With companies implementing no contact policies during and even post Covid 19, the real estate industry is gazing at future with some uncertainty. Real estate being the second largest employer in the country employs almost five crore people directly and indirectly.
Migrant laborers who form a core part of the industry too have made a move towards their hometowns, without any estimated timeline of coming back. A large majority of migrant workers still remain stranded in cities and towns, half of them have not been paid wages for their previous work, some of them have been forced to take unpaid leave, or removed from their jobs. It would not be an easy task to bring them back even after the situation improves. Even after the lockdown gets lifted, migrant laborers might prefer working in their respective hometowns; it will take a lot of conviction to bring them back to the urban cities to work.
The residential segment has already been struggling with project delays, regulatory changes in the last few years. Adding to this, the prices of raw materials for construction is going up each day. In such a scenario, the way forward becomes a critical question for the sector which contributes 12-13% in GDP and still has the potential to be one of the largest employers.
While the market looks uncertain with problem of labor, finances, project delays, every cloud has a silver lining. Government and industry has to come together to ensure that sector comes back to normal at the earliest. Five steps which can help bring the sector back to normal:
Free travel for labor card holders: This will be one of the most significant steps to bring back migrant laborers to work. They are the backbone of real estate and many other similar industries. Not encouraging the laborers to come back might break the backbone of our economy. Free travel for labour card holders, both in bud and railways services can boost return to work.
Reduction in MNREGA spends by the Government: The Government will also come under some financial pressure as labour might look for work under the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) in their respective villages. If new labour-friendly reforms and policies are introduced, along with reduction in MNREGA spends, those will go a long way for the real estate sector.
Insurance and compensation for labourers- Adequate compensation and insurance for families of labour card holders should be offered by the government. This will not only encourage them to come back, but give them immense sense of faith and security. They will be assured that in case of any mishap or contracting of the virus, post the lockdown, their families will be taken care of.
Mandatory benefits post retirement to secure future needs- Like pensions and PPFs provided to government and private sector employee, the Covid pandemic could provide a new opportunity for the government to think of mandatory benefits post retirement for these migrant workers. While RBI has been easing out on a lot of liquidity norms and government has announced infusion of funds into India’s ecosystem, some more funds should be announced as mandatory benefits for the migrant workers.
Cost control by industry on raw materials- There is a need for the entire industry and Government to come together and work towards controlling cost of raw materials. Higher prices of raw materials will hit the market sentiments post Covid; the industry is already reeling under pressure. Government should incentivize industries who are keeping price under check.
While every other aspect like raw materials, project completion, sale of houses are important for bringing momentum into the sector, nothing will substantiate until and unless there are laborer who hold the fort in construction. Bringing them back and realizing their contribution is significantly important for the government as well as the industry as a whole.