an India-based project to identify social issues that could benefit from market-based solutions. Research conducted that year identified the low-end urban housing market as ripe for investment that could generate both profits and substantial improvements in the lives of many slum dwellers. Accordingly, MIM set out to foster innovative low-cost options for housing and home-financing.
As of 2010, MIM had initiated three pilot projects, bringing together developers and mortgage finance companies to deliver more than 5,000 quality homes to low-income residents of three cities across India. The goal is to execute these proof-of-concept pilots at sufficient scale to attract additional development and financing, and drive systemic change.
As a market maker focused on fostering relationships with developers, corporations and entrepreneurs whose involvement is critical to increased availability of adequate low-income housing, MIM seeks not just to raise roofs, but also to raise awareness about the business and social impact. To those ends, the organization has assembled a group of financial institutions to serve customers in the low-income segment, and incubated a housing finance company, Micro Housing Finance Corporation, which provides low-income mortgages to customers who work outside the organized employment sector. As part of its ongoing work, Monitor Inclusive Markets will track the emerging industry to identify any major issues facing low-income customers and to collaborate with developers, housing finance companies, and other stakeholders to address them. Interventions at this stage will enable the market to scale more robustly.
Future Outlook
The potential worth of India’s low-income housing sector is estimated at more than $250 billion. Interest in the sector is demonstrably mounting, with one September 2010 Monitor study reporting that more than 25 developers in urban areas had built or were planning to build multi-family units for the low-income market. With this spike in activity, there’s a critical need for organizations like MIM that have the experience and credibility to act as both a market maker and an advocate for responsible development.
In the next decade, Monitor Inclusive Markets seeks to help create quality low-income housing for 10 to 15 million families in urban India. The goal is threefold: 1) To help enhance families’ economic stability and overall quality of life through home ownership; 2) to create a sustainable market that will help prevent the development and proliferation of additional slums; and 3) to help shape government housing and urban development policies that foster growth while guarding against the imbalances of a pure market-based solution. In the short-term this includes helping to ensure appropriate government oversight on challenges such as the cost and availability of land with clear titles, and guaranteed support on mortgages.