Migrants’ exodus can hurt Gujarat
Hostility against them is a case of bad politics, bad economics
The “Gujarat Model” of economic development was one of the key factors behind the Narendra Modi-led Bharatiya Janata Party’s victory in 2014. Ironical as it may sound, one of the key pillars of this model is under threat from social contradictions within the state. After a migrant worker was accused of sexually assaulting a minor, an atmosphere of hostility has been created against the migrant workers, especially those from Uttar Pradesh and Bihar. This workforce has played a key role in furthering Gujarat’s economic growth.
Two sets of statistics can be given to prove this point. The average non-farm rural wage in Gujarat in 2017-18 was 10% less than the all-india average. Non-farm rural wages are a good proxy for urban demand for labour, which, logically speaking, should be much higher in Gujarat, given its higher levels of industrialisation. What explains this discrepancy? Large inflow of migrants has allowed the Gujarati entrepreneurs to keep wages down. The 2016-17 Economic Survey gave a list of top 30 interstate migration routes listing inflow and outflow states. Gujarat had the second-highest share among states that figured in the inflow list. The corresponding outflow states were Uttar Pradesh, Bihar, Maharashtra, Rajasthan and Madhya Pradesh. Gujarat boasts of housing some of India’s most state-of-the-art industries. However, the state also has a large number of labourintensive industries and these have unleashed the now-famous Gujarati entrepreneurship and contributed to enhanced well-being in the state.
What is also true is the fact that a lot of these industries will lose their competitiveness if the labour costs were to rise significantly. This is exactly what will happen if the migrant workforce in the state were forced to leave. Should this happen now, it will be a third disruption for the Gujarati small and medium industry after the shocks from demonetisation and the Goods and Services Tax. The attempt to whip up hostility against migrant workers in Gujarat is a classic case of bad politics and bad economics.