Saumyen's Pages
Remember the popular dialogue from the Bollywood movie - Jolly LLB, “Kaun hai yeh log? Kiun aajate yeh hamari sundar sahar ko batta lagane!” (Who are these people? Why do they come here to destroy the beauty of our city?) The dialogue points to the sentiment of city (urban) dwellers about the Migrant people – majority are males - the ones who migrate from rural to urban – with family in some cases – mostly engaged in low-wage employment in their productive years of work life.
The media news and academic discussions in recent times have focused on social, political and economic impacts – mostly based on case studies and/or anecdotal evidence - on this relatively poor group of migrant population - presumably one of the most directly affected segments of the Indian population during the ongoing Covid-19 times. While the plight has been unpredictably nightmarish for many of the migrants during this time, the discussions mostly centre around the current issues of reverse migration and impacts thereof - hopefully for a temporary period. The problem however, is more deep rooted.
Reverse migration, apart from income loss of this group of population, creates additional pressure on agricultural income, rural unemployment, resources like water and land etc – predictably increasing rural poverty further. On the other hand, the non-availability of migrant (and largely cheaper skilled and unskilled labour) adversely impacts the infrastructure and industrial sectors - pushing the production cost up, delaying the restart of the economy - more for the regions with positive net inflow of migrant labours.
Looking beyond Covid-19, this movie dialogue above is an anecdote of the existence of rural-urban migration as a phenomenon in India (and the world in general). In fact, this is an old phenomenon of civilisation – purpose, nature, extent and impact have undergone change over time. The subject of migration has been studied in economic theories and policy literature – relevant also in Indian context.
Popular Migration Theory
In a labour surplus situation, migration could help in capital accumulation through sectoral transformation from traditional agriculture to modern industrial sector (Fei & Ranis, 1964). Harris-Todaro’s theoretical dual-sector (rural with agriculture and urban with industry) model (1970) explains that the difference between urban and rural expected income (not wages) drives migration decision. Migration is two-stage process in developing countries – Stage1: the rural migrant enters the urban area and settles down in the so-called informal sector for a certain period of time. Stage 2: the migrant finds a more permanent job in the modern sector. Longer the tenure, higher the chances for migrant to join the organised sector.
The pull factor of higher expected income and job facilities, better infrastructure, medical and educational facilities in urban areas and the push factor of absence of these in rural India – together lead to inflow of migrants in urban areas – resulting in urban growth (i.e. an increase in either the land area or the population size of an urban area) and urbanization (i.e. percentage of people residing in urban areas).
While the principle of the model remains the same, the current day migration problem (and movement from Stage 1 to 2) in India is not straight forward but depends on multiple factors including urban unemployment in the organised (manufacturing and service) sector, under-employment (or low-wage employment) in informal sector (volume and value of this sector itself is a questionable estimate), size of population and ones under BPL, government policy around taxation and subsidy, technology enablement of agriculture etc.
How big is the problem?
65% of GDP is generated in urban areas that hosts 34% (vis-à-vis world average 55% in 2018) of population – thus showing higher per-capita income and better living standard – even if we adjust for higher cost of living in urban areas. On the other hand, almost 50% of people depend on agriculture that contributed 15% of GDP and the share is declining. Therefore, it is no surprise that the surplus labours in rural areas migrates to urban areas in search of better income sources.
If we extrapolate the decade-old Census data (2011), there are 50 Cr migrants today and the migration growth (4.5% per annum) is 2.5x of population growth (1.8%) – a big enough issue to attract policy attention – to make provision for these population in the new (mostly urban) locations.
While 88% of the migration is Intra-state (inter-districts), inter-state (12%) migrants are the major impacted group in the recent pandemic – and cover 4% of population (Census 2011). The first-ever estimates of internal work-related migration using railways data for the period 2011-2016 indicate an annual average flow of close to 9 million people between the states (Economic Survey 2017).
Migration for employment may be temporary – seasonal or over a period and permanent – based on the drivers that individual, household or a group – to complement household income from sources in rural areas for a season or for a certain period of one’s productive work age (16-50 years).
The migration movement is however, not uniform across the states. If we see the relative share of development vis-à-vis population share by State (measured by the ratio of % of GSDP in GDP to % of Population in India population) for larger states (with min contribution of 3% in GDP), there is a clear pattern of lopsided development mainly in Southern and Western states – and these are the states with net positive migration flow. In fact, Andhra Pradesh and Karnataka account for a third of inter-state migrants.
According to Economic survey (2017), Maharashtra, Gujarat, Tamil Nadu, Andhra Pradesh and Kerala are the largest receiver states of migrants while UP, Bihar, MP, Rajasthan on the other hand, are the largest givers. Also, the receiver States have relatively higher urbanization.
How is it impacting?
Total fertility rate (TFR) for urban (1.8 in 2016) has been declining sharper than rural (2.5) - implying that in the absence of migration and reclassification effects, India has been de-urbanising (Tumbe 2016). The country also demonstrates a relatively slower growth of urbanization vis-à-vis other comparable nations.
