How does COVID-19 impact rural demand? MART survey reveals

On the impact of COVID-19 pandemic on rural demand, MART presented a survey report conducted on migrant workers in migration corridors of Uttar Pradesh, Bihar, Madhya Pradesh and Odisha

How does COVID-19 impact rural demand? MART survey reveals

MART, a leading management consulting firm, organised a webinar on “Impact on Rural Demand Post COVID-19 Reverse Migration“. The webinar was attended by around 311 participants from corporates, media, academia and NGOs.

On the impact of COVID-19 lockdown on rural demand, MART presented a survey report conducted on 200 migrant workers in migration corridor states of Uttar Pradesh, Bihar, Madhya Pradesh and Odisha.
Setting the tune of the webinar, Pradeep Kashyap, founder, MART said, “It’s India’s historic moment with rural development integrating towns and cities. He said, for the first time in history, out of 120 million migrants, 20 million have come back to their own villages to stay back in their own states as was highlighted in MART’s study. They will help boost economy as government would have to dole MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) and other schemes.

He shared the example of China in 1978 which had very large PSUs, had latest CNC (computer controlled machines) but China dismantled PSUs as were making losses. Chinese skilled workers had to go back to their villages and started using high level skills to make discrete components of different kinds. These were called ‘Township and Village Enterprises’ as they would make discrete components and sent to district towns and final products made, were marketed and branded. This enabled 400 million Chinese people to pull out of poverty. As past advisor to Ministry of Rural Development, Kashyap said, India’s approach had been piecemeal with no future vision for rural India.
He shared that with India’s 600,000 villages and 8000 towns (Hub & spoke model), integrated rural development programme needs to be followed especially in 50,000 to 500,000 population villages. He emphasised that only 70 percent of our workforce is on our regular sector, so we need to formalise our workforce from an informal economy. He shared companies offered no benefits to migrant labours during lockdown and no formalisation. In fact there was no Ministry for migrant labourers. He further highlighted India’s largest employer was agriculture and shared migrant workers were single largest component of workforce but there was no voice for them.
Pankaj Mishra, Head of Research & Consumer Insights at MART shared highlights from MART’s primary study on migrant workers to understand what are the next steps and how can we answer key questions for the industry to plan strategies in the post COVID scenario. He shared migration workers from corridors of UP, Rajasthan & Bihar migrate to Delhi, Haryana and Punjab. He emphasised 1 of 4 people in city are migrant workers, specifically in construction, agriculture labour and domestic help. He said this was the largest numbers in migration in Indian history, 20 million migrated during partition but 25 million reverse migration took place post-COVID-19 lockdown. He shared a presentation on how migrants will behave post-COVID-19 so various sectors can plan activities in various states and how this would impact rural demand?

Migration in India: An overview
Out of 497 million workforce in India, 120 million are migrated workforce, largely from states like Uttar Pradesh, Bihar, Rajasthan, Madhya Pradesh and Odisha.
According to an estimate, 25 million migrated workers have migrated back to their villages.
Agriculture, construction sector, textile, domestic work and transportation play important role in providing livelihoods to the migrated workforce.

Reason for reverse migration
Responding to a question on why did they returned to their villages, as many as 50 percent of the respondents said that they returned from the cities due to the fear of Coronavirus infection, 42 percent lost their jobs, 12 percent had no savings, 10 percent didn’t get wages and salaries from their employers while 7 percent said other reasons. Many of them had multiple reasons for returning to their villages.

Would they come back?
According to the study, 56 percent of migrated workers who returned to their villages would return to earlier place of work, 25 percent will stay back at their native places while 19 percent will migrate to nearby towns and cities.

How much they travel for job?
According to the MART study, as many as 18 percent travel to 500 km, 36 percent travel to 500-1000 km while 46 percent travel more than 1000 km.

Why do they migrate from their villages?
As many as 49 percent respondents of the study said they migrated for better earnings at other places, 26 percent had no job at their native places, 14 percent for better job opportunities while 7 percent had relatives and friends there.  

Dr. Amar Patnaik, Member of Parliament (Rajya Sabha) was keen to take MART’s recommendations as a committee to the Rajya Sabha for action. Addressing the webinar, Dr. Patnaik expressed lots of works needed to be done on migrant labourers’ issue. He stressed health and social benefits for the migrant labourers. He said for the first time, capital is worried so liquidity needs to be infused by MSMEs. There is a need to promote women self-help groups (SHGs) to engage them into agriculture based industries like food processing. He expressed the government should encourage more community based enterprises and link them to micro and small enterprises, make supply chain robust and reform agriculture. He said people abroad will in future cut unnecessary expenditure and also invest more in agro-processing and knowledge products.

Speaking on the occasion, Sanjay Panigrahi, Chief Customer Officer, Pidilite Industries shared insights on rural market consumption, demand generation, smart villages and how rural plays a significant role in food supply chain. He felt a large population of migrant labourers were still left behind. He said, “New normal intra- state will become more normal than inter-state with labourers travelling lesser distance. The reverse migration has impacted the urban to rural remittances. Around 70 percent of production of FMCG may come down to price point.” Additionally, he talked about digital penetration along with behavioural change in the rural supply chain. He expressed people would work harder in post COVID-19 scenario and the role of wholesaler will be important and direct selling by companies will boost rural consumption.

Addressing the webinar, Rakesh Gupta, Senior Vice President, JK Lakshmi Cements said, construction was the biggest employer after agriculture and in cement industry, demand has gone up post COVID-19. He said, 40 percent of demand has been influenced by government aided funding. He also said incremental construction — building of new units — is on the increase. He shared aspects of decongestion and de-urbanisation and was very much confident, industry will be moving to where skills are available. Policymakers need to keep in mind the changes in construction practices — less labour intensive and more technology driven due to labour shortage.

The Changing Face of Rural India