New Delhi [India], December 31 : The decline in migrant population to the workforce is raising concerns on ruralization as against urbanisation says a report by Systematix Institutional Equities.
The report says the decline in rural-urban migration has contributed to rising ruralization, with an increasing share of the population and workforce remaining in rural areas.
This shift has led to higher food demand, narrowing urban supplies, and persistent food inflation. The dependence on agriculture for employment has also grown, with 46.1 per cent of the workforce engaged in the sector in 2023-24, up from 42.5 per cent in 2017-18.
This trend underscores a rise in disguised unemployment and stagnation in rural wages, particularly among women, whose real wages declined by 2.3 per cent annually over the last five years.
The report challenges claims that improved rural infrastructure, such as electrification and housing under schemes like the PM Awas Yojana-Gramin, has reduced migration.
Historical data indicates that while rural electrification and housing construction have progressed, their pace has slowed significantly in recent years.
The cumulative addition of rural houses between FY14 and FY24 was 25 million, falling short of the potential 46.3 million if earlier growth trends had persisted
The declining migration rate has implications for India's economic and social landscape. Lower urbanization reduces the potential for productivity gains and economic growth traditionally driven by urban agglomerations.
Additionally, the trend also raises concern about fiscal trade-offs, with the government potentially increasing revenue spending, cutting capital expenditures, or expanding GST coverage to compensate for slower tax revenue generation.
The Systematix report cites the figures of the Economic Advisory Council to the Prime Minister (EAC-PM), titled 400 Million Dreams!, which has revealed a significant decline in domestic migration within India. It shows a decrease of 53.7 million migrants in 2023, marking an 11.8 per cent drop from 2011 levels.
The EAC-PM findings indicate a reversal of the decades-long trend of rising urbanization, characterized by labour migration from rural areas to cities in search of better economic opportunities.
The migration rate, which includes all reasons for migration, fell from 37.6 per cent in 2011 to 28.9 per cent in 2023. Migration for economic purposes, such as employment or business, dropped by 5 million, at 40 million compared to 45 million in 2011.
This decline is part of a broader trend reflecting reduced economic incentives for rural workers to relocate to urban areas, coinciding with a slowdown in India's overall productivity and economic transformation.
Addressing these challenges requires a dual focus on rural and urban policies. Supporting rural incomes through fiscal incentives and employment programs is essential. At the same time, accelerating urban growth and creating economic opportunities in cities are critical to reversing the current trend.
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