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How low spending on infrastructure results in large-scale distress migration

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The picture is for representation only. Credit: rohitgautamphotography.wordpress.com

Distress migration is one of serious issues affecting India’s Aam Aadmi. Poverty, lack of job opportunities, low-income, search for better living conditions, etc. among the many reasons that force people to leave their native villages and towns and migrate into other states. Here is an article, which explores how a state’s investment on infrastructure projects affects distress migration.

By Himadri Ghosh

Raju Rai was 17 when his mother was diagnosed with cancer, forcing him to leave his village in Jharkhand’s overwhelmingly rural Jamtara district in search of a livelihood. He’s 22 now and earns Rs 10,000 ($145) a month, painting buildings in Bangalore, about 1,980 km to the southwest.

“As a gift, God gave us poverty,” said the lean, unsmiling young man, whose chief ambition is to save enough money, find his sister a “good man” and “get her married with Dhoom-Dham (in style)”.

How infrastructure pending affects distress migration

Rai’s story is common among many of the 307 million Indians who report themselves to be migrants by place of birth, according the 2001 census report (the 2011 data is not final).

Of these, 268 million (85 percent) migrated within their state, 41 million (13 percent) migrated to another state and 5.1 million (1.6 percent) left India.

Men primarily migrated long-distance as migrant labor to earn more money – marriage was a prime reason for women – and an IndiaSpend analysis found that migration largely correlates with a state’s investment in infrastructure.

States with lower per capita infrastructure spending typically – but not always – have lower per capita incomes, sparking large migrations, according to finance ministry data.

Bihar, Jharkhand, and Uttar Pradesh are among the states with lower infrastructure spending and low per capita incomes.

High infrastructure spending states like Goa, Tamil Nadu, Maharashtra, Haryana and Gujarat also have higher per capita incomes.

So, India is witnessing wide variations in per capita income and growing levels of distress migration from low-income states, experts said.

“Such large flows of migration from village to city have unsettling political and economic effects,” said Sukumar Muralidharan, a felow at the Shimla-based Indian Institute of Advanced Study, a think-tank run by the ministry of human resource development.

Infrastructure is important, but there are other reasons

While infrastructure appears to be the overwhelming link between per capita income and migration, there are important exceptions.

Consider India’s richest state, Goa, which has a per capita income of Rs 224,138 ($3,300), the same as Indonesia ($3,491) and Ukraine ($3,082).

Goa’s per capita infrastructure spending is the highest in India, Rs 36,516. Haryana and Maharashtra stand second and third, respectively, in per capita income, and also in per capita spending on infrastructure.

Maharashtra and Delhi have high in-migration rates, accounting for 16.4 percent and 11.6 percent of the country’s total migration. The large inflow of people into states like Maharashtra (nearly 8 million in 2001) and Delhi (over five-and-a-half million in 2001) is because of the opportunities they offer.

Now consider Bihar, with a per capita income of Rs.31,199 ($589), and Uttar Pradesh’s Rs.36,250, ($534), which are less than Mali ($704) and Guinea ($539).

Bihar spends Rs 13,139 per capita on infrastructure and Uttar Pradesh Rs 9,793.

Compared to Maharashtra and Delhi, the inflow of people to states like Bihar and Uttar Pradesh is limited: Only 1,794,219 and 2,972,111 people migrated to Bihar and Uttar Pradesh In 2001.

The exceptions are evident in prosperous states with low infrastructure spending, such as Punjab and Kerala, and low-income states with relatively higher per capita infrastructure spending, such as Chhattisgarh and Himachal Pradesh.

The precise reasons are not clear, but uneven geography, diverse demography, culture and politics could be reasons for the breaks in pattern, experts said. Attention to the social sector, as in Kerala, is an explanation.

Although the responsibility for promoting equity and equitable development is shifting to the states, as IndiaSpend has reported, the Centre has a role, said Ajitava Raychaudhuri, professor of economics at Jadavpur University. “States need pragmatic planning,” he said. “Equity across states needs focused intervention from the Central government.”

The importance of backward regions, under-invested sectors and local jobs

In the power sector, the thumb-rule is that every rupee invested in generation should be backed by an equivalent sum invested in transmission and distribution, said IIAS’ Muralidharan.

“As against this 1:1 ratio, the record in India has been closer to 8:2,” he said.

Unplanned investment can be as responsible as low investment for disparities, some argue.

Samantak Das, chief economist and national director at Knight Frank India, a global real estate consultancy, explained that vote bank politics is causing disparities as people from backward states depend more on their leaders, and leaders of all hues take advantage to translate this into votes.

