NITI Aayog releases report “S.A.F.E. Housing: Labour Housing Facility for Manufacturing Growth”. It highlights the critical role of safe, affordable, flexible and efficient housing for industrial workers.
NITI Aayog Report
- Objective of the Report: The report analyses the critical role of safe, affordable, flexible and efficient (S.A.F.E.) housing for industrial workers, which can help boost India’s manufacturing sector.
- It includes identification of key challenges, practical solutions and interventions required to enhance such housing facilities across the country.
Background
- In the Union Budget 2024-25, the Finance Minister emphasised the need for rental housing for industrial workers.
- The initiative will be implemented under the Public-Private Partnership (PPP) model with viability gap funding (VGF).
S.A.F.E. Housing Initiative
- Objective: The initiative is in line with India’s goal of increasing the GDP contribution of the manufacturing sector from 17% to 25% by 2047, along with schemes such as ‘Make in India’ and ‘Atmanirbhar Bharat’.
- Need: According to the Economic Survey 2023-24, India needs to create 7.85 million jobs every year by 2030, with the manufacturing sector contributing the most.
- The sector often relies on migrant workers, but lack of housing near industrial centres leads to high migration rates, low productivity, and instability in the workforce.
- Challenges for women: Lack of housing limits labour migration, especially for women, which hinders the growth of the sector.
Benefits
- For workers: Better living conditions, job satisfaction, and stability.
- For companies: Stable and productive workforce, leading to reduced labour costs.
- For the government: sustainable urban development, increased foreign investment, and a globally competitive manufacturing sector.
- S.A.F.E. housing: Will help increase productivity and sustainability of the workforce, attract global investment, and ensure harmonization with international labour standards.
Challenges and solutions in enhancing housing for industrial workers
Challenges
- Restrictive zoning laws: Residential development is not permitted in industrial areas, forcing workers to live far from workplaces.
- Restrictive building bye-laws: Low floor area ratio (FAR) and ineffective land use regulations limit high-capacity housing.
- High operating costs: Hostels in industrial areas are considered commercial establishments, leading to higher property taxes and utility rates.
- Financial viability: Mass housing projects are not attractive to private developers due to high capital costs and low returns
Solutions
- Reclassification of housing: A.F.E. Classify housing under residential category so that:
- Residential property tax, electricity, and water rates apply.
- GST exemption is provided on housing meeting specified criteria.
- Simplify environmental clearances: Include A.F.E. housing under exempted categories such as industrial sheds, schools, colleges, and hostels.
- Flexible zoning laws: Amend zoning rules to allow mixed-use development near industrial centres.
Viability gap funding
- Provide 30%-40% of the project cost (excluding land) through VGF support.
- Amend Annexure 3 of the VGF scheme to include affordable rental housing as an eligible sector.
- Competitive bidding: Implement transparent bidding processes for VGF support to ensure efficiency and cost-effectiveness.