The issue of laborers migrating from large cities and
industrially developed towns to villages & towns of industrially backward
UP, Bihar, Jharkhand, Chhattisgarh, etc has caught everyone's attention in past
few weeks. This migration is being widely seen as a fall out of COVID-19
induced lockdown of socio-economic activities. Indubitably, the lockdown has prompted
many workers to wind up their household and move back to their home towns. But
it would be a grave mistake to assume that lockdown is the only reason for the
migration.
The rate of unemployment amongst migrant and other workers was rising
consistently since past few years. Demonetization and GST dealt a major blow to
the jobs in unorganized and MSME sector. Besides, these workers were faced with
the double whammy of stagnant to declining wages and rising cost of living. To
highlight my point, I would cite my favorite example again.
The rikshaw fare from the nearest metro station to my house in
Delhi is stagnant at Rs20 for past 6years. The number of rikshaws has increased
almost 3x while the passenger growth is less than 50%; the cost of living has
risen at least by 30%. The rikshaw pullers/drivers have been forced to live in
sub-human conditions.
The only lure that has kept them in the city is a better future
for their children. If they are assured of MNREGA wage and city like education
in their villages, they would have migrated long back. While making a strategy
for farm sector growth, it is important to note the following:
(a) The employment
elasticity of growth in manufacturing, agriculture and construction sectors has
been decreasing consistently. This trend shall only accelerate in future. Most
of the growth shall come from higher productivity through automation,
innovation and consolidation. Elimination of redundancies and economies of
scale shall lead the growth effort. The number of jobs, especially unskilled
and low skill jobs shall remain limited.
(b) Implementation of a
common GST, nationwide agriculture market, ecommerce, automation (AI) etc., are
leading to business consolidation in a major way. This may potentially eliminate
millions of unskilled and low skill jobs in next decades of or so.
(c) The historical
transition of farm workers to industry during the developing stage of growth
may not work in the current Indian context. The so called developed economies
have transited the labor from farm to factories, when industry and mining were
still labor intensive and global competition was not much. The productivity
gains were immediate and tangible. It is no longer the case. The industry in
India is already capital intensive. Even traditional labor intensive industries
like gems & jewellery, textile, leather, mining and construction are
becoming increasingly automated to stay viable against the global competition.
Emulating China model may not work in India, as our political and economic
model is entirely different. Moreover, the skill and training requirement for
modern industry do not allow a straight farm to factory transition. So the
options get limited to unskilled construction sector jobs and building industry
around farms where the skill of the farmers could be suitable employed.
While MNREGA and ambitious rural road program is taking care of
unskilled construction jobs, there is little effort to take factories to farms.
The ambitious Make in India program mostly aims to substitute
imports. We are trying to compete with manufacturing powerhouses like China,
Vietnam, Taiwan, etc. This defies the basic principle of making economic
decisions, viz., everyone should do what they can do best to optimize the
resource utilization.
....to continue tomorrow
No comments:
Post a Comment