Bengaluru: More than 120 million jobs have been lost in April 2020 due to the lockdown, and the unemployment rate for April 2020 was pegged at 23.5%, nearly thrice the level in March 2020. More than 4.4 million stranded people, many of them migrant workers, have returned home in special trains as India’s economic growth is expected to be in the “negative territory” this year, according to the Reserve Bank of India.
Millions of migrant workers have had to walk across states and cities to reach their homes, showing that “policy makers ignore them”, says Ravi Srivastava, director of the Centre for Employment Studies at the Institute for Human Development. “They have few rights and entitlements and are treated as irritants or nowhere citizens.”
Despite the announcement of a Rs 20-lakh-crore ($266 billion) fiscal stimulus by the Centre as part of the Atma Nirbhar Bharat package, “the stimulus in 2020-21 is no more than 0.7-0.8% of GDP [gross domestic product], which is tiny”, he adds. The government has claimed it was 10% of GDP, but much of it was already injected. “Virtually nothing has been provided against the jobs lost by the informal workers and circular migrants,” said Srivastava. He and other economists have advocated an emergency income transfer of Rs 6,000 per month to each household.
Srivastava is a former professor of economics and chairperson of the Centre for the Study of Regional Development at Jawaharlal Nehru University in Delhi, and a full-time member of the National Commission for Enterprises in the Unorganised Sector (NCEUS). He has been member and chairperson of committees of the University Grants Commission, Ministry of Human Resource Development and the erstwhile Planning Commission. He has also offered consultancy and advisory role with the International Labour Organisation (ILO), United Nations Development Programme, Asian Development Bank, UNICEF, among others.
In this interview, he talks about the lack of policy focus on migration, challenges to the economy due to the COVID-19 lockdown, and the impact on workers and states’ economies.
India is witnessing unprecedented reverse migration and a situation where workers are not able to find transport back home. Why has internal migration not been an important policy issue?
There are several reasons for this. There is a prevailing orthodoxy which believes that labour mobility is low in India. The Census provides data on population mobility and till 2001, migration rates did not seem to go up, but they have gone up substantially between 2001 and 2011.
Labour mobility has been an underrated and under-studied subject. However, it has been quite clear that labour circulation has been going up and has had close links with informality [in jobs]. But NSS [National Sample Survey] that attempts to measure short duration outmigration has also yielded significant underestimates.
However, I think the most important reason is that circular migrants work at the bottom of the economy. They have few rights and entitlements and are treated as irritants or nowhere citizens. So policy makers ignore them.
NCEUS has devoted a lot of space in its [August 2007] report focusing on their problems. More recently [in January 2017], a Working Group on Migration set up by the Ministry of Urban Housing and Poverty Alleviation gave a detailed report but its recommendations were also not implemented.
Some of the source states of migration are agriculture-dependent. Funding for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has been increased by Rs 40,000 crore in the fiscal stimulus and wages increased 11% to Rs 212 per day. The government has also announced a slew of measures such as Pradhan Mantri Garib Kalyan Yojana (PMGKY) and increased borrowing limit for states. What is your assessment?
The direct fiscal stimulus provided by the government under the PMGKY and the larger package, which is mainly addressed to rural households, is very small, in relation to the magnitude of the crisis. It is now known that a large proportion of households have not received or not been able to access the benefits so far.
While the MGNREGA allocation has been increased, and this is a good thing, the rules of the schemes have not been relaxed and the ceiling of only 100 days of work for a household are still operative. The wage increase is extremely modest and was in the pipeline for a long time.
The allocation for states is yet another issue. Yes, their borrowing limits have been increased but with conditions attached and the states are still concerned about dues to be met by the Centre. I also feel that the Centre has been passing on the burden of financing and implementation to states even where it had a responsibility. For example, inter-state migration and inter-state quarantine is a central subject, but the states have been asked to shoulder the burden.
