Government Initiatives for Housing the Urban Poor in India

Cities in India have always promised something to those who arrive at their doorstep: work, opportunity, a fresh start. But for millions of low-income migrants and long-term residents, the promise stops short of a safe roof. Decades of policy experiments, slum clearance drives, finance reforms, and partnership models have tried to close this gap between urban growth and dignified shelter. Understanding how these governmental measures have evolved reveals not just a policy timeline but a story about who cities are built for.

The early years: institution building in the 1950s and 1960s
The 1970s and 1980s: from clearance to upgradation
The shift toward finance and the enabling state
The 1990s: decentralization and community-based schemes
The 2000s and 2010s: missions, partnerships, and Rajiv Awas Yojana
Rajiv Awas Yojana and the dream of a slum-free India
Pradhan Mantri Awas Yojana – Urban
The role of civil society and international collaborations
Persistent challenges and unfinished agenda

The early years: institution building in the 1950s and 1960s

The genesis of housing policy in India can be traced to the 1950s, when the newly independent state was confronting two simultaneous pressures: rapid urbanization and the resettlement of refugees from Partition. The early focus was on creating institutions rather than declaring a national policy. The Ministry of Works, Housing and Supply was set up at the centre, and state housing boards were mandated to construct houses for allotment. The Industrial Housing Scheme of 1949 had already begun providing subsidies to private employers building housing for workers, and the Life Insurance Corporation was later directed to provide housing finance for low-income groups, as documented in this policy review by the Indian Institute for Human Settlements.

A landmark of this period was the Slum Areas (Improvement and Clearance) Act of 1956, the first central legislation focused on slums. The Act recognized that slums posed a danger to health, safety, and dignity, and it gave authorities powers to declare an area a slum, enter privately owned slum land for improvement, and protect tenants from arbitrary eviction. Importantly, it also empowered competent authorities to demolish buildings unfit for habitation. The intent was protective, but in practice the Act often became a tool for clearance rather than improvement, displacing the very communities it was meant to help.

The 1970s and 1980s: from clearance to upgradation

By the 1970s, the limits of pure clearance were becoming impossible to ignore. Demolition without rehabilitation simply pushed families into new informal settlements. The Fifth Five Year Plan (1974-79) introduced the Environmental Improvement of Urban Slums (EIUS) scheme, which shifted the emphasis from removing slums to upgrading them with water supply, drainage, paved lanes, and community latrines. The Urban Land (Ceiling and Regulation) Act of 1976 was passed to prevent the concentration of urban land in a few hands and to make land available for low-income housing, although its actual record in releasing land for the poor remained disappointing across most cities.

The Sixth Plan (1980-85) pushed integrated provision of services along with shelter. The Housing and Urban Development Corporation (HUDCO), set up in 1970, became a key channel for financing housing for economically weaker sections. In 1985, Indira Awas Yojana was launched, primarily for the rural poor but signalling that housing for marginalized groups was becoming a national priority. Urban-focused programmes like the Urban Basic Services scheme of 1986 began bundling shelter with health, sanitation, and women’s empowerment components, recognizing that a house is meaningless without the services around it.

The shift toward finance and the enabling state

A quieter but consequential change in the late 1980s was the rise of housing finance as a policy instrument. The National Housing Bank (NHB) was established in 1987 as an apex institution to regulate and refinance housing finance companies. The first National Housing Policy, formulated in 1988, reframed the government’s role: instead of being a direct builder of houses, the state would become an enabler, creating conditions for markets, cooperatives, and households themselves to deliver shelter. This was a global trend, echoed in World Bank thinking of the period, and it would shape every Indian programme that followed.

The 1990s: decentralization and community-based schemes

The 1990s opened with constitutional change. The 74th Constitutional Amendment of 1992 gave urban local bodies a formal place in governance, requiring them to plan for economic development and social justice including slum upgradation. This was meant to bring decisions closer to the people who lived in slums. Soon after, a wave of centrally sponsored schemes followed, each requiring matching contributions from states or urban local bodies.

The Nehru Rozgar Yojana’s Scheme of Housing and Shelter Upgradation (1990), the Urban Basic Services for the Poor programme (1991), the Prime Minister’s Integrated Urban Poverty Eradication Programme (1995), and the National Slum Development Programme (1996) all tried to combine shelter upgradation with livelihood, community organization, and infrastructure. The NSDP, for instance, covered water supply, sewers, drains, street lighting, primary health care, and non-formal education, recognizing that shelter cannot be separated from basic urban services. A revised National Housing Policy in 1994 and a National Housing and Habitat Policy in 1998 reinforced the enabling-state approach.

The 2000s and 2010s: missions, partnerships, and Rajiv Awas Yojana

The 2000s brought a mission-mode approach. The Jawaharlal Nehru National Urban Renewal Mission (JNNURM), launched in 2005, was a large reform-linked investment programme for cities. Its two sub-missions for the poor – Basic Services for the Urban Poor (BSUP) and the Integrated Housing and Slum Development Programme (IHSDP) – funded the construction and upgradation of dwelling units for slum dwellers in selected cities. JNNURM marked the first time housing for the urban poor was tied to broader urban reform such as property tax improvements and e-governance.

