How states like Bihar and Odisha can leverage Covid into an opportunity

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A couple of years ago, an economic adviser to the Union government was visiting Hosur and Tiruppur, two key industrial hubs of Tamil Nadu. While Hosur has a variety of industrial units, Tiruppur predominantly is a textile and knitwear hub. But what is common to both is they employ a large number of migrant workers from Bihar, Jharkhand and Odisha – states that are a couple of thousand kilometres away from these industrial centres. Several promoters and industry associations complained that the migrant labour was fickle and unreliable. And costs were rising.

Why not move to states where the migrant labour came from and set up factories and garment units there, the economist asked. That way they could save the costs on two factors of production: land and labour. Why, indeed, were they hanging on to costly industrial townships of the south? The promoters replied that those states were simply not safe enough for industry.

There was no guarantee for their lives, forget capital. They were also too far from their home states for comfort.

Every entrepreneurial decision is made on a cost-benefit analysis and there is always a tipping point from where a business strategy that appeared impractical and risky begins to look appealing.

The disruption caused by the coronavirus pandemic could be one such tipping point, provided the states that supply much of the migrant labour have the foresight and political will to reform their industrial environment. It is evident from many accounts that many migrant workers who have fled to their home states will not return. Even if they do, they would be unwilling to travel very long distances in search of work.

Many of those have picked up shop floor skills, have worked in global supply chains and are familiar with the requirements of the market. This pool of workers would be available in poor and industrially backward states such as Bihar and Jharkhand.

These states are blessed with land and abundant water sources, which are necessary for industry.

In fact, several people who own vast lands in Bihar rue that they would not be able to maintain their inheritance for long. Their children moved to what they saw as the greener pastures of Delhi, Mumbai and London and now have no intention of returning.

This conjunction of the availability of a pool of trained labour, cheap land and socio-economic change offers an opportunity for the third factor – capital – to flow to these largely untapped regions. The senior economist said it was not just conducive, it was imperative that this happens for India’s economic prosperity. It would, however, not be possible to convince entrepreneurs and industrialists from the West and the South unless the state governments concerned show the willingness and gumption to sort out law and order.

They would also need to empower local governments so that they can facilitate setting up of industries and offer local support and protection to men and material.

Odisha handed its village heads a district magistrate’s powers to help them fight the novel coronavirus. They can be empowered to help in industrialisation as well.

The other essential that state governments need to ensure is reliable power supply. Experience shows that industries would even pay more if quality power is assured to them. Availability of electricity would also help cold storages and food processing, which have tremendous potential in this predominantly farming-dependent region.

Diversification of industry eastwards would not only create jobs but would also fuel demand for services. Companies looking to plug into global supply chains have a string of ports in the Bay of Bengal to choose from. This will ease the burden on the ports of the western seaboard. It would perhaps even make the Modi government’s pet project of converting the Ganga into an industrial transport corridor viable.



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