46 % of India's Workforce in Agriculture Contributes Only 18 % To GDP: Report

New Delhi: India faces a significant challenge, with 46 per cent of its workforce engaged in agriculture, contributing only 18 per cent to the GDP, according to the foundation for economic development report.

Manufacturing stands out as the only sector capable of absorbing unskilled labour at a scale necessary to drive the economy forward.

Jobs in manufacturing and services are 3-6 times more productive than agricultural work, underscoring the sector's potential to transition the workforce into higher productivity roles.

Industrial clusters, which act as hubs for manufacturing jobs, require more labour than surrounding towns and villages can supply.

However, the lack of adequate worker housing near these clusters has emerged as a key barrier, leading to labour shortages and lower productivity. This shortfall also hampers India's ability to compete globally in manufacturing exports, limiting job creation and economic growth.

The report highlights that existing worker housing is often informal, consisting of unauthorised slums or substandard settlements that fail to meet the scale and quality needed.

These poor living conditions discourage workers from relocating closer to industrial clusters, perpetuating the labour supply challenge.

Private sector solutions to address this gap are hindered by regulatory obstacles. Inflexible zoning regulations restrict the construction of worker housing, cumbersome building bye-laws inflate costs and delay projects, and high operational charges, including GST and commercial property rates, deter investment.

To address these challenges, the report recommends a series of reforms to unlock manufacturing potential.

It calls for mixed-use zoning regulations to permit worker housing in all zones, simplifying building bye-laws to reduce costs and delays, and exempting worker housing from GST and other commercial property charges.

These measures, the report argues, would make it easier for the private sector to invest in worker housing.

Recognizing the interconnected nature of housing and industrial growth, the report also suggests treating worker housing as critical infrastructure.

It proposes government financial support in the form of subsidies for constructing worker housing and rental vouchers for workers.

These initiatives would make quality accommodation affordable and encourage labour migration to industrial clusters, ultimately fostering industrial growth.