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“Appropriate decisions could lead to bi-directional rural-urban migration”

Nilabja Ghosh, Professor, Institute of Economic Growth opines that many rural and urban citizens will continue to be cautious, even though the trade-off between economics and health will remain a strong challenge after the lockdown is lifted. She also opines that the rural economy in India can gain from additional economic options, greater commercial value and linkages with wider markets while retaining its requisite of self-sufficiency and culture.

TPCI: What, in your opinion, are the reasons responsible for the large-scale exodus of migrants from cities to their hometowns in the recent weeks? How do you see the near-term impact of this on India’s urban economy after the lockdown is lifted?  

Prof. Nilabja Ghosh (NG): The reasons are psycho-economic. The protracted and rather indefinite period of loss of livelihood for people who remit money home and hold little savings can make life in alien cities daunting. The example set by each migrant on another creating a fear of being left alone is also a classic case of demonstration effect.

With information of COVID flowing in, apprehensions of infection also creeped in. At a time of social quarantine, the migrant workers in cities would have liked to be back in their root places in villages with their families and old friends rather than in ‘shelter homes’ at the mercy of the state government. Lastly, village do not always and necessarily see out migration. Some of the migrants may come home to lend their hands in family farms or earn some income as hired farm labour at the time of harvest and post-harvest operations.

After the lockdown is lifted, city economic life will limp back rather slowly due to shortage of workers for shops, supermarkets, factories and errands; so urban economic recovery can be a lingering process. More important, an end of the lock-down is hardly indicative of the end of Covid-19. Many rural and urban citizens will continue to be precautious even though the trade-off between economics and health will remain to be a strong challenge.

Much will depend on when and how the lock-down will be lifted in states. Possibly, a graduated policy towards ending the lock-down synchronously in pace with people’s spontaneous responses would be optimal and less damaging even to the economy, than any hasty imposition to come back to work. A longer exit time would be a humanitarian approach and will prevent crowding in transport vehicles too. Give the economy some time to recuperate.

TPCI: The large-scale migration appears to support the view in favour of large-scale decentralization of the Indian economy, so that people in remote areas need not migrate to cities. What is your perspective on this?

NG: Decentralization may be an ideal case but the idea is utopian, especially in a federal democracy as is amply clear from the central management of the Covid-19 infection. Economic reforms, especially for agro-marketing, are another area where seamless movement of food across the country is needed for the food security of all Indians, farmer’s welfare and efficient trading. The role of a Union Government will be important, but so will be the cooperation of states who must be consulted before taking any decision.

India is regionally diverse and not all regions are equally endowed for all sectors and activities. For example, the quality of soil and hydrological features may prove more beneficial for agriculture or even some crops in one region as compared to others. Identifying and developing comparative advantages would be useful for development and the flow of products, driven by private incentive, can be centrally coordinated.

Migration is a normal social response to differential economic opportunities and the exchange of knowledge, but unfortunately, an urban bias is observable in most countries.  In principle, appropriate investment decisions with spatial concern could pave the way to bi-directional migration, in which even urban and skilled people may move to villages for livelihood and for their professional aspirations. It is however important to determine the sectors that need to be promoted in villages.

TPCI: How can rural India’s contribution to current GVA be augmented? And what role do you see for rural India in the development of the economy, in farm and non-farm sectors?

NG: India has a vast rural sector which is home to 69% of the 1.37 billion population and it contributes only 46% of India’s GDP. Agriculture is a dominant source of livelihood, but by itself, agriculture contributes only 15% of the national GDP. While the diminution of the share of agriculture in national income is not surprising in a country that is developing, it has led to a wide rural-urban disparity of income and opportunity and to the migration from village to city.

It must be remembered that the definition of the rural sector is bound by some specific indicators like population density and percentage of farming population in workforce. Many villages have been outgrowing these bounds to become small towns by definition but retain the rural characteristics. Non-farm activities are contributing to incomes in these rural and semi-rural areas but they mostly consist of small trading, repair shops and transportation.

