Internal migration: Oriyas in Gujarat

While debt has been found to be an important reason for migration, it seems that the reverse is also true: migration is leading to an increase in indebtedness

A CHAPTER on migration in the latest World Development Report raised a storm in the tea cup recently when activists objected to its characterisation of NREGA as an example of how policy makers do not always recognise the economic benefits of migration. NREGA has indeed stemmed migration — there is widespread anecdotal evidence from all over the country of how contractors have had to raise wages in cities to attract workers from the surrounding countryside, of how it has given a fillip to mechanisation, and according to some accounts how even states like Bihar are sending fewer agricultural workers out to work in Punjab and elsewhere. However, what NREGA has reduced most is seasonal distress migration, of whole families, including women and children, who can now stay back in their villages to the huge benefit of the children’s health, education and nutrition. Thus the WDR chapter itself fell victim to the confusion it describes between voluntary migration based on “pull” factors, as opposed to involuntary migration based on the “push” factors of over population, drought, non-existent social services, and environmental stress. Much of the migration NREGA has stemmed is of the latter kind, which is a good thing. The World Bank’s Delhi office had to issue a clarification recognising as much.

    Migration (of both kinds) has a long history in India and is as old as the country itself. The phrase ‘money order economy’ is not of recent vintage, with whole areas (such as the UP hills) earning the epithet long ago. With the advent of the green revolution by far the largest flows have been rural-to-rural, with migrants from agriculturally lagging states moving seasonally, to states like the Punjab, Gujarat and Maharashtra to work on farms. However, there has also been a steady flow of longer-term migrants into the cities. They are pulled in by economic growth, or what the WDR calls the “agglomeration economies” and increasing returns to scale obtainable by the clustering of skills and talent. The case of Oriya migrants to the cities of Gujarat makes an interesting case study of this type of migration.

    First, it illustrates how particular pairs of sending and receiving areas have emerged in different parts of the country as a response to the information and search costs migrants face. The four lakh Oriya workers in Surat’s powerloom industry come overwhelmingly from a few contiguous blocks in Ganjam district, just as the smaller number of Oriya migrants around Gandhidham and Kandla come from another set of blocks in Puri, Khurda and Nayagarh districts. After the initial migrants had established a beachhead right across the country in Gujarat, in the sixties, it was much easier for the rest to follow. Today, young men from the sending villages just land up at the destination in Gujarat, knowing that a friend or relative will help them find a job.

    Second, these migrants do not come from the poorest Dalit families, but tend to be from BC joint families with a little education and a little land (but not nearly enough — the density of population in Puri and Khurda is twice as high as the state average). Joint families make it easier to leave the wives and children behind. The womenfolk do not as a rule work, and males are shy of performing manual labour for others for the loss of prestige this entails. Factory employment in Gujarat is well suited to this background. Those who start off performing manual labour (for example loading ships in Kandla port) before they manage to land a factory job, don’t talk about it back home.

    THIRD, the emergence of these migration “corridors” across the country has led to the development of some unique institutions to serve them. Thus on the financial side a set of money transfer intermediaries have emerged in Surat who offer what is known as a Bayu Seva Service. Through correspondents in Orissa they deliver remittances (which constitute as much as half of total earnings) to recipients back home within six to 48 hours, at a much lower effective cost than that the 5% charged by the post office on money orders (which can take two weeks). Bank drafts are much cheaper than money orders, and were indeed the preferred option, until the private operators emerged to obviate the need to open a bank account or lose precious earning time queuing up and doing all the paper work. With the advent of these private operators the formal sectors’ share of the remittance market has shrunk to 10%. Other informal financial institutions that have proliferated are bishis (chit funds) and “committees” (informal credit unions) to cater to savings and credit needs.

    Fourth, the case raises interesting questions about the economic impact of remittances in the sending area, and in particular on the relationship between migration and debt. A quick survey, conducted by the author, of households who had send migrants to Gandhidham, found that roughly one third of household resources came from remittances, another third from local income including cultivation, and the remaining third from borrowings. On the expenditure side, the largest single item was on dowries and marriages. Given the high rate of interest on informal loans, retirement of past debt through remittance proceeds would have yielded very high rates of return.

    Unfortunately the hold of the social system among these families decreed high marriage and dowry expenses, and did not allow this to happen. Indeed the existence of migration opportunities is strengthening the dowry system, by raising the market value of grooms and the creditworthiness of their families. It is evident that debt is an important reason for migration. Many of the young men I met in Gujarat were working off expenses incurred in connection with their sisters’ marriages. However, somewhat discouragingly, at least in this case, it seems that the reverse is also true: migration is leading to an increase in indebtedness.

    Most studies of migration have revealed beneficial economic impacts of various kinds at the remittance receiving end, although the migrants themselves may have to bear a high social cost. In this case too, there was some increase in expenditures on house construction and repairs, and essential consumption expenditure. However, because the economic benefits were mediated by social factors, the productive impact was greatly attenuated.