No more dreaded economic shock because migrants do not want to return to cities

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Migrant workers and their families sit inside and on top of a bus on the outskirts of Delhi during a lockout.

From March to May, around 10 million migrant workers fled Indian mega-cities, fearing to be unemployed, hungry and far from their families during the world‘s largest anti-Covid ban.

Now, as Asia’s third economy is slowly reopening, the effects of this massive relocation are spilling across the country. Urban industries do not have enough workers to regain capacity, and rural states fear that without the flow of remittances from the city, already poor families will be further disadvantaged – and greater pressure on the coffers of the state.

Meanwhile, migrant workers should not return to cities while the virus spreads and work is uncertain. States are implementing stimulus packages, but the Indian economy is rushing for its first contraction in over 40 years, and without enough jobs, a volatile political climate becomes even more so.

“It will be a huge economic shock, especially for short-term cyclical migrant households, which tend to come from vulnerable, poor and lower caste and tribal backgrounds,” said Varun Aggarwal, founder of India Migration Now, a study and an advocacy group based in Mumbai.

In the first 15 days of India’s foreclosure, domestic remittances dropped 90%, according to Rishi Gupta, president and chief executive officer of Mumbai-based Fino Paytech Ltd., which operates the largest payment bank from the country.

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Migrant workers and their families unable to catch buses walk along a highway on the outskirts of Delhi, March 2020.

By the end of May, remittances had dropped to around 1,750 rupees ($ 23), about half the pre-Covid average. Gupta does not know how long he will fully recover. “The migrants are in no rush to return,” said Gupta. “They say they don’t think about coming back at all.”

If workers stay in their home country for the long term, policy makers will have more to worry about than remittances. If consumption declines and the new labor surplus drives wages down, said Agarwal, “there will also be a second order shock to the local economy. Overall, things are not going well.”

India announced a $ 277 billion stimulus package in May and followed it up with a $ 7 billion program to create 125-day jobs for migrants in villages in 116 districts. In addition, local authorities are also looking for solutions.

Bihar officials have identified 2,500 acres of land that could be made available to investors, said Sushil Modi, chief deputy minister of Bihar, a state in eastern India. “We can use this crisis as an opportunity to accelerate reforms,” ​​he said.

Investors have yet to materialize, and in the meantime, state governments rely on the national cash-for-work program which guarantees 100 days’ wages per household.

Skilled workers do not want to do the manual labor offered by the program, and even if they did, says Amitabh Kundu of RIS, many believe it is their job. “There will be an increase in social tensions,” he predicts. “Caste could start playing again. It’s absolute chaos.”

For skilled workers, initiatives vary:

* Uttar Pradesh, which has hosted 3.2 million people, compiles lists of skilled workers who need jobs and tries to place them with local industry and real estate associations. So far, according to the government, 300,000 people have been placed in construction and real estate companies.

* Bihar placed returnees in state-run infrastructure projects and hired others to sew uniforms and make furniture for public schools, even as they waited in quarantine centers, a said Pratyay Amrit, head of the state’s disaster management department.

* The eastern state of Odisha has announced an urban salaried employment program aimed at putting up to 450,000 day laborers until September. To date, some 25,000 people have been employed in the program, said G. Mathivathanan, Senior Secretary for Housing and Urban Development.

Attract investment

It is not clear that all this will be enough to make a dent, says Ravi Srivastava, professor at the Institute of Human Development in New Delhi, adding that states do not have much experience in economic development.

“It was the failure of these states to improve governance and put in place development plans that led to emigration in the first place,” he said.

But civil servants and workers’ rights defenders see an opportunity. Uttar Pradesh has established links to encourage companies from the United States, Japan and South Korea to establish themselves in the state. There and in Madhya Pradesh and Rajasthan, the government has made labor laws more user-friendly for employers, making it easier to hire and fire workers.

Modi, the minister of Bihar, said that migration could also give workers – historically a group deprived of their rights – new power, especially in the struggle for urban centers. “The way industries treated workers during the lockout – did not pay them, living conditions were poor – now these industries will realize the value of this force,” said Modi.

“In the days to come, work will emerge as a force that can no longer be ignored,” he added. “This is the new standard. We will determine how to guarantee the dignity and the rights of our people who will work in other states.”

Bihar must hold elections by November, a vote that could be an early test of the political consequences of mass migration. The state is currently led by a coalition that includes Prime Minister Narendra Modi’s Bharatiya Janata party. Amitabh Kundu, researcher with the Research and Information System for Developing Countries, a government think-tank based in New Delhi, said that migrant workers are likely to be angry voters.

“The chief ministers tell these migrants that they will not have to return to work,” he said. “But their ability to do something miraculous in the next four to five months is questionable. If they can retain even a quarter of the migrants, I would say it is a success.”

(With the exception of the title, this story was not edited by GalacticGaming staff and is published from a syndicated feed.)

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