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Why is it necessary to create growth along India's countryside and boo...

  May 10, 2020

Why is it necessary to create growth along India's countryside and boost wages? Examine.

  1. The helplessness felt by the migrant workers calls for nothing short of a radical rethink. 
  2. There is a need to plan for an economic growth driven by rising and not stagnant wages, and a development model that is dispersed far and wide across the country, and not centred in a few big cities.
  3. Out of India’s total workforce of 471.5 million, only 12.3% are regular workers receiving some form of social security, while the rest are mostly casual workers or petty producers surviving under various degrees of informality.
  4. A vast majority of migrant workers belong to the category of informal casual workers. 
  5. Workers migrate from villages to urban centres as the growth of rural incomes has not kept pace with the rising numbers and aspirations of the young in the countryside. 
  6. Workers’ shift out of agricultural occupations as well as out of their rural bases is set to accelerate, unless new economic opportunities are created in the countryside.
  7. A majority of the workers who leave villages find themselves in the bottom rung of the urban economy, earning a precarious living as drivers, factory workers, security guards and domestic helpers. 
  8. Their livelihoods are directly or indirectly linked to economic activities that cater to the demand from the relatively affluent in India and abroad .
  9. Even as they work long hours often under exploitative conditions, informal workers manage to earn and consume only very little. 
  10. Businesses in India and elsewhere are concerned that even after the lifting of the lockdown, they will have to operate at a fraction of their installed capacities due to the sagging demand conditions.
  11. The crisis in the economy can be overcome only by widening the sources of demand, by raising the consumption of and investment for the poor. Consider, for instance, the setting up of industries linked to food processing or affordable housing in rural areas. 
  12. The multiplier effects of such investment will be huge. Food processing can help boost farmer incomes, reduce food spoilage, create rural employment and, above all, improve the availability of nutritious food to the needy.
  13. Broadening the demand base requires policies that differ fundamentally from conventional economic ideas. 
  14. The mainstream argument has been that firms should try to reduce costs by squeezing wages. But cutting wages will shrink markets further and deepen the crisis during a depression. 
  15. Instead, firms should assist in raising workers’ wages and incomes, and thereby, in enlarging the size of the markets. 
  16. For rejuvenation of demand, it is critical that governments increase spending on the economy, in areas such as infrastructure and innovation. 
  17. This will include investments in healthcare, education, roads, rural infrastructure, agricultural research, public transport, and so on — perhaps similar in scale and ambition to the post-war reconstruction efforts in western nations following the Second World War.