How One Man Is Changing the Face of Housing in Rural India


Moin Qazi – TRANSCEND Media Service

“We have a dream for 2022. The poorest of poor should have a house of his own. And that house must be equipped with electricity, water and other facilities. There should be hospitals and schools in the neighbourhood.”
— Prime Minister Narendra Modi

26 Jun 2017 – Historians will tell you that an explosion of creativity occurs the moment the world starts complaining that there is nothing left to invent or that the search for solutions to complex problems has come to an end.

This explosion is fate’s way of reminding us that there is always something just over the horizon of knowledge. Social entrepreneurs are now using their talent to bring lasting solutions to several entrenched social problems at a time when the world has never needed them more.

One of the most challenging problems of our times is homelessness. A 2013 report Housing Microfinance in India: Benchmarking the Status by ACCESS-ASSIST found that in India, the total housing shortage is 42.69 million units in rural areas.

Many rural households are largely primitive in nature and are not built to withhold extreme weather conditions, particularly heavy rainfall. As many are constructed with mud and other non-durable materials, many families constantly have to repair their home which takes a large strain on finances. Furthermore, the sanitation conditions are very low in these rural communities where there is no sewage and families live within extremely small confines.

While we have been able to fight poverty relentlessly and continue to record improvements, homelessness remains a big challenge. The key constraint in providing shelter is that people do not have proof of being owners of the piece of land on which they live. This keeps them deprived of so many basic amenities. Even a small plot can lift a family out of extreme poverty.

The United Nations estimates that more than 70 percent of the world’s population lives without any formal acknowledgement of ownership of their land. That is both a human and an economic problem.

While many villagers own their homes, which they likely built themselves, they rarely own the piece of land which holds their dwelling. Little else is as critical to a family’s quality of life as a healthy, safe living space. A decent habitat and shelter environment for the poorer sections of the society can not only contribute towards their well being and real asset creation, but also catalyse overall economic growth.

Priority for housing is higher than education and health. Sustainable and inclusive housing solutions, indeed, could bolster large economic growth quickly and efficiently. Hernando de Soto’s 2000 book, The Mystery of Capital makes a startling revelation. “The hour of capitalism’s greatest triumph” declares the famed Peruvian economist “is in the eyes of four-fifths of humanity, its hour of crisis”.

De Soto explains that for many people in the developing world, the land on which they live is their only asset. If that property is not publicly recognised as belonging to them, they lose out – missing out on some of their highly deserved social benefits. When people have secure land, they invest in improvement projects, work more hours without the fear of land theft, and are more likely to take out loans using their new property as security.

Lack of shelter is the locus that continues to breed innumerable problems for those without a roof on their head – problems in the areas of health, education, family stability, livelihood and self-esteem. It also makes them vulnerable to so many natural hazards like cyclones, floods and fire and causes annual setbacks to their economic condition and saving ability..

The housing reforms introduced by the government mark a new epoch in Indian polity and may turn out to be Narendra Modi’s greatest achievement yet. The ambitious “Housing for All” programme, launched in June 2015, aims to build 20 million urban homes and 30 million rural houses by 2022.  Modi’s initiatives have made housing finance emerge as the next frontier in the financial services spectrum.

India’s housing space, particularly the lower tier in the economic pyramid, has remained largely unaddressed. Lack of proper documentation is a major obstacle as many families may not have had it for generations. The process of obtaining and putting it in place is an impossible mission to accomplish without nimble titling, mortgaging and a financing system. While many villagers own their homes, which they likely built themselves, they rarely own the piece of land which holds their dwelling..

These households cannot provide mortgage-able collateral for a loan and third-party documentation of their earnings. The formal financial sector is unable to serve them. Excluded from formal financing, many households delay or are unable to make investments in housing. Once titled, they could obtain access to several public benefits

This is a major obstacle as many families may not have had documentation for generations and the process of obtaining and putting it in place is an impossible mission to accomplish without a nimble titling, mortgaging and financing system.

However, one such social entrepreneur, A Ramesh Kumar, who had successfully championed new approaches for addressing the problems of low income households in his earlier innings as a banker, decided to solve the puzzle the same way he recontoured the microfinance programme in central India.

Maharashtra had proved an infertile territory for microfinance and ranked low in terms of visibility on the microfinance map before Kumar became its new shepherd. Swarna Pragati is essentially an extension of Kumar’s journey towards the larger goal of empowerment of low-income population, particularly the women among them.

In 2004, Kumar introduced several revolutionary ideas in the microfinance space of banks which had self help groups as their primary units. State Bank of India, whose western operations he headed, achieved 970 per cent growth in self help groups in Maharashtra, which became the new Mecca of microfinance.

