Context:

NITI Aayog has published a report titled “Site Adjacent Factory Employee (S.A.F.E) Accommodation – Worker Housing for Manufacturing Growth”. 

More on the News

• This report explores the crucial need for secure, affordable, flexible, and efficient (S.A.F.E.) housing for industrial workers to enhance India’s manufacturing sector.
• The Report proposes a targeted solution including the development of long-term, dormitory-style housing near workplaces, equipped with essential amenities to reduce commute time, improve worker well-being and also boost productivity. 

About S.A.F.E. Initiative

This initiative is aligned with India's aim to raise its manufacturing sector's GDP contribution from 17% to 25% by 2047, in alignment with initiatives like Make in India and Atmanirbhar Bharat.

• The Economic Survey 2023-24 estimates that India needs to generate 7.85 million jobs annually by 2030, with a significant portion coming from manufacturing, which relies on a centralized, often migrant workforce.

S.A.F.E. is aimed at addressing the problem of inadequate housing near industrial hubs that causes high attrition rates, reduced productivity, and instability within the workforce. 

• It limits worker migration, particularly for women, which hampers sector growth.

S.A.F.E. accommodations will boost workforce productivity and retention, help attract global investments, and ensure alignment with international labour standards. Benefits include:

• Workers: Improved living conditions, job satisfaction, and stability.
• Companies: Stable and productive workforce leading to lower labour costs.
• Government: Sustainable urban development, foreign investment, and a globally competitive manufacturing sector.

Key Challenges in Scaling up Worker Accommodation

• Restrictive Zoning Laws: Residential developments are often not permitted in industrial zones, forcing workers to live far away thus increasing commute times and affecting productivity.
• Conservative Building Bye-Laws: Low Floor Area Ratios (FAR) and inefficient land-use regulations limit housing capacity.
• High Operating Costs: Hostel accommodations in industrial zones face high property taxes and utility rates, discouraging private sector investment.
• Financial Viability: High capital costs and low returns make large-scale worker housing projects unattractive to developers.

Proposed Regulatory Solutions

• Reclassify Worker Accommodations: Designate S.A.F.E. housing as a unique residential category to apply residential property tax rates, electricity, and water tariffs.
• Streamline Environmental Clearances: Exempt S.A.F.E. accommodations from complex environmental clearance processes.
• Gender-Inclusive Policies: Encourage the development of housing that meets specific safety and welfare needs of women workers.
• Flexible Zoning Laws: Modify zoning regulations to allow mixed-use developments near industrial hubs, facilitating the construction of worker housing.

Proposed Financial Solutions:

Viability Gap Funding (VGF):

• Provide 30%-40% of project costs (excluding land) through VGF support on the lines of the “Financial Support to Public Private Partnerships in Infrastructure” also known as the Viability Gap Funding (VGF) Scheme.
• Amend Annexure 3 of the VGF scheme to include affordable rental housing as an eligible sector.
• Viability Gap Funding (VGF) is a scheme by the Govt that provides financial assistance to infrastructure projects that are economically desirable but not commercially viable. 
• The Department of Economic Affairs, Ministry of Finance administers the scheme. 

Competitive Bidding: Use transparent bidding processes to ensure the efficient allocation of VGF support.

Retrofitting Existing Facilities: Use VGF to upgrade current worker accommodations, improving their safety, capacity, and utility.