Building worker housing near factories to increase manufacturing productivity and competitiveness: Niti Aayog

NEW DELHI: Niti Aayog, the union government’s policy think tank, has proposed amending the existing Industrial Zones Act to provide housing for workers, with the aim of increasing India’s labor productivity and making manufacturing more competitive. They requested that the plant be built near the factory.

In the report, Niti Aayog said the government has introduced a scheme for industrial workers called the Factory Adjacent Factory Employees (SAFE) Accommodation Scheme after Finance Minister Nirmala Sitharaman spoke of such a scheme in her budget speech in July. A scheme to provide housing will be launched, the report said.

“Rental housing with dormitory-type accommodation for industrial workers will be facilitated in public-private partnership (PPP) mode with Viability Gap Financing (VGF) support and involvement from key industries,” Finance Minister said. said in a speech.

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Niti Aayog, ministries and departments of finance, textiles, housing and urban affairs, electronics and information technology, and the states of Andhra Pradesh, Tamil Nadu, Gujarat, Karnataka and Uttar Pradesh. Industry leaders from textiles, automotive, leather, food processing and electronics also contributed to the discussions. Niti Aayog added that the scheme will be launched on a pilot basis in ‘Champion States’ with the support of the Ministry of Housing and Urban Affairs.

The government may subsidize rent

He said that the construction of infrastructure for this is possible only if investors receive a favorable return, and for this it is necessary to pay workers about 5000 yen. INR4,000 per month for 80 square feet of space. However, this would amount to around 30% of a worker’s monthly salary, making it unaffordable, the think tank added. It added that direct government support could reduce the cost of these spaces by about 25% and reduce monthly rent for employees by about 25%. INR3,000.

“While this amount is within the range that most formally employed workers at or above the minimum wage can afford, discussions with employers have also indicated that they are willing to cover some of the cost of hire for their workers.” said Niti Aayog.

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These will be long-term dormitory-style accommodation for industrial workers, located close to their workplaces. They said they will be exempted from Goods and Services Tax (GST) and asked the appropriate authorities to grant this exemption. Niti Aayog said that they do not need environmental clearance (EC) as the environment ministry has issued a draft notification exempting projects such as industrial sheds, schools, colleges and educational hostels from applying for EC. He said it would be.

Viability Gap Funding

Niti Aayog said developers can get viability gap funding from the union government of up to 30 per cent of the project cost, excluding land. Using the same model as the “Financial Support for Public-Private Partnerships in Infrastructure” scheme, the Ministry of Economy will provide 20% of the funding and the sponsoring nodal ministry will provide 10%, it added.

Niti Aayog said states need to reform their zoning and building regulations to advocate for funding this viability gap. “Mixed land use zoning should be allowed in industrial areas to allow for the unrestricted construction of SAFE accommodation. Alternatively, SAFE accommodation could be designated as a permitted land use within industrial zones. ” said the Niti Aayog report.

Viability gap funding is a grant or loan that helps make a project commercially viable when it is economically desirable but not economically viable. The goal is to close the gap between a project’s actual cost and potential revenue.

5 stories or more

The think tank also called for liberalization of the floor area ratio (FAR) so that building heights can be decided in a cost-effective manner, saying buildings should be at least five storeys high.

Niti Aayog said the SAFE accommodation scheme is crucial for job creation as India aims to become a developed economy by 2047. The manufacturing industry is expected to create approximately 120 million jobs by 2033.

Niti Aayog said that assuming one in five workers would prefer affordable formal accommodation if possible in 2033, the government would have created around 1,000 such units for manufacturing workers. He said it was necessary to create 25 million homes.

“India’s structural changes could lead to rapid economic growth by moving large numbers of people from low-productivity agriculture to high-productivity industrial jobs,” the report added.

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Niti Aayog pointed out that worker housing complements investments in education and training, permanently improving worker performance and productivity and reducing absenteeism.

The think tank said overcrowded and unsanitary conditions are increasing the spread of infectious and chronic diseases, and poor living conditions are exacerbating workers’ health problems. Niti Aayog said substandard housing and long commutes lead to fatigue, reduce worker productivity and increase absenteeism.