His innovations had a very long term impact. Today, according to the data of MFIN, the main self regulating body of microfinance, Maharashtra has the largest number of microfinance institutions (MFIs).

In 2005, the National Bank of Agriculture and Rural Development (NABARD) invited Kumar to be chairman on the National Committee of Habitat whose focus was to address the deficiencies in the rural housing finance. He contributed to the development of a report resulted in the National Rural Habitat Policy for India.

After seeing how many good ideas, including many recommendations from the National Rural Habitat Policy for India, did not come into play, it made Kumar think about his own approach. In 2009, Kumar started Swarna Pragati to address the market gap he was consistently seeing around access to housing finance in rural communities.

Kumar’s DNA has the twin strands that are essential for any social revolution: ideas and entrepreneurship. As the saying goes: “Ideas are worthless until you get them out of your head.”Many people have great ideas, but they are afraid to fail, so they don’t try. Kumar had the courage to trust  his instincts   . And that made all the difference.

In 1993, the Panchayat Raj Act endowed the local village panchayats with functions of local governance. A number of visionary entrepreneurs spotted in these institutions the building blocks for innovations In India. Although the Panchayat Raj Act was driven by a vision of a new enterprising and grassroots driven rural India, scepticism prevailed on whether these institutions could be trusted to govern themselves.

Policy makers have their own cognitive biases, which will induce them to design imperfect interventions even if they mean well. Social, political and legal scientists sparred on competence of these panchayats. But a Supreme Court judgment gave a new identity to them. Kumar was already grappling with a posse of   possibilities for addressing the baffling conundrum of mortgages for this section of the population who lacked perfect legal titles. The judicial verdict was itself a creative masterpiece and a great milestone in judicial activism. It gave a powerful nudge and its powerful ripples of wisdom opened the doors for immense creative possibilities.

Incidentally, in 1995, the Supreme Court wrote a landmark judgment in Chameli Singh vs State of UP, emphasising the centrality of the right to housing as the precursor to all rights. Successive judgments on similar matters in the Supreme Court reiterate similar concerns.

Interestingly, the court, combining the obligations of the State under the Right to Life, the Right to Residence and Settlement under Article 19(1) (e) and international obligations, gave a very progressive interpretation to the Directive Principles and held that:

“The right to shelter when used as an essential requisite to the right to live should be deemed to have been guaranteed as a fundamental right. As is enjoined in the Directive Principles, the State should be deemed to be under an obligation to secure for its citizens, of course, subject to its economic budgeting.”

The court e therefore succeeded in formulating a distinct right to housing and founded it in the aim of the Indian Constitution in securing economic and social justice as stated in the Preamble and held that:

“Want of decent residence, therefore, frustrates the very object of the constitutional animation of the right to equality, economic justice, fundamental right to residence, dignity of person and the right to live itself. To bring the Dalits and tribes into the mainstream of national life, providing these facilities and opportunities to them is the duty of the State as fundamental to their basic human and constitutional rights.”

This judgment and the overall developments on housing rights that followed  it and the  new rejuvenation of Panchayat Raj institutions opened a new vistas of innovation and policy reform.  They became major drivers and motivators reforms and also spurred entrepreneurs on their innovative trail.

In 2009, Kumar registered Swarna Pragati Housing Finance and came up with a new model of housing finance based on empowering rural communities .Kumar spotted in panchayat raj(Village Government) institutions the building blocks for innovations in housing .He build linkages between self help groups (SHGs), gram panchayats (village councils)and  other government departments and service providers  to design a simple but effective and strong ecosystem for housing finance and mortgage  for lower tier of the economic pyramid

Typically, in rural India, villagers are granted land from the government or live on land passed down to them by ancestors. These are known as “para-legal titles”. Many of them may not have a full land title but possess a documentary right to ownership, such as tax receipts and a legal protection from eviction.

Several state governments in India have provided a degree of tenure security to poor households, which grant residents of unauthorised settlement specific period licences to their land or an official assurance that the user will not be forced to vacate the property and evidence that usual and customary local practices support this assurance. This security amounts to “presumed ownership”.

Kumar build linkages between self help groups (SHGs), gram panchayats and  other government agencies  to design a simple but effective and strong ecosystem for housing finance and mortgage  for the lowere tier of the economic pyramid.

The Swarna Pragati’ process of titling, mortgaging and financing   has now become a widely recognised and accepted practice with grassroots bureaucracy et al. The key grid is the gram sabha (village assembly), a constitutionally mandated bottom tier of governance. The local adult population which comprises the gram sabha endorses   the titles and mortgages and  certifies the income  of the potential borrowers of Swarna Pragati. This community titling and participatory screening has paralegal sanctity and is a cost effective l and progressive way of building tenure documents that carries legitimacy and weight with local institutions.

