The Indian economy has many moving parts, of which migrant workers constitute a significant component(REUTERS)
The Indian economy has many moving parts, of which migrant workers constitute a significant component(REUTERS)

To restart the economy, identify the recovery foundation workforce| Analysis

Evaluate links between demography, skill sets and work locations of workers. Prioritise and get them back
By Raghu Raman
PUBLISHED ON MAY 05, 2020 06:43 PM IST

In July 2005, floods in Mumbai forced the shutdown of a factory at Taloja that manufactured fibre optic cables. These cables are made by superheating silica and other raw materials until the molten glass is pushed through channels and strained past microscopic holes to create the fibres. Since the power and fuel supplies were disrupted, the factory’s operations had to be stopped, causing the molten glass to solidify in the system. Though power was restored within a few days, it took several months and millions of dollars to remove the hardened glass from the intricate machinery before the factory could resume operations. Restarting a stalled economy is a bit like that. While the economy can be stopped abruptly with a lockdown, restarting it takes months and loss of billions of dollars until it resumes normalcy.

The Indian economy has many moving parts, of which migrant workers constitute a significant component. Their removal from the manufacturing and services value chain will stall the revival process because nearly all of them would have gone back to their villages as restrictions ease, a process that has begun. They will understandably not return for several weeks, if not for months. This will incapacitate the economy, diminishing at least a quarter worth of annual GDP.

Economic activities are intricately interlinked. The output of one industry is essential to another, and ancillary industries are needed to support mainline industries. For example, the road transport industry needs the roadside dhabas; telecom networks need the service engineers who, in turn, require the restaurants and hostels which support them. All of them need to be daisy-chained in precise proportions for the economy to restart optimally. Expecting them to settle down organically will be time-consuming and expensive.

Here’s an example that illustrates the phenomenon. When the Army is called out after an episode of internal disturbance, the administration needs to begin the normalisation process after the situation is brought under control. The first set of people who are encouraged to come back to work are bus drivers. When buses begin to ply, it gives a semblance of normalcy, and transports other workers to their places of work. The complex ecosystem of the town is jump-started by mobilising the bus drivers who form the first layer of the “recovery foundation workforce”. Therefore, it is crucial to identify the “recovery foundation workforce” among the migrant workers and get them back into the economic structure in a layered manner by joining four key data sets.

The Indian labour force has a strong association between demography, skill sets, and preferred locations of work. For instance, the farm labourers who work in Punjab come from specific location clusters. Similarly, factory workers with specific skill sets migrate from particular districts. This coupling of skill specialisation and geographical location is the first key whose data set exists with the employers.

The second key is to determine the exact location of these migrant workers who can be divided into four categories. They would either be stranded in their work locations, in transit, in their villages or within quarantine holding camps. This data set of each individual’s location is available with all the mobile phone operators.

The third parameter is to develop a workforce return timetable, starting with the “foundational” industries. While all industries and sectors should begin working simultaneously, that is not optimal. For example, it will be more critical to move the farmworkers into their work locations to capture the harvesting and sowing window, than say for real estate construction workers to return to their unfinished projects. The former is time-sensitive while the latter can wait. The broad contours of this timetable can be developed by war-gaming and establishing the minimum inescapable requirement for every value chain. Taking the agriculture example, the steps involved would be to determine the harvest and sowing windows across the country, establish the minimum quantum and locations of the labour force required to accomplish that, ascertain the transport routes and the ancillary support required and activate that on priority. The data needed to develop this timetable is available in various ministries and can be fused by an entity like the Niti Aayog by creating a task force with representatives from each ministry.

The last key would be to implement return incentivisation packages to get the migrant workers to their places of work in the shortest possible time based on the timetable. This could be in the form of advanced salaries credited directly into their accounts so that cash flow reaches the bottom of the pyramid instead of subsidies given to industries which will trickle down slowly — if at all.

All the data required for modelling this restart is available in various databases even if their fidelity is suspect. And of course, this model is fraught with challenges and conflicts. However, even in its most imperfect form, it would still be better than hoping for an organic rebooting of the economy which will not only be expensive from a time and resources perspective — but will also cause untold misery as each piece of the economy tries to get back into place unaided by any macro-planning.

Raghu Raman is the founding CEO, Natgrid  and former president, Reliance Industries
The views are expressed are personal 
Story Saved