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Industrial Housing for Workers
Context:
NITI Aayog released a report outlining a proposal to address the growing need for affordable housing for industrial workers.
More on News:
- The plan suggests a scheme to build mega housing projects near manufacturing plants, offering rental accommodations in dormitory-style setups for as low as Rs 3,000 per month.
- This initiative is part of the broader vision articulated by the Union Finance Minister in her budget speech for the financial year 2025, which focused on rental housing for industrial workers through a public-private partnership (PPP) model.
The NITI Aayog report highlights that China’s manufacturing success was not only driven by industrial estates but also by the development of housing for workers, pointing to the need for integrated planning in India. By improving housing availability, the scheme aims to address the challenges of workforce retention and stability, creating a more attractive environment for workers in India’s manufacturing hubs.
Objective:
- The initiative is aimed at reducing commuting costs and improving worker safety by providing accommodation near manufacturing hubs.
- The scheme also intends to address workforce instability, high attrition rates, and low productivity, which are often caused by inadequate housing.
Key Features of the Scheme:
- The NITI Aayog proposal suggests providing Viability Gap Funding (VGF) of up to 40% of the total project cost (excluding land) for the development of these housing projects.
- This VGF will be jointly provided by the Department of Economic Affairs (DEA) (20%) and the sponsoring Ministry (10%), with additional contributions from state governments.
- The VGF will also be used for upgrading existing brownfield worker accommodation.
Impact on Rent:
- According to the Niti Aayog report, with zoning reforms and applying residential tariffs for utilities like electricity, the effective rent per bed for migrant workers could be as low as Rs 3,900.
- With the central government’s 30% VGF contribution, rents could fall to Rs 3,100, and further corporate contributions could reduce it to Rs 2,000 per bed per month.
Significance:
- The manufacturing sector in India heavily relies on migrant workers. However, the lack of proper housing has made it challenging to retain workers, especially women, and limits migration for better job opportunities.
- It will also boost industrial growth by addressing the accommodation dilemma, which is crucial for the development of manufacturing hubs in India.
- Industry representatives at the conference proposed that contributions for worker accommodation could be treated as Corporate Social Responsibility (CSR) expenditure.