Secondly, between 2009-19, urbanization in India has increased by almost 4%, as more people leave the agricultural sector to find work in services. However, while urbanization is increasing more owing to jobs in telecommunications and IT and the increasing importance of private sector, India is not facing a shortage of agricultural workers or a mass exodus to the cities yet (Plecher, 2020). In fact, the migration of rural poor, as a study shows, is often to “hedge the risks of the family – by diversifying into different activities by members of the family. When some members continue in house, young boys and male members typically migrate – when the rest focus on agriculture or other work at local level” (Banerjee & Duflo, 2011).
Thirdly, the organised sector uses half or more of employees with casual or informal status - often at less than the statutory minimum wage level – that helped in their cost-cutting. Owing to the lack of identity and nature of employment, this worker group does not have legal working status to fight.
Moreover, given the unemployment scenario in urban areas, the supply of migrant workers is still abundant and most of the poor migrants have necessary but inadequate access to basic amenities – like housing, financial services, public distribution system, education etc – often in absence of documentation and Identity.
Reverse migration, hopefully for a temporary period, may dampen the production in the labour-intensive formal sector (including infrastructure) and inadequate supply of cheap labour may push the cost up – when the demand continues to be sluggish. And the reverse situation is expected in agriculture sector that is already plagued with dependence of 70 percent of its rural households for their livelihood, with 82 percent of farmers being small and marginal (Data source: FAO in India site).
Additionally, foreign remittance is expected to fall by 23% (2020) that is significantly contributed by the workforce mostly from the rural households working abroad and will impact the income of many rural households.
In summary, India’s relatively slow urbanization trend and the recent unpredicted pandemic shock predominantly on industry and Services sector are now saddled with reverse migration to rural areas – where the pressure of agriculture and level of poverty are already high – and the effective population growth is higher than urban.
No conclusion yet…
Poverty level in rural (30% as per an estimate in 2017) continues to be higher than in urban (9%). Moreover, India’s rural population growth surpasses the urban to potentially create a larger issue for rural areas. Poverty literature has abundantly and rightly argued that poverty alleviation is linked to access of the poor to better education, healthcare and credit in rural areas.
On the other hand, the growth in rural sector can hardly match the productivity increase in urban sector and urbanization through migration should, theoretically be able to reduce the extent of rural poverty. However, the existing unemployment in urban areas and inadequacy of skilled manpower of rural migrant workforce result in low absorption in formal sector. It is also true that over time, the skill of migrant workforce increases and so is their ability for employment in formal sectors.
Tackling urbanization and the related migration issue may therefore, need focus on rural development – by boosting agricultural productivity, enhancing rural literacy levels and skills, improving healthcare for more productive workforce.
One of the positive outcomes of reverse migration is that this brings knowledge, skills and innovation (called social remittances) – potentially making industrial skills available in the rural areas and as we have seen above, in the States that are relatively backward. These States should provide incentives (eg industrial policy to support ease-of-doing-business, land, tax and credit availability etc) to bring investment that can leverage these skills – especially in the segments that have higher export potentials. Given the current international interest on alternative sources of supply and the Government’s focus of Self-reliant India (Atmanirbhar Bharat), the potential market is indeed big enough to utilise this workforce in their own States. The start may be to create an organization and set up governance to push this in respective States. Time is just right now.
References:
1. Banerjee, Abhijit V. and Duflo, Esther (2011): Poor Economics, Penguin Books
2. Kundu, Amitabh (2007): Migration and Urbanisation in India in the Context of Poverty Alleviation, Referred to in Networkideas.org
3. Iyer, Madhunika (2020): Migration in India and the impact of the lockdown on migrants; PRSIndia.com (10 June 2020)
4. Jiong, Chen (1994): The Hriias-Todaro Model of Labor Migration and its Commercial Policy Implications; Thesis at Iowa State University
5. Ministry of Housing and Urban Affairs- Government of India (2019): Handbook of Urban Statistics
6. Plecher, H. (2020): Urbanization in India 2019; Statista.com, Jul 8, 2020
7. Rameez Abbas and Divya Varma (2014): Internal Labor Migration in India Raises Integration Challenges for Migrants; Migration Policy Institute
8. Sen, Sunanda (2020): Rethinking Migration and the Informal Indian Economy in the Time of a Pandemic; The Wire, June 2020
9. Tumbe, Chinmay (2016): Urbanization, Demographic Transition and the Growth of Cities in India, 1870-2020; (Reference: C-35205-INC-1, Study for International Growth Centre
10. World Bank Group (2020): Covid-19 Crisis through a Migration Lens; Migration and Development Brief, April 2020
11. Sharma, Krishnavatar (2017): India has 139 million internal migrants. They must not be forgotten; World Economic Forum Webpage: Article part of India Economic Summit
(The views are personal)
Rethink
Migration Issues - No Full Stops in India
(August 2020)