Rajiv Awas Yojana and the dream of a slum-free India

Building on JNNURM, the government launched Rajiv Awas Yojana (RAY) in 2011. According to the official guidelines issued by the Ministry of Housing and Urban Affairs, RAY envisaged a “Slum Free India” with inclusive and equitable cities. Its mission was to bring all existing slums, whether notified or non-notified, within the formal system, and to address the structural failures that produced slums in the first place by planning affordable housing stock and assigning property rights to slum dwellers.

RAY’s two-step strategy required cities to first prepare a Slum-Free City Plan of Action through mapping and biometric surveys, and then prepare detailed project reports for individual slums. The scheme preferred in-situ redevelopment so that communities would not be uprooted from their livelihoods, and it offered credit-linked subsidies for those who could access bank loans. On paper, RAY was the most ambitious slum policy India had ever attempted.

In practice, RAY’s record was mixed. Many cities struggled to complete the survey and mapping stage, slum-free city plans were uneven in quality, and the legal complexity of awarding property rights on contested land slowed implementation. By 2015 the scheme was effectively subsumed into a larger successor programme. Independent reviewers like urban planner P. K. Das argued that genuine recognition of slum dwellers as equal citizens, rather than merely as beneficiaries, was the missing piece.

Pradhan Mantri Awas Yojana – Urban

Pradhan Mantri Awas Yojana – Urban (PMAY-U) was launched in June 2015 with the goal of providing pucca houses to all eligible urban households by 2022. It works through four verticals: in-situ slum redevelopment using land as a resource, affordable housing in partnership, beneficiary-led individual house construction, and the Credit Linked Subsidy Scheme. The mission deliberately targets EWS, LIG, and MIG households, with mandatory provisions making the female head of the family the owner or co-owner.

According to the Press Information Bureau, more than 85 lakh houses had been delivered under PMAY-U by 2024, and in September 2024 the Union Cabinet approved PMAY-U 2.0, extending financial assistance to one crore additional urban families over five years with a government outlay of around ₹2.30 lakh crore. PMAY-U 2.0 adds rental housing as a recognized vertical and includes street vendors, construction workers, anganwadi workers, and sanitation workers as priority groups.

The role of civil society and international collaborations

Government schemes have rarely worked alone. NGOs and grassroots federations have shaped both the design and the delivery of housing measures for the urban poor. The most influential example in India is the alliance between the Society for the Promotion of Area Resource Centres (SPARC), the National Slum Dwellers Federation (NSDF), and Mahila Milan, a federation of women’s savings collectives. As described in research published by the International Institute for Environment and Development, this alliance has helped pavement dwellers conduct their own enumerations, design their own house models, negotiate with municipal authorities, and resist arbitrary evictions.

These organizations did not just deliver houses. They reframed slum dwellers as partners in policymaking rather than passive recipients of welfare. The very ideas of community-led enumeration and in-situ redevelopment that found their way into RAY and PMAY-U owe a great deal to decades of this groundwork.

International collaborations have reinforced this shift. Slum/Shack Dwellers International (SDI), a transnational network of federations of the urban poor, has connected Indian slum dwellers with counterparts in South Africa, the Philippines, Cambodia, and elsewhere, building shared strategies on tenure, savings, and negotiation. The UNDP has documented how Urban Poor Funds set up by such federations, often with matching contributions from national governments, have become a model for engaging the urban poor in service provision. The UN-HABITAT-led Cities Alliance and bilateral agencies like DFID and SIDA have also supported pilot projects, technical studies, and capacity building that have nudged Indian housing policy toward more participatory and incremental approaches.

Persistent challenges and unfinished agenda

Despite seven decades of policy, housing remains one of India’s sharpest urban inequalities. Several patterns recur across schemes. Land is the recurring bottleneck – affordable housing fails when buildable land is unavailable or located far from livelihoods. Many resettlement colonies on the urban periphery have struggled with poor transport, weak services, and loss of work, leading some families to return to informal settlements closer to the city. As independent analyses have noted, schemes designed without secure tenure or genuine community participation tend to be captured by middlemen, builders, or local political interests.

The institutional architecture is also crowded. Multiple agencies – central ministries, state housing boards, development authorities, urban local bodies, parastatals – operate with overlapping mandates, which is one reason why poverty alleviation schemes have often been renamed, restructured, or merged without delivering the expected impact on the ground. Finally, the rental and migrant housing segment, long ignored, is only now receiving sustained attention through PMAY-U 2.0’s rental housing vertical.

What do you think? Has the shift from the state as a builder to the state as an enabler genuinely helped the urban poor, or has it simply transferred risk onto households least able to bear it? And if you were redesigning a housing scheme for a fast-growing Indian city today, which one principle from the last seventy years would you put at the centre?

References

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Government Initiatives for Housing the Urban Poor in India

Table of Contents

The early years: institution building in the 1950s and 1960s 🔗

The 1970s and 1980s: from clearance to upgradation 🔗

The shift toward finance and the enabling state 🔗

The 1990s: decentralization and community-based schemes 🔗

The 2000s and 2010s: missions, partnerships, and Rajiv Awas Yojana 🔗

Rajiv Awas Yojana and the dream of a slum-free India 🔗

Pradhan Mantri Awas Yojana – Urban 🔗

The role of civil society and international collaborations 🔗

Persistent challenges and unfinished agenda 🔗