Variable regulation in Indian states and labour migrations within India: Some observations

Variable regulation in Indian states and labour migrations within India: Some observations

Prashanth NSInstitute of Public Health, Bangalore

India• World’s largest

democracy • <2.5% of landmass,

but > one-sixth of the world’s population

• Federal parliamentary structure with 28 states and 7 UTs

Federal structure

Kerala

What is the Kerala Model of Development?

• Gained attention due the presence of the ‘paradox’ of high indicators of social development and comparatively low economic growth.

• Promoted as a ‘Cheap’ Model of Development- No need to achieve economic growth first.

• Amartya Sen and Jean Dreze’s favourite example– Receives a mention in a lot of their work but they started to express concern about its low economic growth too!

Source: Natasha Chhabra/UNDP Policy Centre

Social Protection Programmes in Kerala

• Land Reforms in Kerala- Equity as its goal.• Democratisation of Education• Universal Health Care

Kerala model

• A set of high material quality-of-life indicators coinciding with low per-capita incomes, both distributed across nearly the entire population of Kerala.

• A set of wealth and resource redistribution programmes that have largely brought about the high material quality-of-life indicators.

• High levels of political participation and activism among ordinary people …Kerala's mass activism and committed cadre were able to function within a largely democratic structure…

Source: Franke, RW & Chasin BH (1999)

In-migration of unskilled labour

But…

An outlier in more than one way

• Kerala is an outlier in terms of state social security initiatives, labour laws, health and development indicators

• The unskilled labour in-migration and skilled labour emigration are somehow consequences of these

• Strict land tenure laws and labour-friendly laws prevent “investment”

It is perhaps not an accident that Kerala, Tamil Nadu and Himachal Pradesh also tend to have the best social indicators among all major Indian states. For instance, a simple index of children’s health, education and nutrition achievements clearly places these three states at the top ….

Securing land, labour rights: A dis-incentive?

• States in India compete with each other to woo investors. “Tax-free holidays”, “Industry parks”.

• Even legislations to create exceptions to land laws

• Keeping India’s economic growth alive: proposals to create extra-constitutional authorities to “usurp” state’s prerogative in national interest -> National Infrastructure Bureau

Competition among states: Race to the bottom?

“…we indeed find that the approval of SEZs and EOUs investment

proposals in one state are positively correlated with approval of SEZs

and EOUs investment proposals elsewhere (i.e. potential hosts are

more likely to approval SEZ and EOU investment proposals when

their competitors have done so)”

“The race to attract investments is potentially having socially

undesirable consequences in the areas of land acquisitions,

environmental regulations, and labour standards.”

Ronald B. Davies and Krishna Chaitanya Vadlamannati (2013)

References & Thanks• Cato Foundations’s Economic Freedom of States in India.

http://www.cato.org/economic-freedom-india/EconomicFreedomIndia-2011.pdf• Krishnadas et al. The Worrisome Business of the National Investment Board.

Economic & Political Weekly. Nov. 10 2012• Sato, H. Social security and well-being in a low-income economy: an appraisal of

the kerala experience. The Developing Economies, XLII-2 (June 2004): 288–304. http://www.ide.go.jp/English/Publish/Periodicals/De/pdf/04_02_08.pdf

• The Hindu Op-ed dated November 14, 2012 “Workers without Borders”. http://www.thehindu.com/opinion/editorial/workers-without-borders/article4093603.ece

• Ronald B. Davies and Krishna Chaitanya Vadlamannati (2013, forthcoming) A Race to the Bottom in Labour Standards? An Empirical Investigation, Journal of Development Economics .

• Dreze, J & Sen, A. Putting growth in its place. Essay in Outlook Magazine. http://www.outlookindia.com/article.aspx?278843

• Maps and table from Wikimedia Commons images licensed under creative commons