NITI Aayog’s Rajiv Gauba Calls for Land Policy Reforms to Boost Housing Affordability

Comprehensive land policy reforms are essential to making housing more affordable in India, said Rajiv Gauba, member of NITI Aayog. He highlighted that high land costs remain one of the biggest barriers to large-scale housing development, particularly in the affordable segment.

Speaking at an international housing conference organised by the National Housing Bank, Gauba stressed that structural land policy reforms could significantly reduce project costs and unlock housing supply across urban India.

Land Costs Driving Housing Prices

Gauba noted that land currently accounts for nearly 50–70% of total project costs, a proportion far higher than in other infrastructure sectors. Without targeted land policy reforms, developers face mounting financial pressures that ultimately push housing prices higher.

He explained that rising land acquisition costs, combined with regulatory constraints, have reduced the feasibility of affordable housing projects. Margins in economically weaker section (EWS) and low-income group (LIG) housing remain thin, discouraging private investment.

Key Measures Suggested

To address these challenges, Gauba proposed several land policy reforms, including:

• Reserving at least 10% of residential land in master plans for affordable housing
• Increasing permissible Floor Area Ratio (FAR) from the current 2–3 levels to 5–6
• Promoting transit-oriented development
• Adopting land pooling mechanisms

He stated that such measures would help lower land costs, increase density in urban areas, and enhance housing supply without expanding city boundaries excessively.

Credit Constraints and Financing Gaps

Apart from land-related issues, Gauba pointed to limited access to formal credit as another obstacle. Many developers rely on high-cost borrowing, affecting project viability. Effective land policy reforms, coupled with improved financing mechanisms, could ease liquidity constraints and attract private capital into affordable housing.

He suggested additional interventions such as profit exemptions for affordable housing projects, higher credit guarantee limits for low-income housing, and reductions in stamp duty to improve project economics.

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Addressing Vacant Homes and Rental Housing

Highlighting inefficiencies in the housing ecosystem, Gauba observed that nearly one crore homes remain vacant across the country. He emphasised the need to strengthen rental housing frameworks alongside implementing land policy reforms.

Reforming tenancy laws, rationalising municipal charges, and promoting diverse rental housing models could improve utilisation of existing stock and expand affordable options for urban residents.

Government Housing Initiatives

At the event, M Nagaraju, Secretary of the Department of Financial Services, highlighted the government’s progress under the Pradhan Mantri Awas Yojana.

He stated that 3 crore additional homes have been sanctioned under PMAY, including 2 crore in rural areas and 1 crore in urban centres. By 2029, the total number of houses constructed under the scheme is expected to reach 7 crore.

Under the Affordable Housing Fund, the National Housing Bank has disbursed concessional refinance worth ₹60,000 crore until December 2025, supporting nearly 5.85 lakh housing units.

Policy Push and Future Outlook

Officials also noted that revisions in priority sector lending norms and GST reductions on construction materials are expected to support housing affordability. However, experts argue that without comprehensive land policy reforms, these measures may not fully address structural cost pressures.

NITI Aayog has reportedly worked closely with the Ministry of Housing and Urban Affairs and other stakeholders to develop actionable recommendations grounded in global best practices and cross-sectoral analysis.

Conclusion

The call for land policy reforms reflects growing recognition that land-related constraints are central to India’s housing affordability challenge. By revisiting zoning norms, increasing FAR limits, promoting land pooling, and improving credit access, policymakers aim to reduce development costs and accelerate housing supply.

As India moves toward ambitious housing targets, coordinated reforms across land, finance, and urban planning will be crucial to making affordable housing a sustainable reality.