Thus, while clear legal titles have to be the ultimate goal, one could look at interim regularisation with much less time and administrative effort. Swarna Pragati’s community titling is a powerful and progressive way of building tenure documents that carry legitimacy and weight with several basic service providers.

Kumar is working to get the buy-in of regulators for this alternate titling and mortgaging system. His model is in a way enabling gram panchayats to become vibrant units in financial, legal and social democracy.

The model has also demonstrated what these grassroots institutions can do if their potential is creatively unleashed to address some of the toughest challenges – housing is certainly the topmost on the list. The revenues of gram panchayats which partner with Swarna Pragati receive an automatic boost because the villagers have to pay all the taxies due to them in order to qualify for the company’s housing finance.

“The best way to predict the future is to create it,” says Kumar. He has always sought to remake the world around him instead of becoming part of the blame game brigade.

“We have to replace signs and protests with individual actions” Kumar asserts. Kumar’s model has a strong gender window. It is in keeping with his personal philosophy that gender perspective needs to be woven into any social as well as business intervention if want to have a wider and deeper impact.

The loans are mostly to women and so they legal entities in the mortgage process which gives them an implied share in the ownership of the house. This has motivated several households to register their plots jointly with their wives.

Kumar has introduced multiple innovations in the model which mitigate problems both for the financiers and the clients.

First, the model practices modular or incremental housing with both construction and the finance broken into numerous components namely, roof, flooring, kitchen, toilet, well, work shed et al, and financing is done for one or more modules at a time keeping in view the psychology of seeking short term loans with affordable repayment installments.

Second, the focus is on habitat and hence work-sheds, wells for water supply, toilets and renewable energy sources. Third, self help groups (SHGs) and joint liability groups are used as the delivery models because they save costs and risks for the financiers.

Swarna Pragati has a specialised finance product for sanitation solutions that helps to save time, improve health, and provide safety, privacy and dignity to women. Kumar’s ground team is also creating the cultural shift that will ensure that once the toilets are built, they are used by everyone,

Modi’s flagship sanitation programme ,Swachh Bharat  Abhiyan, is experiencing an upsurge primarily on account of Modi’s personal priority . It was a dismal picture that Modi saw all around when he initiated it.57 per cent of Indians defecated in the open compared to five per cent in Bangladesh.

Modi’s   housing and sanitation programmes, although having the potential of a game changer, are   mired in thickets of bureaucratic redtapism. A reform in land policies is an important prerequisite and the policy planners of the government can use the lessons of the likes of Swarna Pragati as helpful markers.

Changing governance, raising money and designing new policies  all take time and the  stresses on account of inadequate housing and sanitation are mounting fast .it will be well worth if the efforts and talents of  the private and public sector are  synergized through creative partnerships and fruitful  linkages. Corporate support has been commandeered by Modi in his mission and business has enthusiastically partnered with the government.  The Indian business womb is pregnant with entrepreneurship and start-ups and many like Swarna Pragati have been generous in their support and the outcome of their efforts have been truly transformative..

Kumar’s experiment with panchayat raj institutions is just one creative way of harnessing existing institutions and laws to forge solutions for intractable problems. Kumar is now a shaper of the entire ecosystem for rural housing finance. And he knows his model will light up the path for many others. More than two decades after the panchayats became realities and with mountains of data and research studies piling up, there is still lingering scepticism about the efficacy and potential of these panchayats.

There should be no reason for it, but if there is, the Swarna Pragati model and the vision of its architect, Ramesh Kumar are enough proof of the potential creativity and wisdom that our early leaders saw in these institutions. The model has been named by NITI Aayog as one of 20 Mission Driven Social Impact Innovations in the country.  It is just one of the many creative ways panchayats can become harbingers of a larger revolution.

A lot of good programmes got their start when one individual looked at a familiar landscape in a fresh way. These creative and passionate individuals saw possibilities where others saw only hopelessness, and imagined a way forward when others saw none. What they did was not something too revolutionary to supplant the whole system. They simply changed the fundamental approach to solving problems, and the outcomes have been truly revolutionary .One inspiring step has a tendency to raise the sense of possibility in others.

We increasingly have the tools; but we need to summon the will the way game changers like Kumar are doing.

People like him have shown there are solutions if we think out of the box. And don’t accept limits to how the world works.


Moin Qazi, PhD Economics, PhD English, is a member of the TRANSCEND Network for Peace, Development and Environment and author of the bestselling book, Village Diary of a Heretic Banker. He has worked in the development finance sector for almost four decades in India and can be reached at


This article originally appeared on Transcend Media Service (TMS) on 26 Jun 2017.

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