Maharashtra, India's richest state, needs over $200 billion to house its poorest

MUMBAI (Reuters) - Maharashtra, India's wealthiest and most urbanised state, needs more than $200 billion in fresh investment by 2022 if it is to solve a chronic shortage of affordable housing in its fast-growing cities, a report by consultants KPMG found.

India's urban population is set to roughly double by 2050, and that means finding jobs and inexpensive city homes has become a major headache for the country's politicians.

According to the 2011 census, Maharashtra already has India's highest urban population, most of it concentrated in five cities including Greater Mumbai, which is home to 23 million and one of the most densely populated cities on earth.

Activists have long complained that, despite a surplus of luxury homes lying unsold, Mumbai and other cities have a severe shortage of affordable housing. The issue has been taken up by nationalist groups, such as right-wing Hindu party Shiv Sena, appealing to Mumbai's working classes.

"Where are the homes for Mumbaikars?" asked Subhash Desai, Maharashtra's industries minister and a Shiv Sena leader.

"They are industrial workers, office-goers, drivers, security guards, domestic help. We make them (live) two hours away," he told the audience at the KPMG report presentation.

Roughly half of Mumbai's households earn less than 20,000 rupees a month, putting even the average price of government-built affordable homes in the city - just under $24,000 - out of reach.

The KPMG report published on Tuesday found that, in urban areas alone, Maharashtra would need 5 million new homes by 2022, adding about 50 percent to its current housing stock. Most of that - an estimated 70 percent - would need to be affordable.

In total, across rural and urban areas, Maharashtra will need to add 10 million new homes by 2022 to end the shortage.

The report warned the state would need to redevelop its overcrowded cities, but also to build new ones to accommodate an extra 1 million new city dwellers a year.

"One of the key challenges is how do you create new urban growth centres?" said Arvind Mahajan, partner and head of infrastructure and government services at KPMG in Mumbai.

New cities on the outskirts of Mumbai have been criticised for failing to create jobs, instead adding commuters.

Maharashtra's urban planning woes hit headlines in India earlier this week, after Mumbai was forced to scrap a development plan criticised for failing to consider heritage buildings, open spaces, slum dwellers and affordable housing.

(Reporting by Clara Ferreira Marques; Editing by Alex Richardson)