To truly unleash Indian manufacturing, the country must think of building dense, large-scale worker housing as infrastructure, that can reap coordination and externality benefits for several stakeholders and ensure great public returns, according to a report on Tuesday.

New-Delhi-based Foundation for Economic Development underscored the need for worker accommodation as a critical unlock for enabling large-scale, employment-intensive manufacturing.

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“Our biggest imperative as a nation today is to create good jobs that would help our workforce transition out of low-productivity, low-paid work. Manufacturing is the only sector that can absorb relatively unskilled labour at the rate required to ensure sustained economic growth,” the report emphasised.

Jobs in manufacturing and services are three-six times as productive as agricultural work. These jobs are likely to be found in large industrial clusters, which allow for the concentration of related industries and help leverage economies of scale.

In such clusters, the labour requirement is much more than what nearby towns and villages can provide.

The report found that worker housing is currently managed informally and often characterised by unauthorised slums or multi-storey settlements.

The report recommended zoning regulations where Mixed land zoning should be implemented to allow for the construction of worker housing in all zones without any restrictions.

“Worker housing should be set up based on residential building bye-laws. These regulations can be further liberalised to bring down land costs. A system of third-party certification, insurance and self-certification by chartered architects can replace the requirement for prior government approvals,” it suggested.

According to the report, worker housing should be exempted from paying GST and residential rates must be charged for property tax, electricity and water tariffs to bring down land costs.

The report also recommended financial support from the government in the form of schemes that can subsidise the setting up of worker housing and rental vouchers that can be issued to workers to be exchanged for rent to subsidise housing.