Economic Impacts of Rural-Urban Migration

How migration from rural to urban areas affects our economy and why it happens

• Employment opportunity

• Income Inequality and Poverty

• Urbanization and Economic Growth

• Agricultural Transformation

• Infrastructure Development

Before we start, here are a few definitions that you should be aware of. I believe that everything I write should be clear and easy to understand. 

Migration: Moving from one area of something to another is called migration. the main reasons people migrate are for better jobs, lifestyles, health, or education.
Urbanization: A growing percentage of people are moving to urban areas like towns and cities, a phenomenon known as urbanization.

Employment opportunity

Migration from rural to urban areas can have a variety of effects on the economy, but one that is thought to be particularly important is employment.

It appears that most people in rural areas depend on agriculture and related activities like animal husbandry, chicken farming, and fishing, and some work for the government or own their own businesses. If some individuals are successful in finding employment in the private sector, they will not receive fair labor fees.

This is basic economics. If an individual's monthly income does not match their monthly expenses, they will search for alternative options. In this case, most people will seek out urban areas or large cities where they can secure a stable job with fair wages.

According to the Ministry of Statistic and Programme Implementation(MoSPI) Report Migration in india, 2020-2021, which was based on the Periodic Labour Force Survey (PLFS) 2020-2021. the overall migration rate in india was 28.9%, while the rate in rural areas was 26.5%. Of all those who are migrants,

10.8% of the population migrated for work-related reasons. The reasons related to employment include looking for work or a better job, seeking employment or work (to take up employment or to take up better employment/business/proximity to place of work/transfer), losing work, having a unit closed down, or having few job opportunities.

Income Inequality and Poverty

India is the most populous country in the world with the fastest-growing economy.

India's per capita Net National Income (NNI), at constant (2011–12) prices, climbed by 35.12 percent from Rs. 72,805 in 2014–15 to Rs. 98,374 in 2022–23, according to the most recent provisional estimate released on May 31, 2023..

Let's start by examining how the government regulates income inequality in a nation. 

This is done through a variety of measures, including minimum wages, tax laws, welfare programs, higher tax rates on higher incomes, government-run schools and colleges, and numerous programs where the government provides subsidies to those who fall below the poverty line.

Essentially, the government takes more from those who have more and gives it to those who have less.

People who are poor and unable to support their families move to large cities where they can find good jobs and maintain their family's standards of living.

• The above graph makes it clear that, as of 2021, 33% of welath will account for the top 1% of India's Population  
• Additionally, as of 2021, 64.6% of India's wealth was owned by the top 10% of people. 
• Additionally, as of 2021, 5.9% of India's wealth was owned by the 50% of people.

Urbanization and Economic Growth

There are two types of urbanization that we can examine: the first involves people moving rapidly from rural to urban areas, such as large cities, and the second involves rural areas becoming small urban cities. 

as is well known, urbanization results in higher population density, which raises labor standards through increased competition.

additionally, a large labor pool allows businesses to obtain labor at a lower cost.

the development of skills and innovation in urban areas appears to facilitate the migration of knowledge exchange.

Agricultural Transformation

On the one hand, migrationto urban areas negatively impacts labor availability for agriculture; on the other hand, people from these areas innovate technology for skilled agriculture, which contributes to the transformation of agriculture.

The pattern of agricultural land use may change as a result of increased migration; agricultural landowners often sell their properties for commercial uses, such as the construction of apartments and offices. 

India's farming sector is high-risk, with substantial upfronts costs and no assurance of returns, For agriculture purposes, some farmers take out loans that they are unable pay back. The Nation Crime Record Bureau (NCRB) estimates that, as of 2022, one farmers in India committed suicide every hour.

Infrastructure Development

There is a noticeable rapid migration from rural to urban areas, which could be the reason for the growth in urban slum areas as well as the congested conditions on buses, trains, and other forms of public transportation. 

On the other hand, migration from rural to urnab areas may result in a decline in rural population, which could affect the upkeep of current infrastructure.

The current query is how people migrating from rural to urban areas will affect the economy.

One of the first things to know about human nature is that everyone has certain basic needs, such as a place to live, food, and stable employment. This means that in urban areas, businesses have more customers for their products and services, and they also have to pay rent and taxes.

In the second scenario, it appears that migrants seek out their own homes after a brief stay, which boosts demand for real estate and benefits property dealers.However, in certain instances, it appears that real estate brokers sell a single plot of land to multiple purchasers in order to maximize profits, whether or not this is permitted by law.

The third is that more people who migrate to urban areas will earn a sizable income and pay sizable taxes on it, which will aid in the development of urban infrastructure.