The government seems to be encouraging people to move out of farming by trying to create more non-farm jobs. But the pandemic will force more people back into agriculture and related activities. What is your assessment and what role will the agriculture sector play during this crisis in rural areas, especially considering that migrants may be agricultural labourers and landless farmers?
I don’t think that the government has been encouraging people to move out of agriculture, but yes, structural issues and policy neglect have been making it less possible for both labourers and farmers to subsist on agriculture, and the gap between value-added per worker in agriculture and non-agriculture [sectors] has been increasing. This has now led to workers moving out and a decreasing workforce in agriculture.
As far as the present crisis is concerned, segments of agriculture have been affected seriously by the crisis, and price and marketing issues are still very important. However, agriculture, which altogether is about 13% of GDP, has been able to weather the storm somewhat better than other sectors.
Now the government has announced a package of reform measures in marketing and credit [among others]. Most of these have been suggested, and also implemented for decades. They are unlikely to lead to a dramatic change in the short run and will not lead to an additional absorption of the labour force that may be added to rural areas.
For that to happen, greater attention will have to be paid to irrigation and the cropping pattern so that there is some additional scope for absorbing labour. But the major scope will come from public works, which can be used to rejuvenate rural areas, agro-processing, and non-farm enterprise growth. Migrant workers who may decide to stay back have a pool of skills and the government should provide focused credit to help them set up micro enterprises. MUDRA is a good vehicle for doing this.
The government's fiscal stimulus is lower than that provided after the economic crisis of 2008 and is around 2%-2.5% of GDP. How beneficial are the announcements for migrants when more than 120 million jobs have been lost?
My own estimate is that the stimulus in 2020-21 is no more than 0.7-0.8% of GDP, which is tiny. As far as the migrants are concerned, the urban informal economy in general and the migrants in particular were very poorly targeted in the package, though a proportion of their families in rural areas may have been able to receive the meagre support that was provided. Virtually nothing has been provided by the Centre against the jobs lost by the informal workers and the circular migrants.
India’s economic growth is expected to be in the “negative territory”, according to the RBI. With the workforce wanting to go home or already back, what options does India have to revive economic activity? Is dilution of labour laws and rights inevitable to recover lost growth?
Yes, the economy will be in the negative territory in 2021 and will take time to revive. This means that demand for workers will also pick up slowly and large numbers will remain unemployed. There could, however, be a temporary mismatch between demand and supply of workers in some industries and destinations, which rely heavily on circular migrants.
It is important that industry builds up confidence in workers and offers them a better deal to attract them back as soon as possible. Dilution of labour laws will send the opposite signal and will harm the economy. Moreover, labour laws are being suspended in the hope of bringing in fresh investments in the next one year. This is a facile hope.
Existing businesses, not only in India, but all over the world, will be confronting issues of survival and revival and will not be buoyed by the idea of making fresh investments except in key sectors with high demand and profitability. Even when they do that, the suspension of labour laws for a finite period, breaking India’s international commitments to the ILO and obligations under UN Conventions, is not likely to be a high selling point for them.
At this juncture, industry has to work to restore the confidence of labour, which feels badly let down by employers and the governance system. It should do that by offering them a better deal, and working with the government on a set of changes in which formality and the health and safety of workers and their families can be promoted.
The majority of the workforce in India is informal without labour contracts. The government expected the employer to compensate for wages at a time when there was no industrial or employment activity. What should the government have done immediately during the lockdown that began on March 25, 2020, and what are the top three things that can be done now to improve demand?
The government issued a directive to employers to provide wages to the informal wage workers who had lost jobs. This showed a lack of understanding of the labour markets. Informal wage workers do not have contracts with their employers, often work with a nebulous group of contractors, or with more than one employer.
In any case, the crisis impacted everyone--self-employed, casual workers, as well as informal but regular wage workers. Data from Centre for Monitoring Indian Economy’s consumer pyramids household survey showed that consumption levels of about 80% of households shrank. Even now, it will take a long time before employment and incomes revive.
