India has a severe housing shortage: in the urban sector alone, the demand-supply gap is about 17 million units. Over 90 percent of the housing demand is from low-income families, who as a consequence are most directly affected by unhealthy and unacceptable living standards in India's urban centers. The slums prevalent in many Indian cities are evidence of the shortage of low cost housing. With the number of slum residents increasing by between 9 percent to 10 percent each year, there is an urgent need for the government to find a solution to this problem. Women and children, who proportionally spend more time at home, are the ones most adversely affected by poor living conditions caused by the lack of potable water, sanitation facilities, proper solid waste disposal, etc. Upward of 25 percent of slum residents are home-based workers, mostly women. For these families, access to decent living conditions and basic urban infrastructure and services is important not only for their health and welfare, but also for their ability to remain economically productive.

In response to the housing shortage, the government has encouraged the establishment of market-oriented housing finance institutions (HFIs) and poverty-targeting community-based financial institutions (CFIs). There are also private housing financing companies, which target middle-income households, and some NGOs and CBOs which assist low-income communities to organize thrift and credit societies in order to provide housing finance to the poor. Given the limited availability of housing finance through formal HFIs, intermediaries such as CFIs, NGOs, public and private enterprises, as well as state and local bodies, are important conduits for channeling housing finance to low-income households.

The Housing Finance Project in India II builds on the earlier Housing Finance Project (1997) to support all of these diverse housing finance channels. It promotes on-lending by HFIs to community-based CFIs and NGOs/CBOs to provide market-based housing finance to low-income households, which typically have had to rely on their own meager savings and limited family assets in order to improve their housing conditions.

The major objectives of the current project are to

1. increase low-income households' access to market-based housing finance by increasing and broadening the finance channels of both formal and informal HFIs

2. reduce poverty by improving infrastructure and services in slum areas and financing innovative low-income housing and workplace subprojects

3. expand the lending operation of HFCs to include a greater proportion of loans to low-income households

The project consists of three components:

1. lending to low-income households through intermediaries, including CFIs, NGOs, public and private enterprises, and state and local bodies

2. poverty reduction and slum improvements subprojects

3. lending to low-income households through Housing Finance Institutions (HFIs)

The first Housing Finance Project highlighted the importance of establishing minimum on-lending targets for each of the different lending channels and this has been maintained in the current projects.

More than 100 CFIs and NGOs have been identified as potential sub-borrowers under the project. The main project beneficiaries of CFI and NGO lending are low-income households with monthly incomes of Rs7,000 or less. The majority of these households are able to afford housing loan repayments of between Rs250 to Rs500 per month. Other beneficiaries of this component are low-income employers from public and private sector enterprises, and state and local government workers, who can use these bodies and enterprises as intermediaries for accessing home financing.

Slum residents and home workers will be the main beneficiaries of the poverty reduction subprojects. This project component builds on two approaches initially piloted in the first Housing Finance Project, that is, 'slum networking' and home workplace schemes. Slum networking is a joint effort of government, private industries, NGOs/CBOs and residents towards slum improvement. The approach focuses on improving essential services such as water supply, drainage, sanitation, access and solid waste management. Slum networking also includes a guarantee of tenure, which provides residents with the necessary assurance to improve their housing and contribute financial resources and labor to community-wide improvements. Under the slum networking component, the project will also finance improvements in selected urban slums. Improvements will focus on access to clean water, sanitation and latrine construction, drainage works and the disposal of solid waste. The active involvement of local communities in the conception, implementation, financing and maintenance of slum networking projects will be prerequisite to any loan.

Home workplace schemes are designed to provide financial resources to low-income households that operate cottage industries from their houses. The money will be provided for the purpose of improving their premises thus increasing their income potential. Funds are provided directly to handloom and handicraft cooperative societies, as well as various public and private companies that out-source their operations, such as beedi (tobacco) rolling, weaving, pottery, brass works, footwear, and so on. Female and male members or out-workers can approach these organizations for loans to improve their home workplace. Beneficiaries undertake not to sell or rent their home workplace for at least 10 years.

Women from low-income households constitute major project beneficiaries. Women and children are particularly affected by poor housing conditions and the lack of clean water and proper sanitation. Better living conditions, and improved community services and facilities will reduce the vulnerability of women and children to disease, diminish the burden of household tasks and provide more time for income-generating activities.

Aside from the general improvements in living conditions that will benefit men and women, the project includes a number of innovative gender components designed to benefit women. Women and Housing Loans

Women will constitute the majority of borrowers from CFIs and NGOs for housing loans under the housing finance component. Many of the organizations identified predominantly lend to women, such as the Self-employed Women's Association (SEWA) Bank and Friends of Women's World Banking. Average loans of Rs35,000 with interest rates ranging from 15 to 18 percent per annum for a term of four years will be made available to women. This approach is especially important for female-headed households as families rarely acquire assets in the name of female family members. In general, lending to women will raise the status of these women in their households in that it enables them to play a major role in mobilizing household financial resources.

Women will also be the major beneficiaries of the home workplace improvement subproject. It is estimated that 20 to 30 million people across India are home-based workers; 80 percent are women. The creation of assets such as shops, carts, lands or houses in women's names is crucial to improving low-income women's socioeconomic status. The Home Workplace subproject also supports capacity building of borrowers through skills development training, assistance in identifying sources of raw materials, provision of better tools and equipment, and assistance in establishing links to markets. Given the predominance of women in this subproject component, most of these training opportunities will also be extended to women.

The project asks that NGOs and CBOs recruited to implement slum improvement projects actively encourage the participation of women in their activities. Particular focus will be on gaining input and cooperation from women, women's organizations and women's self-help groups in order to guarantee the communities' financial and labor contribution. Women's direct participation in determining the housing and infrastructure priorities of their community will in turn increase slum women's confidence and capacity to participate in community activities.

From the point of view of the project officer who processed the loan mission, the involvement of a gender specialist during project inception, design and implementation is critical to not only this project but all projects' success. During loan appraisal and project inception missions, for example, project officers have to attend to great number of issues, all competing for attention. Under these circumstances there is a risk that gender issues will not be give the care they warrant. Implementation is a particularly crucial time for gender input as "the beginning is really at implementation, not at design".

Areas where a gender specialist can assist include:

• During the Project Inception Mission to provide concrete suggestions and targets regarding women's participation across all project components.

• During consultation with local women's organizations (now that the project is 'real').

• In networking with the local communities in order to build support for the project.

• In providing more grounded sets of likely barriers and solutions.

• In preparing a 3-to-4 page GAD Action Plan, that serves as a detailed checklist to project consultants on inception, implementation and monitoring.

• In close discussion with consultants to ensure that they do not go off on a tangent, and/or fail to attend to gender issues in the project.