What distinguishes these areas is their pervasive poverty, sharp inequality and tendency to migrate temporarily to meet the family needs. Debt, sickness and need for savings impose compulsions. Policies towards rural people have concentrated more on subsidies, welfare, farm credit, minimal housing amenities, disaster management and poverty alleviation rather than development. Even the large MGNREGA programme of public works, which could help in building up rural infrastructure is essentially a mandatory welfare payment for mitigating the extreme hardship of village people, with hardly any component for skill development and product quality.

Rural development would mean more investment in human development in terms of basic education, skill and health and creation of high-skill jobs that draw on modern technology, geographical advantages of the regions and global market demand. Rural India holds the key to the nation’s development and rather than over-emphasizing growth rate of overall GDP, it is more pertinent to treat rural GDP share as an important indicator of India’s development.

TPCI: What should be done to facilitate the industrialization and development of rural regions in India? What are the key sectors that should be developed to promote gainful employment?

NG: To make rural areas investible destinations as well as habitable, the first essential requisite will be transportation facilities for both passenger and freight as well as information highways, both via media and interaction facilities. Best results would come from working out priorities and suitable determination of goods or services that can be produced in any region using SWOT analysis keeping the advantages and interests of people of the region in mind. Training services need to be extended to the local people to enable their participation in the process.

To draw best expertise with domain knowledge and management skills, the rural areas need to offer a good standard of living. As for deciding the sectors, Indian development and industrialization plans have traditionally given emphasis to locational aspects depending on the character of the raw material and final product. In the case of rural areas as defined, the advantage should ideally lie with the availability and cost of raw materials so that agro-processing including crafts, utility, food products that draw on products and by-products of farms, common grounds, water bodies and forests can be recommended. This could generate diverse employment and skills like collection, rearing, farming, processing, health safety measures, cleaning, packaging, accounting and marketing but possibly all of this together will not be enough.

Rural areas can easily accommodate service sector activities like higher education, specialized health provision and training (medical schools and hospitals), Information and Technology (hubs) , marketing centres (malls, wholesale markets) tourism (parks, farm, river front development) so that urban people may also avail of the facilities instead of crowding in limited urban centres. Developing small satellite towns to be the central spot of village peripheries can form efficient rural clusters.

Many of these suggestions would call for release of land from agriculture, a process that is not easy. Fallow land, infertile or land suitable for only low value crops may be targeted, but in essence, the farmers or land operators have to be roped in as stakeholders in the new activity as far as possible, land collectivity may be considered and land use needs to remain structurally flexible and reversible.  Last but not the least, it is extremely important that rising crop productivity accompanies the shrinking of land.

TPCI: What suggestions would you like to offer to the government or private players to make sure that the rural economy becomes as vibrant and attractive for jobseekers?

NG: Rural areas can become attractive for job seekers if they offer good standard of living and in a more mobile and even globalized world, also cheap and convenient connectivity with homes left behind and friends in different places. Good roads, suburban fast trains/tube trains, access to airport all of which the government seems to be working at are in the right direction.  Communication facilities and contact by means of state of the art mobile and internet facilities are equally important. Moreover, for family living and senior citizens who often serve in advisory capacity, schools and hospitals will be vital and parks, clubs and other entertainment will help. 

In a departure from practices, residential estates need to be planned for good quality housing with an eye to aesthetics. Food safety, availability of authentic medicines, environmental and other safety regulations need to be strengthened from the government side.

TPCI: Is there an international model of rural development that can be emulated by India? Please elaborate.

NG: Economic development models that are standard do not essentially talk about rural or urban focus, but almost all of them rely of capital formation. Early development economists like Nurkse, Leibenstein, Rosenstein-Roden and Hirschman visualized investment for development variously as balanced or unbalanced depending on resource availability for a big push to the economy. While capital was once treated to be physical, recent advancements have added human capital to it as a very important component as also the idea of infrastructure that is the underlying facilitator.

