Migration and Economic Inequality in India: Insights into SDG 10.7

Abstract

This article investigates the impact of migration on economic inequality in India, examining both internal and international migration. Internal migration, driven by urbanisation and economic opportunities, often exacerbates regional disparities, while international migration provides significant benefits through remittances, which help reduce poverty but also highlight issues such as unequal distribution and labor rights concerns. Key policies like the eMigrate Online system and Pravasi Bharatiya Bima Yojana reflect progress in supporting migrants but require further refinement. The case of Kerala illustrates both the economic advantages and the dependency challenges of remittances, emphasizing the need for a balanced approach to economic development and migration policy.

Introduction

Migration involves the movement of individuals seeking better opportunities, either within their own country (internal migration) or across international borders (international migration). This movement is driven by factors like poverty, lack of access to quality healthcare, and environmental challenges, as well as opportunities for better employment, higher wages, and improved living conditions in urban areas.
The Sustainable Development Goals (SDGs), set by the United Nations in 2015, address global issues such as poverty, inequality, and sustainability. SDG 10 specifically aims to reduce inequality within and among countries by 2030 (United Nations, n.d.) focusing on income growth for the poorest, social inclusion, and equal opportunities. Migration significantly impacts economic inequality, especially in a diverse country like India.

Internal migration often results in wealth concentration in urban areas, exacerbating income disparities between regions. Meanwhile, international migration affects both sending and receiving regions through remittances, which can reduce poverty but also highlight and deepen regional inequalities. SDG 10’s target 10.7 seeks to facilitate safe and responsible migration (United Nations, n.d.). This article examines how migration influences economic inequality in India and its implications for achieving SDG 10.

Impact of Internal Migration on Economic Inequality

Internal migration in India has seen substantial growth, with the number of internal migrants rising from 309 million in 2001 to 450 million in 2011. This 45% increase outpaced the country's population growth rate of 18% during the same period. Internal migrants now constitute 37% of India's population, up from 30% in 2001(World Bank Blogs,19). Rural to urban migration plays a complex role in shaping income inequality. It provides opportunities for individuals from rural areas to access better-paying jobs, improving their living standards and contributing to poverty reduction in rural areas through remittances. However, this migration often exacerbates income inequality, as the benefits are unevenly distributed. Migrants frequently face challenges in securing stable, well-paying jobs, leading to wealth concentration in urban areas while rural regions lag behind.

Challenges: Low Wages and Poor Working Conditions

Migrants who move from rural to urban areas often encounter low wages and poor working conditions. Many works in the informal sector, where jobs are unstable, and workers lack legal protections, social security, and benefits. They frequently live in overcrowded and unhygienic conditions with limited access to essential services like healthcare and education. This disparity between the living standards of migrants and established urban residents exacerbates income inequality, as migrants struggle to improve their economic situation due to persistent challenges.

Policies: Review of Support for Internal Migrants

Several policies aim to support internal migrants and address their challenges. The Pradhan Mantri Awas Yojana (PMAY) and Affordable Rental Housing Complexes (ARHCs) seek to provide affordable housing options close to workplaces. The Pradhan Mantri Kaushal Vikas Yojana (PMKVY)-offers skill development programs to enhance employability. However, these policies often face implementation issues due to lack of awareness, bureaucratic hurdles, and insufficient coverage. Effective policies must be more inclusive, ensuring better access to education, healthcare, and social security for migrants, alongside legal protections against exploitation.

Impact of International Migration on Economic Inequality

International migration impacts economic inequality in both sending and receiving regions. Migrants often leave their home countries for better economic opportunities, leading to substantial remittance flows that influence poverty and development in sending regions. Remittances are crucial for reducing poverty and supporting economic development by providing financial support for essential needs and stimulating local economies. However, the distribution of remittances is often uneven, with urban and wealthier households receiving a larger share compared to rural or poorer regions. High transfer costs and dependence on informal remittance channels further limit the net benefits for recipient families.

Policies: Enhancing Remittance and Labor Rights

India has implemented several policies to address international migration. The eMigrate Online system enhances the emigration process by integrating stakeholders into a transparent and efficient electronic platform. The Pravasi Bharatiya Bima Yojana (PBBY) offers mandatory insurance for overseas workers, covering work-related travel, death, or disability, while the Mahatma Gandhi Pravasi Suraksha Yojana (MGPSY) provides pension, life insurance, and support for return and resettlement. Despite these initiatives, challenges in labor rights and social security for unorganized workers persist. The 2016 SAARC Plan of Action aims to improve labor migration management and worker safety in South-Asia, though issues in human rights and worker protection remain, highlighting the need for better governance in both origin and destination countries.

Policy Responses and Effectiveness

Internal Migration Policies: The Delhi Urban Shelter Improvement Board (DUSIB), established under the DUSIB Act, 2010, focuses on improving the living conditions of internal migrants in Delhi, particularly those in slum areas and jhuggi jhopri clusters. DUSIB's role includes providing essential civic amenities and resettling squatters, impacting the estimated 1.4 crore slum dwellers in the city. The Ministry of Skill Development and Entrepreneurship (MSDE) has launched the Garib Kalyan Rojgar Abhiyaan (GKRA) under PMKVY to deliver skill training to 3 lakh migrant workers across several districts, aiming to improve their employability.

International Migration Policies: The Ministry of Overseas Indian Affairs and the Money Transfer Service Scheme (MTSS)-facilitate remittance flows and safeguard labor rights abroad. While these policies are designed to support international migrants, the uneven distribution of remittance benefits and challenges in labor rights protection highlight the need for ongoing evaluation and improvement.

Welfare Implications

Labor market indicators reveal significant welfare implications for both migrants and local populations. In 2023, India's labor force participation rate was 55.8%, with a gender disparity: 76.4% for men versus 35.1% for women. Informal employment remains high at 88.8%, disproportionately affecting women (92.1%) compared to men (87.2%). The unemployment rate stands at 4.2%, with youth unemployment at 15.5%. Migrants face lower earnings, averaging ?19,783.5 monthly compared to ?21,513.8 for men and ?15,058.1 for women, highlighting economic instability. Additionally, 50.5% of employed individuals work over 48 hours per week, with a gender divide of 61.8% of men versus 25.9% of women. These figures underscore persistent challenges in labor market policies and their impact on economic security and welfare, suggesting that while some policies offer improvements, ongoing disparities and gaps in protection and benefits remain.

Kerala's GDP Growth and Remittance Dependency

In Kerala, remittances from expatriates have significantly boosted economic growth, with the state's GDP growth rate reaching 12.01% in 2021-22, surpassing the national average. Remittances, constituting around 19% of India's total, have primarily fueled the expansion of the service sector, including construction and trade. Despite this growth, Kerala faces challenges due to stagnation in agriculture and industry, highlighting the risks of excessive reliance on remittances. Revitalizing these sectors and reducing dependence on external financial inflows are crucial for Kerala's future economic stability.

Conclusion

Migration influences economic inequality by offering opportunities but also deepening disparities. Both internal and international migration provide benefits such as poverty reduction and economic growth, but challenges like uneven remittance distribution and inadequate labor protections persist. Effective policies are essential to address these issues, ensuring equitable support for all migrants and fostering sustainable economic development. Addressing implementation challenges and enhancing support for migrants will be key to achieving SDG 10 and reducing economic inequality in India

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