India plans rental homes to entice migrant workers back to cities

India has approved a plan to develop affordable rental housing for migrant workers after millions of labourers fled the nation's cities for villages amidst coronavirus lockdowns that left many of them without jobs and homes.

The scheme, part of a federal housing project aimed at providing housing for all by 2022, aims to convert existing vacant government housing into affordable rental housing complexes (ARHC). Private developers can also participate.

The programme will benefit about 300,000 workers initially, according to the Ministry of Housing and Urban Affairs.

"The Covid-19 pandemic has resulted in massive reverse migration of workers and urban poor who come from rural areas or small towns seeking better employment opportunities in urban areas," the ministry said in a statement on Wednesday.

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"Usually, these migrants live in slums, informal or unauthorised colonies or peri-urban areas. ARHCs will create a new ecosystem in urban areas making housing available at affordable rent close to the place of work."

No timeline was provided.

The abject housing conditions of migrant labourers has come under scrutiny during the pandemic, with virus hotspots in slums from Brazil to the Philippines, to foreign-worker dormitories in wealthy Singapore.

Creating affordable housing to tackle inequality is one way governments can help economies recover from the coronavirus crisis, according to economists.

Spanish authorities this week said they will lease public land to private companies and waive royalty fees on commitments to build and manage social housing.

The Indian plan, announced initially in May as part of a coronavirus stimulus package, will offer subsidised loans, tax incentives and additional floor space allowances to developers.

But low returns on rental housing are likely to be a "major deterrent" and make it unviable for developers who bought land in cities at high prices, said Anuj Puri, chairman of property consultancy ANAROCK.

"The scheme is clearly an attempt to bridge the shortfall of dwelling units across the country," he said.

"The government had to shift gears on their Housing for All initiative and include affordable rental housing."

The Housing for All scheme aims to create 20 million new urban housing units and 30 million rural homes. Land rights groups have said the plan's focus on ownership excludes the homeless and the urban poor, including migrants.

But S. Irudaya Rajan, a professor at the Centre for Development Studies, said rental housing alone would not be enough to entice back millions of migrant workers who were forced to walked hundreds of miles to homes in distant villages after the government imposed a nationwide lockdown on March 24.

He estimated about 140 million migrants were directly impacted by the lockdown in India, one of the world's strictest.

"Covid-19 made migrant workers highly visible, and showed they were treated very badly by employers and authorities - they had to beg for food, beg for transport, and go home empty handed," Rajan told the Thomson Reuters Foundation.

"Housing alone won't bring them back. This experience has scarred them badly."