The pandemic has certainly raised several questions regarding migration within the country. Migration across regions is a routine exercise as people relocate, not just across different states within a country but also across countries from time to time due to various reasons. Improving one’s standard of living is certainly one of the reasons. This illustrates that there is significant geospatial inequality, both in terms of standard measures of welfare and economic opportunities.
Several authors have attempted to explain migration and explore its linkages with geospatial inequality. Such studies have become important given that the pandemic has disrupted economic activities across the world. In the specific case of India, the pandemic even resulted in reverse migration, thereby suggesting that migrant workers felt they would attain a higher level of welfare should they be back in their villages.
A recent study by Sriram Balasubramanian, Rishabh Kumar and Prakash Loungani that explores geospatial inequality is very timely. The study, titled Inequality and locational determinants of the distribution of living standards in India, uses the 2011/12 Consumption Expenditure Survey by the NSSO to explain the variation in living standards. The 2017 version of this survey was withheld due to data inconsistencies and other procedural issues and thus, the 2011/12 survey is the last one that provides us with an income distribution.
Their study is critical as it puts the spotlight back on issues related to geospatial inequality—a fact often ignored in popular discourse even though it plays a large role in inbound (and outbound) migration. One of their key findings is that consumption levels and locational inequality are positively related. That is, living standards are higher in richer parts of the country, but so is inequality. Thus, we find large income inequality in many of our urban centres such as Delhi, Mumbai, Bengaluru, etc., which would typically have a higher average consumption level compared to other parts of the country.
Further, they find large differences in average consumption levels for rural and urban households, which is to be expected. There is some evidence that this difference may have converged since then due to large transfers focussed in rural areas, but the gap continues to remain. Additionally, they point at the continued divergence in the per capita incomes of rich and poor states, which is an increasingly critical issue from a policy perspective. As is the case, even the manufacturing sector tends to be more concentrated in our peninsular states, thereby concentrating jobs across that region even though there is large surplus labour in the heartland.
These factors are important as they illustrate how some states are gaining in terms of pushing for more pro-economic policies. Subsequently, they are witnessing an increase in their per capita income levels, which is motivating people from other regions to come in search for better opportunities. The paper provides an excellent explanation for the persistence of economic migration that is likely to continue over the coming decade. Due to this, we will witness a significant change in the distribution of population and thus population density within the country.
The flip side to this is that in the absence of economic reforms in the relatively poorer states, they may continue to lose out in the development process. Continued migration to other parts could result in lower amounts of surplus labour in these areas, which could slow the process of industrialisation in these states.Luckily, some states in the heartland have recognised the need to undertake strong economic reforms in a quest to create a pro-business and pro-markets environment. Thus, the approach is to create job opportunities within the state to retain a share of migrant workers who returned during the pandemic. Whether these states succeed or not will depend on a host of factors, but there is a concentrated policy push for the same.
If states are successful, India may soon begin to bridge the gap in terms of access to opportunities. However, if states mandate domicile requirements and fragment our labour markets, there will be a situation where companies could benefit from disaggregated labour markets.
The paper by Balasubramanian, Kumar and Loungani (2020) provides us with an excellent review of what the 2011/12 data tells us about consumption patterns and geospatial inequality in India. What remains to be seen is if in 2027/28 or perhaps 2031/32 we show some improvement or convergence in income levels, or whether the trend of divergence will continue.
KARAN BHASIN
New Delhi-based economist
(Views expressed are personal)
(karanbhasin95@gmail.com)