Affirmative action to compensate discrimination has been the agenda of public policies towards the socially disadvantaged communities in India. This article examines why the scheduled castes/scheduled tribes (Dalits) and the largest religious minority (Muslims) have lower living standards, as measured by floor area and facility index, relative to the mainstream population. The econometric estimates are based on unit record data, over 54,000 households’ survey from urban India. This article estimates living standards using regression analysis and measures gaps using Oaxaca decomposition. Results show that causes for the low living standards of the Muslims are similar to that of the Dalits. This study concludes that income improvement strategies and enhancement of occupational hierarchy would be one of the recommended strategies to reduce housing poverty and disparity among the minority and the Dalits. In addition, improvement of minority and Dalit concentrated slum settlements would be also significantly helpful to reduce housing inequality.