India, World Bank may ink $500 million deal for rural housing project

The World Bank is in discussions with the Union government to provide nearly $500 million in funding for the Sustainable Housing Integrated Efficient Living and Disaster-Resilience (SHIELD) initiative under the Pradhan Mantri Awas Yojana-Gramin (PMAY-G), three officials said. The project aims to develop climate-adaptable and heat-resilient rural housing. 

“The goal is to raise awareness and ensure proper housing design. There are active and passive measures to mitigate heat, so we need to ensure the houses we build meet minimum standards and incorporate new materials. While we have an existing system, the broader idea is to understand best practices from other countries. These houses, to be built over the next five years, will be heat- and climate-resilient,” a government official said. 

On the project’s capital expenditure, a World Bank executive said, “The proposed loan from the World Bank is $500 million for the entire programme over five years.” 

The initiative comes as rural communities face increasing heat stress, particularly during peak summer months. Many lack access to air conditioning, worsening the impact. This year, states such as Jharkhand, Maharashtra, Karnataka, Telangana, West Bengal, and Odisha, are already experiencing heatwaves, with temperatures exceeding 40°C. In 2024, India recorded 536 heatwave days — the highest since 2010, when there were 578 such days— according to the India Meteorological Department. 

 

Last August, Prime Minister Narendra Modi had approved the Ministry of Rural Development’s proposal to implement PMAY-G from 2024-25 to 2028-29. The plan entails constructing an additional 20 million houses with a budget of ₹3.06 trillion. First introduced in 2016, PMAY-G aims to improve access to affordable housing, raise living standards, and support social and economic development in rural India. 

“SHIELD is designed to make rural housing cooler, more energy-efficient, and more disaster-resilient,” another government official said. “We are integrating climate-adaptive designs and energy-efficient technologies into new housing construction while also improving access to affordable credit so families can invest in cooling solutions without excessive financial strain.” 

Queries sent to spokespersons of the Ministries of Rural Development, Power, Finance, and New and Renewable Energy, as well as the World Bank’s country head, remained unanswered until the time of going to press. The government is also considering linking PMAY-G with its flagship rooftop solar scheme, the Pradhan Mantri Suryoday Yojana, to enhance local resilience, the official added. The two officials said discussions on the project have been ongoing for a year and now await approval from the Ministry of Finance. 

A World Bank executive highlighted a shift in focus for SHIELD. “Previously, the emphasis was on volume — constructing as many houses as possible. For the first time, the priority is the comfort of those living in these homes. The government is now involving us to ensure housing is built with thermal comfort and disaster resilience in mind, making these homes safer from earthquakes and floods,” the executive said. 

While the Centre has its own system, the World Bank is being brought in to provide a global perspective, the first official said.

 

“We already have a system for rural housing. Initially, we collaborated with the Central Building Research Institute in Roorkee, the Indian Institute of Technology Delhi, and the United Nations Development Programme to design houses using locally available materials while considering cultural factors. Over 100 designs exist. However, we lack insight into international practices, and the World Bank’s role is to help address this. The Ministries of Environment, Forest and Climate Change, Power, and New and Renewable Energy are also being brought into the discussion,” the official said.

 

Dipa Bagai, country head of NRDC India, a US-based climate non-profit, pointed out that only 9–10 per cent of India’s population has access to air conditioning.

 

“How will the remaining 90 per cent live and work? Their productivity and health — and ultimately, the economy — will be affected. All stakeholders must collaborate and consider long-term solutions, as there could be unintended consequences,” Bagai said.