I would say slowly and gradually there is a shift in the mindset of a laborer. If he migrates to tier-1, metro city and the conditions are same what he/she used to get in village setup [with no growth in real wages]; then why to shift altogether. I have experienced this 1st hand in many villages in RJ & GJ, so can say this with confidence.
Practical Situation: Avg laborer in India is having a marginal land for farming.
a) Past Scenario: He bought inputs -> did sowing -> reaped the yield -> sold it in Mandi [Avg cycle was 4-5 months, and during this cycle he didn't had money - this was more of a gamble farmer played but didn't had clarity on the final output due to rains, weather, pests and other factors].
b) Present Scenario: He buys inputs on finance [avg ROI 8% to 24%] -> does sowing -> reaps the yield [Village/FPO/SHG level-funded farm mechanization to some extent] -> either market linkage startup buys the output at good rates or he goes to Mandi and uses his option of MSP -> pays back the financier [MFI/FPO/Startup/NBFC at agreed ROI] -> gets the better credit line for future farming.
One of the reasons is massive handouts as currently identified. The consequence of such can be far reaching which is not discussed here (could be a seperate topic)
Another consequence would be India might never become low cost manufacturing centre... Hence GDP growth could taper off some time in future (very very unlikely to be at 8%+ on sustainable basis without low cost manufacturing export boom)
I would say slowly and gradually there is a shift in the mindset of a laborer. If he migrates to tier-1, metro city and the conditions are same what he/she used to get in village setup [with no growth in real wages]; then why to shift altogether. I have experienced this 1st hand in many villages in RJ & GJ, so can say this with confidence.
Practical Situation: Avg laborer in India is having a marginal land for farming.
a) Past Scenario: He bought inputs -> did sowing -> reaped the yield -> sold it in Mandi [Avg cycle was 4-5 months, and during this cycle he didn't had money - this was more of a gamble farmer played but didn't had clarity on the final output due to rains, weather, pests and other factors].
b) Present Scenario: He buys inputs on finance [avg ROI 8% to 24%] -> does sowing -> reaps the yield [Village/FPO/SHG level-funded farm mechanization to some extent] -> either market linkage startup buys the output at good rates or he goes to Mandi and uses his option of MSP -> pays back the financier [MFI/FPO/Startup/NBFC at agreed ROI] -> gets the better credit line for future farming.
Believe me this is happening. Thanks to Govt.
That's true, thanks for bringing this up.
The flip side of this is also growing disguised employment/ underemployment in rural India.
A mechanism to fill this gap has to come up.
One of the reasons is massive handouts as currently identified. The consequence of such can be far reaching which is not discussed here (could be a seperate topic)
Yeah agreed, i do expect such transfers to cross 1% of GDP in FY26
Another consequence would be India might never become low cost manufacturing centre... Hence GDP growth could taper off some time in future (very very unlikely to be at 8%+ on sustainable basis without low cost manufacturing export boom)
This would shrink India's labour advantage... Very unlikely India will get a chance to hold a high share in global textile export market
Ahluwalia contracts have said same that they are facing labour shortage.
thanks for letting me know