Paper

Low Income Shelter Finance in Slum Upgrading: India Urban Initiatives

Models of financing slum upgrading in India
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This report summarizes findings from the USAID-sponsored project on models of financing for slum upgrading in India, undertaken on behalf of SPARC, an NGO and the National Housing Bank of India (NHB).

The report identifies and addresses barriers to slum upgrading in India such as lack of finance for low-income housing, and lack of participation of banks in construction finance in slum projects. It suggests credit enhancements to leverage subsidies and household contribution. The report identifies a need for:

  • Pilot projects to demonstrate comprehensive slum upgrading models;
  • Formation of a slum upgrading consortium;
  • Housing subsidies and microfinance for housing loans;
  • MFIs, banks and foundations to enter into low-income finance in urban settings;
  • Credit enhancement policy in slum upgrading.

The Government of India is devoting major resources to slum upgrading, yet progress has been slow. Recommendations include:

  • Forming a public/private partnership for shelter development in slum upgrading;
  • Developing bank/MFI/NGO partner models in financing for slum upgrading;
  • Developing credit enhancement mechanisms;
  • Undertaking household surveys;
  • Developing and testing savings programs in slum upgrading projects;
  • Including income generation projects in slum upgrading projects.