India is facing a housing crisis. The national shortage stands at close to 20 million units. Unsurprisingly, most of the shortfall is at the bottom of the economic ladder. The United Progressive Alliance and National Democratic Alliance governments have both tried to address this with centrally sponsored schemes.

It isn’t going to be easy, as the Reserve Bank of India's Affordable Housing in India report shows. According to the central bank, the policy incentives provided by the government, such as home loan interest subsidies, have spurred activity in the segment of home loans up to Rs2 lakh. But this segment has also shown the highest rate of delinquencies, rising to 10.4% in 2016-17.

Meanwhile, according to the ministry of housing and urban poverty alleviation, 17% of the houses constructed under centrally sponsored schemes were vacant in 2017 because of poor relocation planning and missing infrastructure. The lesson is clear: throwing money at the housing crisis is not enough, and it comes with risks.

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