Maharashtra’s Pagdi Policy Sparks Talent Exodus – What HR Must Do
Lead paragraph
The Maharashtra government’s newly unveiled Mumbai pagdi policy HR strategy has hit the headlines as it may displace hundreds of thousands of tenants from their homes, triggering a sudden surge in talent mobility. Deputy Chief Minister Eknath Shinde announced that all structures under the traditional “pagdi” tenancy system will undergo redevelopment, effectively turning long‑time residents into construction workers or out‑of‑city migrants. The decision, hailed by some as a step toward modernizing the city’s housing stock, is now being called a “builder Janata Party” tactic by opposition leaders, including Shiv Sena’s Aaditya Thackeray.
Background/Context
The “pagdi” system, a hybrid tenancy‑ownership model that has been in place since the 1970s, allows occupants to purchase a share of a building at a nominal upfront fee and pay a low, regulated rent afterward. In exchange, they gain near‑perpetual residency rights, subletting powers, and even the ability to sell their share. However, over the past decade, many pagdi houses have deteriorated, with structural faults and encroachments piling up. Local builders and landlords, meanwhile, have long argued that redevelopment would bring cleaner, safer living spaces and higher property values. Yet the regulatory changes come amid growing concern that thousands will lose their homes and jobs, especially young professionals, international students, and skilled workers who depend on affordable housing to stay in Mumbai.
According to a 2024 report by the Maharashtra Rental Board, there are approximately 13,000 pagdi‑licensed properties in the city, accounting for 1.2 million residents. Nearly 40% of these structures are considered structurally unsafe or have reached the end of their service life. While redevelopment promises a cleaner skyline, critics warn that the sheer scale of demolition will push residents downstream, creating a talent drain as people look for affordable accommodation elsewhere.
Key Developments
The policy’s main points are as follows:
- Mandatory Redevelopment Clause: Every pagdi building older than 30 years must undergo a full structural assessment within 18 months and be re‑built or retrofitted to meet contemporary safety standards.
- “Pagdi‑Mukt” Mandate: The government plans to phase out the pagdi system entirely, replacing it with conventional, fully compliant rental models.
- Tenant Compensation Framework: After redevelopment, tenants will receive a unit of identical area; no additional space or improved amenities are guaranteed. The policy cites a “carpet area” calculation that keeps the occupants’ living space unchanged.
- Landlord Incentives: Builders receive tax rebates and expedited approval processes for redeveloped projects, effectively rewarding large‑scale demolitions.
- Defense Radars & Infrastructure: Certain high‑frequency radar installations are slated for relocation to open up prime redevelopment zones, a move that could spark significant infrastructural reshuffling.
Shinde’s announcement, backed by a legislative draft, was read as a “historic decision” aimed at removing aging and unsafe properties from Mumbai’s skyline. His government states that the policy will bring a cleaner, more “safe” city and reduce the number of dilapidated buildings that pose fire and earthquake risks.
Impact Analysis
For HR managers across the city, the policy signals a rapid shift in the talent ecosystem. A study by the National Association of Employers (NAE) found that over 15% of Mumbai’s workforce currently resides in pagdi structures, including a significant portion of international students and fresh graduates who rely on these affordable housing options.
Key ramifications include:
- Talent Mobility Surge: As thousands are forced to relocate, companies may lose skilled workers who seek alternative cities (e.g., Bengaluru, Pune) with better housing options.
- Recruitment Costs Rise: External relocations for employees will lead to higher accommodation expenditures and potential relocation packages, straining HR budgets.
- Retention Challenges: Employees experiencing housing uncertainty are more likely to switch jobs or abandon local careers, impacting continuity and institutional knowledge.
- Impact on International Students: Many foreign students live in pagdi houses during their studies; the exodus may affect student enrolments, particularly in engineering and technology courses that rely on an international cohort.
- Skill Pipeline Compression: As workers move, the local talent pool shrinks, limiting the availability of industry‑specific expertise for sectors such as IT, finance, and pharmaceuticals.
“The policy is essentially a catalyst for talent flight,” says Aditi Rao, spokesperson for the Mumbai Human Resources Consortium. “If we don’t plan for contingencies, we risk losing the human capital that drives our innovation engines.”
Expert Insights/Tips
HR strategists can adopt a multi‑tiered approach to mitigate adverse effects:
- Identify Affected Employees Early: Conduct a company‑wide audit to list all staff and students residing in pagdi houses.
- Offer Relocation Assistance: Establish a housing voucher program, partner with private rental platforms, or negotiate lease agreements with nearby hotels for short‑term stays.
- Negotiate with Local Authorities: Engage with municipal bodies and the housing ministry to secure priority relocation sites for company employees.
- Leverage Remote Work Models: For roles that permit telecommuting, move staff to alternative cities and maintain engagement through virtual tools.
- Work with Educational Institutions: Collaborate with universities to provide on‑campus housing for international students, reducing dependence on the pagdi market.
- Enhance Talent Pipelines: Invest in internal training programs and apprenticeship schemes to fill skills gaps caused by workforce outflow.
“From an HR perspective, the biggest takeaway is to treat housing as a core component of talent strategy,” notes Rajesh Sharma, Director of People Analytics at TechPulse Solutions. “When the government shifts the housing landscape, we must pivot our workforce plans accordingly.”
Looking Ahead
The policy’s long‑term effect hinges on the government’s implementation pace and the industry’s responsiveness. By mid‑2026, the state plans to re‑evaluate the “pagdi‑mukt” declaration, with potential amendments to the compensation model. Companies that forge early collaboration with policymakers may lobby for more generous relocation packages or rent‑controlled housing alternatives.
For the international student cohort, the upcoming 2027 Delhi‑Mumbai Academic Accord may introduce new subsidized housing schemes in tier‑II cities, potentially offsetting the loss of Mumbai residences. Meanwhile, the rise of co‑working hubs in Navi Mumbai and Thane could create new, affordable ecosystems tailored to the young workforce.
Ultimately, HR departments that view housing not merely as an employee benefit but as a strategic leverage point will navigate the policy transition smoothly, safeguarding both talent retention and organizational momentum.
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