“Rural industrialisation should complement agriculture”

Prof. Arindam Banerjee, Ambedkar University of Delhi, tells TPCI that diversification of work opportunities in the rural areas, nearby to villages, can make it possible for rural labour to find non-agricultural jobs without undertaking migration. This can be done through a mix of regulatory support by the government, technology-induced productivity increases and subsidy support to farmers in key areas. Such interventions should also take care of the basic food security in rural areas.

TPCI: What, in your opinion, are the reasons and potential long-term impact of the large-scale exodus of migrants from cities like villages ? 

Prof. Arindam Banerjee (AB): The nature of employment that is created in urban areas is primarily responsible for the large-scale exodus of migrant workers triggered by the lockdown announcement. The precarious nature of work, where employment is essentially temporary and contractual in nature, means that workers never think of the city as their permanent residence or homes. Further, the low paying nature of their jobs, often piece-rated, means that it is not possible for them to permanently settle down in cities. These incomes are more like supplementary incomes to what their family members earn in rural areas. Even when these incomes are distinctly higher than what they can earn in rural areas, the nature of the jobs and high costs of settling down in cities, keep their migration as a temporary phenomenon.

Thus, the lockdown announcement, the suddenness of which was perhaps unavoidable given the context of the COVID-19 pandemic, sent the message to the workers that they are stuck in their workplaces but with no work and income, and far away from their homes. Back home in their villages, there are some securities, arising from land that their relatives may be cultivating, and those arising from kinships. In the absence of work and the prospective loss of income, they immediately attempted to access those securities by returning home.

The immediate effect once the lockdown is lifted will be a shortage of labour to the extent that the migrant workers successfully reached back to their villages. They would not want to migrate back to the cities immediately. Those, who are in camps, and still far away from their homes, may want to come back and resume their work. Much depends on how the government and local authorities deal with this. In the near term, there will be a shortage of labour supply and economic services will be disrupted. In the current context, much will depend on how fast the workers gain confidence that the pandemic, and associated adverse consequences, are no more a threat.

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

AB: One cannot imagine a situation where there will be no migration from rural areas to urban centres. However, the present patterns of migration where a few metropolitan cities and industrial centres account for the bulk of the migrant workers are a problem, primarily because the distances of migration are larger, and insecurities greater. So yes, there is a case for more decentralized development. The development of smaller growth centres in and around tier-2 and tier-3 cities can allow people to migrate for shorter distances and perhaps with lesser insecurities. The capacity of newer growth centres to accommodate migrant workers with better living and working conditions may be greater and this is desirable.

The more important intervention would be to create economic dynamism within rural areas so as to reduce the need for workers migrating to urban centres. Diversification of work opportunities in the rural areas, nearby to villages, can make it possible for rural labour to find non-agricultural jobs without undertaking migration. This would mean that significant investments are made in businesses in rural areas to create new growth and employment opportunities.

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?

AB: The major problem that afflicts rural India is the persistent agrarian crisis, whereby a large majority of farmers is unable to generate enough income to improve their farm systems and/or improve their living standards. At the same time, there are not enough employment opportunities outside agriculture to engineer a diversification of livelihoods. This crisis intensifies when prices of agricultural commodities are stagnating or declining. With nearly half of the population dependent on agriculture, the incomes generated from agriculture and retained by farmers need to improve. Only then can the situation of demand in rural areas be more buoyant, without which, investments in rural areas will not take place.

Given that agriculture, and allied activities, supports the largest number of people in rural areas, income deflation in that sector will further pull down the non-agricultural activities in rural areas. The primary task therefore is to raise agricultural incomes. This can be done through a mix of regulatory support by the government, technology induced productivity increases and subsidy support to farmers in key areas. Such interventions should also take care of the basic food security in rural areas.

Value-added activities linked to agricultural commodities should be developed in a decentralized manner such that it creates a virtuous cycle of income augmentation and investments.

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

AB: Rural industrialization must happen in a manner that does not intensify conflicts with agriculture but complements it. Major initiatives should be taken in order to develop industries in rural areas that process agricultural commodities, particularly food. More importantly, the food-processing industries needs to be developed under a cooperative model such that the surpluses generated are invested back in the rural areas. The government schemes like MUDRA loans can be used effectively for developing such cooperatives, empowering rural women as well as using their enterprise to create value-added activities.

Large private companies procuring food commodities for further processing should be the second choice. They can only be allowed under conditions of making CSR expenditure in rural areas contributing to the development of physical and social infrastructure. Without a certain condition of repatriating a minimum amount of profits back into rural areas, more and more private investments in rural areas will only lead to more intensified transfer of surplus from rural to urban areas and will not improve the demand situation in rural areas.

Finally, the government needs to ramp up public social infrastructure for mass education (including higher education) and advanced health facilities. In both these areas, there is a significant deficit in rural India from the point of view of human development and the intervention is long due. The generation of a large number of such public service jobs will not only boost the rural economy but also create conditions for skilled personnel to go and work in rural areas, even if for a limited number of years. The current pandemic is the ideal situation for boosting the social infrastructure in rural India, which is presently in a massive deficit.

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?

AB: This has mostly been elaborated above. An additional point that is to be kept in mind by both the government and private investors is that any industrialization in rural areas, needs to create a harmonious relationship with the local ecology. It must be kept in mind that the ecological wealth in rural India is of enormous value and any human enterprise must not end up denuding that wealth, leading to new problems of sustainability. Thus, industrial domains and designs have to be carefully thought out.

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

AB: Unfortunately, rural development is a challenge that more or less all development countries are grappling with for the last thirty years. There are some success stories in South-East Asia and East Asia from which one can draw some lessons. It is however not possible emulate any model from elsewhere given historical and social specificities. The key is to develop one’s own model taking into consideration the specific social complexities. It must also be kept in mind that no model of development is frozen in time and requires modification and adaptation as the economic and social situation evolves over time.


Prof. Arindam Banerjee, Ambedkar University of Delhi, teaches courses on economic history, theories of value and distribution and agrarian development. His research is primarily in the areas of agrarian development, colonialism, political economy, food security, poverty and bio-fuels. He has published on the agrarian crisis in India, global food crisis, corn-ethanol and food-feed-fuel competition, food policy in India, colonial historiography among others. He has also worked as external consultants to multi-lateral organizations like IFAD and FAO.

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