New Delhi: A new report highlights the critical need for large-scale, affordable worker housing to unlock India’s manufacturing potential, paving the way for economic growth and job creation.

India’s manufacturing ambitions face a pivotal challenge: a lack of proper worker housing. A report by the New-Delhi-based Foundation for Economic Development has emphasized the importance of treating worker accommodation as essential infrastructure to drive the manufacturing sector’s growth. According to the report, creating dense, large-scale housing solutions could generate significant public returns by addressing a major gap in industrial development.

Manufacturing: A Catalyst for Employment and Productivity

The report underscores that India’s foremost challenge is generating well-paying jobs to transition its workforce from low-productivity agricultural roles to higher-value employment. Manufacturing, as the report states, is the only sector capable of absorbing relatively unskilled labor at the scale needed for sustained economic growth.

Jobs in manufacturing and services, the report highlights, are three to six times more productive than agricultural work. These high-productivity roles are predominantly found in large industrial clusters, where economies of scale and industry concentration drive efficiency. However, these clusters often face a labor shortage, as nearby towns and villages fail to meet the high demand.

The Informal Reality of Worker Housing

Currently, worker housing in India remains an informal and chaotic arrangement. Many workers live in unauthorized slums or overcrowded multi-story settlements that lack basic amenities. This, the report argues, hampers India’s ability to develop employment-intensive manufacturing clusters.

“Worker accommodation must be recognized as a vital element of industrial infrastructure,” the report states, adding that proactive measures are required to address the housing gap.

Policy Recommendations for Worker Housing

To tackle this challenge, the report presents a series of actionable recommendations:

Mixed Land Zoning: Allowing the construction of worker housing in all zones without restrictions by implementing mixed land zoning regulations.

Liberalized Building Bye-Laws: Worker housing should follow residential building norms, which can be further simplified to reduce land costs. Prior government approvals could be replaced with systems of third-party certification, insurance, and self-certification by architects.

Cost Reductions through GST and Tax Reforms: Worker housing should be exempted from GST, and property tax, electricity, and water tariffs should be charged at residential rates to make such projects viable.

Government Support for Worker Housing

The report also suggests robust financial support from the government to catalyze worker housing projects. Proposed measures include:

1. Subsidy Schemes: Government-backed schemes to lower the cost of setting up worker housing.
2. Rental Vouchers: Workers could receive rental vouchers to offset housing costs, ensuring affordable living conditions for industrial employees.

A Roadmap to Unlock India’s Potential

The Foundation for Economic Development argues that addressing the worker housing challenge could create significant coordination benefits for stakeholders, boosting the manufacturing sector and, by extension, India’s economic growth.

“Manufacturing is key to creating jobs and achieving sustained economic growth. To unlock its potential, worker housing must be prioritized as an integral part of infrastructure development,” the report concludes.

India’s journey to becoming a global manufacturing powerhouse is contingent on its ability to solve the worker housing puzzle. As policymakers weigh the report’s recommendations, the focus will be on crafting policies that strike a balance between industrial growth and worker welfare.