Number theory: Tracking how housing in India is transforming

Had the 2021 census been conducted, there would be a comprehensive database on the number of houses and amenities associated with them up to 2021

Had the 2021 census been conducted, there would be a comprehensive database on the number of houses and amenities associated with them up to 2021. But the census has been delayed and there is no certainty on when it will be held. But a recently released report by the National Sample Survey Office (NSSO) can offer some answers on housing . The MIS was conducted in 2020-21 and has recorded information on houses which have been built or bought after March 2014. Here are six charts which summarise what the Multiple Indicator Survey (MIS) tells us about housing in India.

The MIS was conducted in 2020-21 and has recorded information on houses which have been built or bought after March 2014. (HT PHOTO)

Poor, socially weaker villagers have constructed more houses

9.9% households in India have constructed houses since 2014, according to the MIS. A higher share of rural and poorer households (by monthly per capita consumption expenditure or MPCE) than urban and richer households have constructed houses. Similarly, the share of households that constructed new houses was higher among the more disadvantaged castes.

The puzzle of poor building their second house

Among the households which have built a house since 2014, only half of them built their first ever house. While this may seem counter-intuitive, the share of households who have built a house that is not their first , is higher among the poor and rural households.

These trends are likely because of kutcha-to-pucca transformation

House ownership is actually higher among the poor than the rich in India. The latter, especially in urban areas spend a large part of their incomes in paying rent which is a very small component of spending for the poor. But this also means that the poor stay in much worse houses than the rich. MIS data shows this clearly with a higher share of kutcha house ownership among the poor, especially in rural areas. This also means that the poor would like to move from a kutcha house to a pucca house. A lot of the housing demand from the poor in the 2014-20 period has been exactly this, with the data showing that even the poorest have been building pucca houses. To be sure, data shows that the poor were more likely to build a brick, stone or limestone pucca house rather than a concrete one.

Pucca houses for everyone does not mean big houses for everyone

The difference in the proportion of concrete houses among pucca houses suggests that despite the higher affordability of a pucca house, the rich still own better houses. This is reflected in the size of the first-ever houses too. The top 20% richest households have significantly bigger houses than the 20% just below them, who have much bigger houses than the bottom 40%.

How were first-ever houses financed?

The survey only asked respondents to pick one of four sources that financed most of the construction for a first-ever house: ‘bank’, ‘private finance’ (such as a Non-Banking Financial Company), ‘own finance’, and ‘any other source’. The survey shows that for 35% of the households (the number is similar for both rural and urban areas), their own money was the biggest source of finance. To be sure, in urban areas, banks were the biggest source for most households (42%). In rural areas, ‘any other source’ was the biggest source for most households (40%). It is possible that some of this ‘any other source’ category was PMAY (the Pradhan Mantri Awas Yojana) or that PMAY was the second biggest source (it does not necessarily fund the entire amount of construction), the survey does not allow one to check for this.

PMAY awareness was higher among those who built houses

While the survey does not give a direct indication of how PMAY has helped in construction of new houses, it does suggest that those constructing houses are familiar with the scheme. While around two-thirds of the households had a member aware of the scheme, this proportion rises sharply to 79% among those who have built houses since 2014. This number is even bigger among scheduled tribe and scheduled caste households (especially the poorest among them) which are prioritised under the scheme. This high intersection of new houses with PMAY awareness suggests the scheme played a role in delivering a basic pucca house to disadvantaged demographic groups.