“We need evenly-distributed, strategically-planned infrastructure in the country. We have to have social infrastructure, physical infrastructure because infrastructure has a high positive rub-off effect on growth,” Das added.

Raychaudhuri said the future can be secure only if capital expenditure and environmental planning are increased simultaneously.

The rural-urban divide-and, migration-can be addressed by encouraging micro, small and medium enterprises locally.

As evidence grows that the job-creating potential of large industry is falling in India, migration appears to be growing.

India’s urban population has grown faster than its rural population since the last Census, according to provisional 2011 census data.

The proportion of migrants in the urban population was 35% in 2007-08, when measured by the National Sample Survey.

This intermingling plays out in growing reports of conflicts with outsiders in various Indian states.

“Migrations lead to ethnic and cultural stereotyping and intolerance towards people seen as different due to competitive politics,” Muralidharan said.

Since infrastructure spending is a major factor in economic growth, it is important that related budgetary allocations rise to India’s more backward states, particularly their backward regions, said Sidhartha Mitra, head of the economics department at Jadavpur University.

The exceptions to the rule indicate, he said, that social-sector spending is equally important. (IANS/IndiaSpend.org)

Next Story

Concerns over China’s Growing Clout, Indonesia Still Hopeful About OBOR

Jokowi is expected to continue courting Chinese investments in his second term, Achmad said. An official preliminary count after the April 17 election showed Jokowi poised for a second term with a 10-percentage-point lead.

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Economists contend that the initiative forces emerging economies to take on unsustainable levels of debt to fund Beijing-backed projects. VOA

Indonesia’s investment chief expressed optimism about the future of China’s massive One Belt One Road (OBOR) infrastructure initiative in his country, despite lingering domestic criticism about Beijing’s growing economic influence.

President Joko “Jokowi” Widodo has made improving Indonesia’s dilapidated infrastructure a priority, and during his first term embraced Chinese investment and attended the initiative’s 2017 unveiling in Beijing. Multibillion-dollar projects under the OBOR banner in Indonesia feature the construction of a high-speed rail link and dams.

Thomas Lembong, chairman of the National Investment Coordinating Board, said this week he believed that “the Chinese leadership will do whatever it takes to make Belt and Road a success.”

“Well, I’m very happy, because it’s going in the right direction, as far as I’m concerned,” he told foreign correspondents in Jakarta on Wednesday.

Lembong also praised Chinese President Xi Jinping for what he described as “a stunningly humble posture” in responding to criticism about OBOR.

Soon after Indonesia’s presidential and legislative elections in April, Lembong accompanied Vice President Jusuf Kalla to the second international OBOR forum in Beijing. Kalla witnessed the signing there of 23 agreements between Indonesia and China, which Jakarta has described as business-to-business deals.

The president who just won reelection – according to unofficial “quick-count” projections by independent pollsters – highlighted his infrastructure push during a major post-electoral speech on Thursday. In it, he announced plans to unveil tougher reforms aimed at boosting the economy, as well as lifting Indonesia to developed nation status by 2045.

“First and foremost is infrastructure. Equal development must be achieved. Without it, don’t ever dream of Indonesia progressing to be a country with the world’s fourth or fifth economy,” Jokowi told the National Development Planning Conference in Jakarta, according to Indonesian news outlet Tempo.

Because he was heading into his second and last term in office due to term limits, he said he was no longer burdened by elections.

“So I will do whatever it takes for the country’s sake,” Bloomberg quoted him as saying.

Opposition politicians and conservative Muslim groups have accused Jokowi of being too soft on China by opening doors to Chinese investment in Southeast Asia’s largest economy and, with it, Chinese workers.

China
A migrant worker sits next to his belonging against a wall displaying a Chinese government propaganda message at the Beijing railway station in Beijing, Monday, Jan. 21, 2019. China’s economic growth hit a three-decade low in 2018, adding to pressure on Beijing to beef up stimulus measures and settle a tariff war with Washington. (AP Photo/Andy Wong) RFA

A modern-day Silk Road

OBOR, Chinese leader Xi’s signature policy, is an estimated U.S. $1 trillion-plus initiative that stretches across 70 countries. It aims to become a 21st century Silk Road by weaving a network of railways, ports and bridges, linking China with Africa, Europe and Southeast Asia.

Beijing’s globe-spanning project has drawn criticism domestically and abroad, amid accusations that China is engaging in a “debt-trap diplomacy” by extending excessive credit with the alleged intention of extracting economic or political concessions from the debtor country.

Economists contend that the initiative forces emerging economies to take on unsustainable levels of debt to fund Beijing-backed projects. They highlight concerns by pointing out that a Chinese state-owned company took over a majority stake in Sri Lanka’s Hambantota port after Colombo struggled to repay its loans from China.

