By K Raveendran
Urban migration has been blamed for many of the problems the country is facing today, both in the urban and rural India. But despite all the negatives, urban migration has pulled up large sections of rural populations out of poverty. This adds a new undetermined dimension to the large-scale reverse migration of workers in the wake of the pandemic and the lockdown, which the government has failed miserably to address so far irrespective of the tall claims made by government functionaries.
In this context, the findings of a just-released IMF working paper on ‘inequality and locational determinants of the distribution of living standards in India’ makes highly absorbing reading. The paper attributes one-third of the variation in living standards to locational factors alone. The only blemish is that the consumption data used for the study is quite outdated, but there are no reasons to question the trends it brings out.
One key findings is that although the much celebrated rural employment guarantee scheme MGNREGA has played a crucial role in lifting rural poor from poverty through its clear stimulus to rural wages, gains to living standards of rural poor have been found to be higher via migration to an unequal urban area.
The study results show that the growing rural-urban gap and divergence in growth across states exacerbates the otherwise slow rise of consumption inequality. These gaps have created significant location premiums which explain a variation in living standards between 25 percent and 31 percent. While class is an important determinant of consumption, the rural versus urban location also plays a significant role.
For instance, in Bihar, which is mostly rural, and has just 10 percent of the state GDP per capita compared to Delhi, an individual placed at an income level of 1/10th of the mean income in Bihar, when shifted to Delhi, has to accept 1/20th of the mean income level in the capital, but he still sees a five-fold increase in the actual income. This suggests that even in his worst situation in Delhi, he is better of there by at least five times of what he would been in his home state even with better positioning.
One potential explanation of the gap in consumption levels between rural and urban India lies in differential costs of living. For instance, the higher spending on urban housing could imply that while consumption appears higher, in a real sense this balances out because rural Indians pay less in rents.
It is unfortunate that no studies have been held to measure the impact of reverse migration, which is likely to have negated a huge positive that lifted rural poor out of the poverty level purely on the basis of their urban migration. And this explains the absence of any meaningful initiative in the central government schemes, including finance minister Nirmala Sitharaman’s 2021-22 budget to address the problems thrown up by the reverse migration.
This is particularly worrying as there is no worthwhile attempt to address the massive employment loss due to the closure of lakhs of units in the informal sector in the wake of the lockdown. This means that some 67 lakh migrants who returned to their rural homes in 116 districts of six states, as per the Skill Development Ministry’s estimates, face a situation of no work, no food and no shelter.
An analysis by the non-profit India Migration Now in December 2020 showed that the reverse migration has rendered the reverse migrants particularly vulnerable, cutting off access to crucial social security schemes including the public distribution system for subsidised food grains.
The basic takeaway from the IMF working paper is that before Covid-19 turned everything on its head, an economic migrant could expect to be better off in the lower classes of urban India than in the middle class of rural India. Given that rural India offers much lower living standards on average, a person may be indifferent to their relative class position and prefer the absolute gains emanating despite moving down in the class hierarchy.
And this explains some of the large flow of inter-state migration, estimated by the Economic Survey and census, as 9 million every year. The number does not include the large post-Covid reverse migration, which has posed huge challenges to inclusive growth, but the Modi government has miserably failed to come up with a credible programme to counter the problem. (IPA Service)