The three urgent requirements were an emergency income support to all but the well-to-do; free food or rations for six months; and well-coordinated and free arrangements by the Centre to transport migrants to their homes. These measures, if taken timely, would have also stemmed the outflow of migrant workers from cities.
There has been debate over minimum income support before the present crisis. What are your views on it?
We, as part of a large team of economists associated with the Indian Society of Labour Economics, have advocated an emergency income transfer of Rs 6,000 per month. This is roughly the present level of the administrative national floor wage. The proposal is similar to a short-term universal basic income.
For the long run, I have personally advocated the institution of a universal social protection floor to consist of a minimum level of income on a life-cycle basis, and essential services, including health. It will also incorporate some of our well instituted social protection measures such as MGNREGA and the Integrated Child Development Services. This is a more promising approach than a universal basic income, which is also fiscally unsustainable.
I must also add that the social security code envisaged by the government sets back even the existing social security architecture in many ways and needs to be urgently reconsidered. This is because the code bill does not provide an integrated framework for universal social security. Instead, it segments the framework into three compartments - establishments with ten or more workers, construction workers, and unorganised sector workers. There is no tangible proposal made for the last, who constitute the overwhelming proportion of workers. One of the clear lessons of the pandemic is the need to institute a universal system of social security covering all workers.
Would it be appropriate to initiate an urban employment programme considering the urban unemployment rate is on average higher than the rural?
The unemployment rate is directly related to education level and is very high for the highly educated. The pandemic has thrown up the challenge of unemployment among the informal workers, including the less skilled and less educated. An urban employment programme will be useful in this context but its contours will be quite different from the rural programme’s, which also has changed direction since its inception. Needs associated with pandemic control and management, for example, can be identified, and large-scale programmes created around it. But more thought will have to be given to the content of such a programme.
The majority of the Shramik trains carrying mostly migrant workers are going to Uttar Pradesh and Bihar. What will be the consequence for these states’ economies? How much do you foresee migration patterns changing, and for how long?
Bihar and Uttar Pradesh account for about half the circular migrants. They, and the other major source states, have a weak resource base and their record of creating employment and managing public programmes is unenviable.
They have made some bold announcements of providing social security and employment to the migrant returnees. But translating this into concrete action in the middle of the pandemic and the deep economic crisis is not easy.
Migration patterns are determined by underlying patterns of development, migration circuits and demographic regimes, among other things. In the medium term, migrant workers may like to find better jobs elsewhere. But the short term is also crucial for them and businesses, and economic activity in the urban areas, which may slowly revive. That is why businesses need to go all out and rebuild confidence among these workers. And of course, the precarity of these workers must be addressed.
The Uttar Pradesh government has now announced that permission will be needed to hire workers from the state. How do you view this policy measure when restricting movement based on permission may infringe on fundamental rights to travel for work?
This announcement has been made with good intentions but Article 19 of the Constitution guarantees freedom to people to take up employment anywhere. The governments of UP and Bihar have made a number of announcements but they need to be diligently thought through and their implementation mechanisms carefully considered. Mobility of migrants requires a carefully considered framework under arrangements that should be overseen by the national government.
States such as UP, Bihar and West Bengal also send blue-collar workers abroad, especially to the Gulf and West Asia. What is the impact of returning migrants from outside the country compared to internal migrants? Are there areas that may be more vulnerable to economic shocks?
The focus of labour emigration over the last several years has shifted from states such as Kerala and Andhra to UP, Bihar and West Bengal, which are now sending workers to the Gulf Cooperation Council countries in much larger numbers. So far, there are very few accounts of workers returning to these regions from abroad.
However, as contracts end and are not renewed, which is the likely scenario, these workers will start returning to their parent states. Like the internal migrants, this will have both a health dimension and an economic dimension, and will exacerbate the problems faced by the source states, and of course the migrant workers and their families.
(Paliath is an analyst with IndiaSpend.)
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