More Shock to the Economy, Millions of workers fled and Don’t Want to Return

The urban industries now don’t have enough workers, to get their capacity back and rural states worry that without the monetary flow from the cities, the already poor family will be worse than before, which in return will be of more stress to the state reserves.

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More Shock to the Economy, Millions of workers fled and Don’t Want to Return.the policy times

After the nationwide lockdown, from March till June, around 10 million migrant workers from various megacities of India have gone back to their villages, after fighting with unemployment, and hunger for a few days. As the country’s economy is trying to reopen slowly, the effects of a massive relocation of these workers are rippling across the country.

The urban industries now don’t have enough workers, to get their capacity back and rural states worry that without the monetary flow from the cities, the already poor family will be worse than before, which in return will be of more stress to the state reserves. Amidst all these problems with the economy, the migrant workers aren’t expected to return to the cities as long as the virus is spreading and work is uncertain. States are providing different stimulus programs, but India’s economy is rushing for its first contraction in more than 40 years and that too without enough jobs, and a volatile political climate.

Varun Agarwal, the founder of India Migration Now, a research and advocacy group based in Mumbai said, “There will be a huge economic shock especially for households of short- term cyclical migrants, who tend to come from vulnerable, poor and low caste and tribal backgrounds.” Rishi Gupta, Chief Executive Officer of Mumbai- based Fino Paytech Ltd, which operates the country’s biggest payment bank, said, “In the first 15 days of India’s lockdown domestic remittances dropped by 90%. By the end of May remittances were back to around 1750 rupees ($23), about half the pre- COVID average, and we are not sure how soon it’ll fully recover and the migrants are in no hurry to return, they perhaps are saying that they’re not thinking of even coming back at all.”


India announces a $277 billion stimulus package in May and followed it up with a $7 billion package aimed at creating jobs for 125 days for the migrants in villages across 116 districts. Separately, local authorities are also looking for various solutions. Sushil Modi, Deputy CM of Bihar said that 2, 500 acres of land which is identified could be made available to the investors. But the investors have not materialized yet, and in the meantime, the State governments are relying on the national cash-for-work program that guarantees 100 days’ worth of wages per household. Now, the workers who are a little bit skilled do not want to do manual labour which is offered through the programs, and even if some does they think that work to be beneath their social status which will once again bring differentiation in Caste.

Uttar Pradesh which has received 3.2 million people is allocating skilled labourers in local manufacturing and real estate industry associations. The government says it has placed 300, 000 people in construction and real estate firms till now. Bihar has placed the migrants in state-run infrastructure projects and hired others to stitch uniforms and make furniture for government-run schools. The eastern state of Odisha announced an urban wage employment program aimed at putting 450, 000 labourers to work through September. Around 250, 000 have been employed under the scheme so far.

If the migrant workers stay back in their villages for the long term, policymakers will have more monetary issues and more reasons to worry about. If the consumption falls and a new surplus of labour drives wages down, there is a chance of second-order shock to the local economy of the country, which overall is not at all good looking.

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More Shock to the Economy, Millions of workers fled and Don’t Want to Return
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The urban industries now don’t have enough workers, to get their capacity back and rural states worry that without the monetary flow from the cities, the already poor family will be worse than before, which in return will be of more stress to the state reserves.
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TPT Bureau
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