In Indonesia, the perceived influx of Chinese workers has spawned criticism and was a key issue during campaigning for the April 17 presidential election. The opposition camp tapped into historic sentiment against the country’s ethnic Chinese minority and whipped up fears about eroding sovereignty.

“It can’t be denied that the Chinese have built a lot of bridges, dams, factories and other infrastructure in recent years,” said Achmad Sukarsono, an analyst at Control Risks, a Singapore-based consultancy.

“These things may not be of high quality, but the Chinese get the jobs done, in places where Japanese and Western investors won’t take a second look,” he told BenarNews, , an RFA-affiliated online news service.

“The Jokowi government favors the arrangements with the Chinese because they aren’t too legalistic, with less attention paid to things like human rights, as long as they deliver and both sides’ interests align,” he said.

There were occasional tensions in projects where Chinese nationals are employed as menial workers, foremen and managers, Achmad said.

Economist: Benefit to local economy ‘minimal’

Indonesia’s infrastructure needs cannot be financed by the state budget alone and OBOR is an attractive financing mechanism, said Bhima Yudhistira, an economist at the Institute for Development of Economics and Finance.

“But Chinese investment often comes with workers, raw materials, machinery and technology, with the pretext that they aren’t readily available here. So the benefit to the local economy is often minimal,” Bhima told BenarNews.

Despite its embrace of OBOR, the government has insisted that any infrastructure project under the scheme should be profitable and conducted on a business-to-business basis.

Lembong, the Indonesian investment chief, acknowledged that the Jokowi government had “burned untold amounts of political capital” with its decision to welcome Chinese investment.

“Supporting Chinese investment in Indonesia exposes us to this hoax and attacks that we’re somehow an offshoot of the Communist Party, or secretly Chinese, or openly Chinese, and or secretly pro-China or what have you,” he told reporters.

But Indonesia would miss out tremendously if it abstained from Chinese investment, Lembong said.

“What happens then is that Chinese investment will just go next door, to Malaysia, to Thailand, to Cambodia and eventually Myanmar, maybe even the Philippines at some point, and all of them will see enhanced competitiveness, and we will not,” he said.

Sino-Indonesian trade grew almost tenfold from 2003 to 2010 alone, when the volume reached 524 trillion rupiah (U.S. $36.1 billion), according to the International Institute for Sustainable Development, a Canada-based independent think-tank.

China was Indonesia’s third largest investor after Singapore and Japan in 2018, with investment worth $2.4 billion.

“The government has said all along that we won’t meddle except for facilitating and issuing necessary regulations,” said Wijayanto Samirin, an economic adviser to Kalla, the vice president.

“We have learned from the experience of other countries and conveyed to President Xi Jinping that China must respect our independence,” he told CNBC Indonesia last April.

Projects

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A China-backed hydropower project in Indonesia already is under the spotlight amid concerns that it could threaten the world’s rarest orangutan species. Pixabay

OBOR’s flagship project in Indonesia, a U.S. $6-billion high-speed railway linking the city of Bandung in West Java and the capital Jakarta, went through initial setbacks after it was launched by Jokowi in 2016 to much fanfare.

Construction resumed last year after a delay for more than two years.

Lembong blamed the delay on “good old-fashioned mismanagement and incompetence” and said the problems were being fixed and the consortium building the railway was now being led by “a younger and more energetic” chief executive.

“The project has been in difficulty,” he said, “but I’m confident it’s now being fixed.”

A China-backed hydropower project in Indonesia already is under the spotlight amid concerns that it could threaten the world’s rarest orangutan species.

The U.S. $1.6 billion hydropower plant in the Batang Toru rainforest on Sumatra Island will divide the habitat of about 800 Tapanuli orangutan and increase the risk of their extinction, environmental groups and scientists have said.

Other OBOR projects include a hydroelectric project in North Kalimantan – in the Indonesian section of Borneo – estimated to cost 363 trillion rupiah (U.S. $25 billion) and a series of coal-fired power plants estimated to cost 174 trillion rupiah (U.S. $12 billion).

Achmad, of Control Risks, said problems in securing land also contributed to the delay in the high-speed train project.

But he said smaller Chinese-backed projects in remote places in the archipelago were mostly completed on time.

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Jokowi is expected to continue courting Chinese investments in his second term, Achmad said. An official preliminary count after the April 17 election showed Jokowi poised for a second term with a 10-percentage-point lead.

“The Chinese are here to stay and their role is unlikely to be reduced,” he said, “because they have contributed so much to Jokowi’s programs.” (RFA)