India is part of a global trend that is advancing towards an increasing urbanisation, according to which more than half of the world's population is living in towns and cities. India has a total population of 1,027 million as accounted by the 2001 census, out of which 27.8 percent live in urban areas. The span of ten years between 1991 and 2001 has showed a steady increase of 2.1 percent in the proportion of urban population in the country.
It is noteworthy that the contribution of urban sector to Gross Domestic Product (GDP) is currently expected to be in the range of 50-60 percent. In this context, enhancing the productivity of urban areas is now central to the policy pronouncements of the Ministry of Urban Development. Cities hold tremendous potential as engines of economic and social development, creating jobs and generating wealth through economies of considerable scale. They need to be sustained and augmented through high urban productivity for a country's economic growth. National economic growth and poverty reduction efforts will be increasingly determined by the productivity of these cities and towns. For Indian cities to become growth oriented and productive, it is essential to achieve a world class urban system, which in turn depends on attaining efficiency and equity in the delivery and financing of urban infrastructure.
After 1950, the Government of India formulated ten five year plans aimed towards housing and urban development, which led to the launch of Urban Poverty and Alleviation Programme of Nehru Rojgar Yojana (NRY). These plans laid emphasis on institution building and on construction of houses for government employees and weaker sections. The Industrial Housing Scheme was widened to cover all workers. As a follow-up of the Global Shelter Strategy (GSS), National Housing Policy (NHP ) was announced in 1988, whose long term goal was to eradicate the problem of lack of housing, improve the housing conditions of the inadequately housed, and provide a minimum level of basic services and amenities to all. The role of Government was conceived, as a provider for the poorest and vulnerable sections, and as a facilitator for other income groups and private sector by the removal of constraints and the increased supply of land and services.