Even after concerted efforts made by central and state governments, housing shortage has assumed frightening proportions. It is estimated that there is a housing shortage of nearly 25 million dwelling units affecting 67 million households. Most of this housing shortage pertains to low income families. Deploying the political economy approach, this paper attempts to comprehend why housing for low income families could not be provided. It is contented that in tune with the neoliberal project, the state has been gradually withdrawing from the provision of public goods including housing.