BackOpinion | The opportunity in unintended consequences: Post Covid-19 reset for India
If 90% of India’s population is based outside metropolitan cities, can the government use this crisis of reverse migration as a trigger to redraw a regionally-progressive, more balanced plan for development and industrialization?
PremiumNever let a good crisis go to waste—a phrase often used to look for optimism and opportunities in difficult times. The current scenario in India could be one such inflection point.
Recently, Prime Minister Narendra Modi announced a lockdown across India to apply brakes on the spread of the highly pathogenic and contagious novel coronavirus, which causes Covid-19 disease. With the impracticality of social distancing, a lockdown seeks to flatten the curve in a country which has a frail healthcare delivery system and limited resources, besides significant incidence of underlying pre-existing conditions such as diabetes, hypertension and malnutrition.
Yet, it was the unintended but inevitable consequences that have caught everyone off guard. The hardships endured by the nearly 360 million self-employed (who are largely in the informal sector) and casual workers, and their families in India are already becoming unbearable. The finance minister has announced relief measures of over $20 billion. Timely and comprehensive disbursement of these benefits may provide temporary relief.
The real plight, however, is that of around 140 million migrant workers, of whom over 50 million travelled to urban centres in search of economic opportunities. Together with their families, migrants account for over 450 million people, according to a 2017 report of the Working Group on Migration. This flight is being reversed now, as many get evicted from homes with no notice and have to walk miles on foot with family in tow, to reach back home. Anecdotes from those migrating back suggest that the current shock will create lasting reluctance on people to come back to cities. The toll on livelihoods is going to be massive, giving rise to an equally virulent and painful crisis.
Tragic as it is, this opportunity must be used to correct a major issue plaguing India. Economic growth in India has been skewed towards a few major centres, leaving behind large parts of the country. Massive population centres such as Uttar Pradesh and Bihar are the largest source of migrants, who flock to major cities in Delhi, Maharashtra, Tamil Nadu, Andhra Pradesh and Kerala, in search of opportunity. This model which continuously concentrates growth in a few areas is especially unsustainable in India, given the vast cultural diversity and social disparities.
There is hope, though. Our recent work to promote entrepreneurship in small towns and villages in India has highlighted that people here are inherently entrepreneurial and have a strong desire to generate economic wealth close to home. There is no dearth of drive or hustle in these locations; what is lacking is an opportunity and enabling ecosystems.
This is where the opportunity lies. If 90% of India’s population is based outside metropolitan cities, can the government use this crisis of reverse flight of migrant workers as a trigger to redraw a regionally-progressive, more balanced plan for development and industrialization? Economies of scale have already been achieved in the larger centres, and now the need is to take the next wave of economic development further inside India.
From a ‘bounce-back’ planning perspective, this means directing investments to widen the spread of industrial activity and urbanization in India. A country as large and demographically gifted as India should have multiple thriving economic corridors that include ecosystems of large and small enterprises, educational institutions, innovation labs that seek to capitalize on the geographic, demographic and economic assets of that region. This will require three major changes. First, a deliberate shift away from the continuous expansion of existing over-burdened economic hubs towards creating new ecosystems surrounding various population centres. These must pull in working-age populations from nearby towns and villages. Second, a coordinated effort is needed between the central and state governments as well as the private sector to make a blueprint for a future-state model for each such corridor. Finally, rapid prioritisation of infrastructure and diverse capacity-building investments to develop these ecosystems and integrate them into the national economy.
Economic corridors must have an elevated place for small and medium enterprises, which are crucial to creating a comprehensive system, and driving sustained development of a region. Finally, as governments play the catalytic role, the private sector itself needs to come forward and make some bets on under-utilised regions.
India might have 600,000 villages, but about 60% of the rural population is in 20% of these villages. Plus, many of these villages are close to one another and to towns. This makes an inclusive development model more conceivable. The good news is that some of the groundwork exists. With the right road infrastructure, and operationalisation of available utilities, these villages can absorb the local working-age population, which otherwise migrates outside or remains unemployed.
There are other benefits which will ensue – more environmentally-responsible growth, better and a wider spread of renewable sources of energy, and faster unlocking of the promising consumer markets that exist in rural and semi-urban India.
Ultimately, if India has to grow at a sustainable clip, the economic opportunities have to be distributed beyond the big metropolitan cities. It is this intentionality that can ensure that the current crisis does not get wasted.
Seema Chaturvedi is Founder and Managing Partner of AWE (Achieving Women Entrepreneurs) Funds, an early growth equity fund. Megha Chawla is a partner in Bain & Company, a global management consulting firm.
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