Housing is an important economic activity besides being a basic necessity. As part of the construction industry, which accounts for more than 50 per cent of the development outlays, housing has emerged as a major sector of economy having backward and forward linkages with almost all other sectors. 
The Central Government adopted the National Housing and Habitat Policy in July 1998. Its thrust is on creation of an enabling environment for an all-round growth of the housing sector. For the vulnerable and weaker sections of the society, the Government is playing the role of direct provider. A Centrally sponsored scheme called Valmiki Ambedkar Awas Yojana (VAMBAY) was launched last year with a view to ameliorating the conditions of the urban slum dwellers living below poverty line that have inadequate shelter. The scheme has the primary objective of facilitating the construction and upgradation of the dwelling units in the slum areas and to provide health and enabling urban environment through community toilets under Nirman Bharat Abhiyan, a component of the scheme. The scheme is being implemented through HUDCO. 
The response from the State/UT Governments to the scheme has been overwhelming. This is evident from the fact that against the Government allocation of Rs. 69 crore during 2001-2002, large demands from more than 16 States/UTs were received and an amount of Rs. 73.56 crore was finally released comprising an additional Rs. 4.56 crore made available out of the savings of the Department from other heads. During the current financial year, Central subsidy to the extent of Rs. 138.31 crore has so far been released out of the budget provision of Rs. 256.85 crore. This also includes a release of Rs. 26.37 crore to the Gujarat government in May 2002 for repairing or reconstruction of partially or completely damaged houses of the riot victims. Thus a total sum of Rs. 211.87 crore has so far been released since the inception of the scheme for construction of 1,06,038 dwelling units and 20,817 toilet seats. 
Another major initiative for the weaker sections is the Two Million Housing Programme. Though the programme is basically for the State sector housing schemes with financial assistance from HUDCO and other housing finance institutions (HFIs), banks and cooperative housing finance societies, the progress of the scheme is being monitored by the Ministry of Urban Development and Poverty Alleviation. The Two Million Housing Programme envisages addition of 20 lakh dwelling units every year out of which 7 lakh units are to be taken up in the urban areas and 13 lakh in the rural areas. Even though the Ministry of Urban Development and Poverty Alleviation is basically responsible for 7 lakh urban houses with a major portion (4 lakh houses) being financed by HUDCO, the Ministry has also asked HUDCO to finance 6 lakh rural houses under its ongoing programme. The progress of Two Million Housing Programme over the last four years, however, has not been upto the targeted level. For this the State governments and their designated agencies have to come forward in a big way. The State agencies have to work on professional lines and take action for removal of all constraints – legal, administrative and financial. They also need to improve their cost recovery system to ensure a sustainable housing programme.
Since the inception of the Two Million Housing Programme in 1998 and as of Nov.31, 2002 HUDCO had sanctioned loans worth Rs. 1,656.95 crore to enable construction of 18.30 lakh dwelling units. 
The Ministry of Urban Development and Poverty Alleviation is closely monitoring the implementation of the National Housing and Habitat Policy to ensure that each household has a roof over its head by 2010. 

Urban Sector Reforms
There can be no two opinions on the need for urban reforms to ensure a sustainable and orderly urban development. With a view to speeding up the process of urban reforms and taking it to a reasonable conclusion, the Urban Reforms Incentive Fund (URIF) has been conceptualized in the current year’s budget. While the operationalisation of the Fund is being finalized, it is proposed to initiate the process in major areas of urban reforms such as repeal of the Urban Land Ceiling and Regulation Act at the State level. Rationalization of Stamp Duty is also being done in phases to bring it down to no more than 5 per cent by the end of the Tenth Plan period. Reform of Rent Control Laws is being initiated to remove rent control so as to stimulate private investment in rental housing. Information technology is being introduced to simplify the processes of registration.
Reforms in Property Tax are also being sought so that it may become a major source of revenue for the urban local bodies. Double entry system of accounting is being introduced in urban local bodies besides the levy of reasonable user charges by the urban local bodies with the objective that full cost of O & M (Operation & Maintenance) is collected by the end of the Tenth Plan period.
The response of various States to carry out the reforms in these areas is quite encouraging. Many States have already initiated action in this regard. But few States are prepared to reduce the Stamp Duty to 5 per cent or below, due to feared revenue loss. The States have been advised to reduce the stamp duty gradually over the Tenth Plan period and simultaneously bring reforms in the property valuation system so as to make it more rational and scientific. 
With a view to ameliorating the living conditions of the urban poor, the Swarna Jayanti Shahri Rojgar Yojana (SJSRY) is being implemented as a Centrally- sponsored scheme for the benefit of urban poor on an all-India basis. This programme seeks to provide gainful employment to the urban unemployed or underemployed poor by encouraging them to set up self employment ventures by those who have read upto 9th standard and through provision of wage employment by utilizing their labour for construction of socially and the economically useful public assets. This programme is funded in the ratio of 75:25 between the Centre and the States.
Since the inception of the scheme Rs. 499.31 crore was released to the States/UTs till 2001-02. During 2002-2003, Rs. 100.74 crore has been tentatively allocated to the States/UTs. Out of this an amount of Rs. 60.37 crore (including Rs. 15 crore sanctioned to the Government of Gujarat for the benefit of the riot- affected persons) has so far been released to various States under this Scheme. 
Concerted efforts are being made by the Union Government and the States to provide basic amenities under various schemes/programmes in order to ameliorate the living conditions in urban slums. One such programme known as the National Slum Development Programme (NSDP) was launched at the national level by the Government in August 1996 to provide Additional Central Assistance (ACA) to the States for the development of urban slums. For the year 2002-2003, Rs. 365 crore has been allocated.