A Crisil Research report says affordable housing at attractive locations (near CBD areas) is not possible because of the high land prices. The mid-income category has the Hobson's choice of purchasing a house in the suburbs or on the outskirts.

To make living in the suburbs and commuting to city for work a viable option, state governments and developers must collaborate to build the necessary infrastructure.

"For developers, an important challenge is to generate an awareness among policy makers on the vitality of the sector. In fact, it should not be seen in isolation. Housing construction should be classified as urban infrastructure. When a residential township is developed, there is a simultaneous development of roads, sewage, hospitals and educational institutions," K P Singh, chairman of DLF group had told FC Estate.

"The year 2009 will be the year of affordable housing. This will be an important focus area for DLF."

Developers stress that the government should provide a greater impetus to those involved in the segment.

"Specific tax concessions should be given to those involved in affordable homes, by which I mean homes costing up to Rs 20 lakh.," says Ravi Ramu, finance director of Bangalore-based Puravankara Projects.

"The industry believes that the central government has the potential to play the role of the steam engine based on the fact that real estate sector alone can add to the GDP by 1-1.5% if efforts are made to reduce the shortage of urban housing while moving towards a slum-free urban India. We are asking for financial incentives for encouraging affordable mass housing in 300- 600 sq ft and up to 1,000 sq ft by providing subsidy in interest payable by home buyer," says Santosh Kumar Rungta, president of Confederation of Real Estate Developers Associations of India (Credai).