14.3.09

Reshaping Economic Geography

The World Bank advised India to encourage migration of the workforce through policy initiatives to improve the economic health of 60% of its poor living in states that do not provide sufficient opportunities for growth. “The process of migration should be welcomed and encouraged,” said Indermit S Gill, chief economist of Europe and Central Asia, World Bank, while releasing the World Development Report (WDR) 2009. Noting that over 60% of the nation’s poor live in lagging states, the ‘WDR 2009: Reshaping Economic Geography,’ calls for “policies that promote mobile people, products and ideas”. “Instead of worrying about the size of metropolises, cities and towns, the government should “worry about making sure that these places work well”, said Gill. The report said “in the second half of 1990s, about three million people moved from lagging states of Bihar and UP to leading states like Maharashtra and Punjab.” The report is significant as it comes in the backdrop of large-scale protest in Mumbai against the influx of migrant workforce from Bihar and UP, evoking sharp reaction from minister Lalu Prasad and Bihar CM Nitish Kumar.
Challenging the assumption that growth activities must be spread geographically to benefit the poor, the World Bank report said, “Trying to spread out economic activity can hinder growth and does little to fight poverty”. Pointing out that markets favour some places over others, Gill said developed countries, too, have concentration of wealth at select locations that attract workforce from different areas. The governments, according to the report, should also encourage the movement of people to urban centres as “fighting concentration is tantamount to fighting prosperity”.
Referring to Mumbai, the report said despite attempts to discourage the inflow of people, the city population has more than doubled from 75 lakh in 1980s to about 1.6 crore, with over half of the people living in slums. The government, it added, should have accommodated the influx by establishing robust and versatile land market and institutions and providing basic amenities.

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