Labour, Jobs and Employment – Harmonization of labour laws, gender gap, unemployment, etc.

Why worker housing is the key to unlocking India’s manufacturing ambitions


From UPSC perspective, the following things are important :

Prelims level: NA

Mains level: Present challenges in the Manufacturing sector;

Why in the News?

The emphasis on workers’ accommodation in the manufacturing sector is gaining traction in the news due to its potential to address key challenges and unlock India’s manufacturing ambitions.

About  India’s goal to $10 trillion by 2035

India aims to grow its economy to $10 trillion by 2035, with a specific focus on transforming the manufacturing sector to increase its GDP share from 15% to 25%. This ambitious goal involves a four-fold growth in manufacturing to enhance employment elasticity.


Present Challenges:

  • Inadequate Infrastructure: Many factories currently lack the necessary infrastructure to support large-scale manufacturing, particularly in terms of workers’ accommodation.
  • Land Regulation: Existing industrial land allocation regulations do not typically account for worker housing, necessitating regulatory changes at the state level.
  • Commute and Productivity: Workers often face long commutes, with studies showing travel times of up to two hours each way, leading to exhaustion and reduced productivity.
  • Living Conditions: Many workers live in ad hoc accommodations, which are not ideal for maintaining a stable and productive workforce.
  • Skill Gaps: There is a need for more targeted skill development programs to enhance worker productivity and adaptability to new manufacturing processes and technologies.
  • Lack of Coordinated Policy: There is a need for a more coordinated approach between state and central governments to provide the necessary fiscal and policy support.

Economic Factors that will steer Enlightened Self-Interest:

  • Transportation Savings: By providing on-premises or factory-adjacent accommodation, companies can significantly reduce transportation costs, estimated at over Rs 5,000 per worker per month.
  • Increased Productivity: Reduced commute times and better living conditions can lead to increased worker productivity.
  • Reduced Attrition: Better living conditions and reduced commuting stress can decrease workforce attrition, ensuring a more stable and experienced workforce.
  • Better Training Facilities: On-site accommodation can facilitate better training programs, enhancing workers’ skills and productivity.
  • Lower Carbon Footprint: Reducing the need for long commutes can lower the overall carbon footprint of manufacturing operations.

Way forward:

  • Tax and Fiscal Incentives: The Union government can catalyze investment in workers’ accommodation through tax incentives, GST reductions, and other fiscal benefits.
  • Priority Sector Tagging: Tagging workers’ accommodation as a priority sector for construction finance can attract more investment.
  • Collaborative Financing: Leveraging vehicles like the National Investment and Infrastructure Fund (NIIF) to finance credible worker housing projects can boost infrastructure development.

Mains PYQ:

Q The nature of economic growth in India in recent times is often described as a jobless growth. Do you agree with this view? Give arguments in favour of your answer. (UPSC IAS/2015)

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