The Lewis model, often held as a gold standard for planners, does make a distinction between industrialization and agriculture, and the latter may be identified with the rural sector. While the rural sector or agriculture is seen as a consistent reservoir and supplier of cheap labour for industrialization or urban construction activities as evidenced in India’s current growth story, Lewis model does foresee a stage when dearth of farm workers raises wage rates, encourages mechanization and improves productivity in agriculture, which can translate to development. Schultz also considered transforming traditional agriculture as a feasible way to economic development.

However, development for rural areas has to go beyond agriculture at present times, when despite food security still being a basic requirement, food prices are low and often volatile in a capricious market. In the presence of fast developing technology, any dependence on primary produce exports cannot be an option.  Most theories recognize forward and backward linkages of the chosen industry as critical for employment creation at the up-stream (inputs) and downstream (processing) ends. Location of the industry is also important depending on the bulkiness of raw materials and products and distances from markets.

In that sense agro-based industrialization begs attention for rural development in India although with human capital, imagery and electronic communication and their combined compatibility with many activities in finance, academics, data analytics, modern medicine and day to day monitoring for governance dissociate economic activities from locational pre-requisites. The shortfall of rural infrastructure and human capital and the exploitation of agricultural labour especially women have been noted by development economists like Marx, Myrdal, Lipton, Boserup and Sen. 

What India needs to do is to take an integrated perspective of development theories in context of modern times as also the cultural and environmental ambience of rural areas. In a paper written by Ian Hodge and Peter Midmore of the Department of Land Economy, University of Cambridge and School of Management and Business, Aberystwyth University, the complexity of rural development in United Kingdom is discussed indicating the lack of a single path.  That two major features of the rural economies lies in the limited number of sectors (mainly agriculture) they depend on and the  interdependency with the urban economy measured by the Liontief model as shown in a paper by Thomas G. Johnson, Deborah Roberts and Timothy R. Wojan who found the additional residential functionality of rural areas in USA.

Without polluting the environment, the rural economy in India can gain from additional economic options, greater commercial value and linkages with wider markets, while retaining its requisite of self-sufficiency and culture. Looking at agriculture as a farm business and exploiting the advantages of agriculture itself and of the varied intra-agricultural choices, organic options, opportunities of post-harvest processes, input and technology delivery and environmental opportunities for tourism and climate change can be supplemented with industries that are less intensive in material inputs and more in skill can be a general framework qualified by flexibility and community spirit of rural culture.

It may be advisable to have a flexible approach to avoid the traffic rush, pollution and enforced discipline of urban work-life by appropriately using economic incentives and internet connectivity. However, emphasis on the linkages with organized larger industries, marketing agents in supply chains and global developments cannot be undermined. Human needs of education, health, food and entertainment will be necessary as well as gainful especially if these sectors can acquire enough excellence to draw urban clients. As APJ Kalam visualized, villages must be connected with themselves and with main towns and cities and have schools, colleges and hospitals with good teachers and doctors who can draw the best from indigenous wisdom and skills also.

Prof. Nilabja Ghosh is a Professor at Institute of Economic Growth. She has earlier served as a Lecturer (project) Indian Statistical Institute in Calcutta, Lecturer in Economics (permanent), Calcutta University, Consultant at NCAER and NIPFP in Delhi, Associate Professor (Leave vacancy) in IES unit, IEG.

Her research interests include Agriculture, Resources and Development, Supply responses, Fertilizer use and organic farming, Education, Gender, Globalization, Food marketing and processing, Econometric modeling, Forecasting of output, Measurement of inputs and output in agriculture.

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Sam Dash
Sam Dash
1 year ago

Thank you Ma’am, its a very differentiated perceptive. A more robust policy interventions, corporate will and thinking is required to create more opportunities in rural beyond agriculture.