'$300 home is not just viable but also profitable'

Vijay Govindarajan, professor at Dartmouth College's Tuck School of Business who jointly initiated the idea of a $300 (less than Rs 14,000) house, has now proposed a model village of ultra low-cost houses. Sachin Dave reports.

Vijay Govindarajan, professor at Dartmouth College's Tuck School of Business who jointly initiated the idea of a $300 (less than Rs 14,000) house, has now proposed a model village of ultra low-cost houses.

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The Mahindra group is one of the six finalits invited to the US for a prototype workshop.

The ultra low-cost house would reach India if the pilot project is successful.

Speaking to Hindustan Times from the US over phone Govindarajan said, "We have invited six finalists to the US for a prototype workshop. After that we would want to build a model village in a country near the US with housing issues."

"A housing need in different countries may vary but what we want to test is if such a house is possible as most of the designs are still on the paper," he said.

"The concept of a $300 house is not just economically viable but also profitable. If groups like the Tata, Mahindra and Reliance form a consortium and target the low-cost housing segment, there is lot to be gained at the bottom of the pyramid," said the Indian Institute of Management (Ahmedabad) alumni.

These companies can utilise their specialties to create a ultra low-cost house and still earn handsome profits out of it as the demand for such a product would be huge, he said.

Govindarajan along with Christian Sarkar, a marketing expert, had written a blog on the website of Harvard Business Review about the possibility of a house for less than $300. After the post received phenomenal response, a crowd-sourcing forum had announced a $25,000 award for anyone who suggests the best way for its construction.

"The profit margins in such a venture ($300 house) would be wafer thin, but the volumes would be huge," said Govindarajan.

The $300 figure was menat to attract people's attention in the same way as a $100 laptop or a $2,500 Nano did, Govindarajan said. "We arrived at the figure $300 as according to Muhhmmad Yunus the average house value for a Grameen member who had escaped poverty was $370. But we know that housing problem cannot be solved through philanthropy or donation, it can only work if private firms participate in such a project."

When asked if the $300 house is a possibility in India Govindarajan said: "If you go back in time, India faced a milk shortage, but Amul revolutionised everything and today the country is self sufficient in milk production. The same can be applied to housing, and I am confident that it is possible."