from Asia Unbound

No, India Doesn’t Need a Hukou System

Labourers work at the site of a commercial building under construction in Noida, on the outskirts of New Delhi December 13, 20... and increasingly getting – rapid increases in pay and benefits. Picture taken December 13, 2013. REUTERS/Anindito Mukherjee

November 18, 2016

Labourers work at the site of a commercial building under construction in Noida, on the outskirts of New Delhi December 13, 20... and increasingly getting – rapid increases in pay and benefits. Picture taken December 13, 2013. REUTERS/Anindito Mukherjee
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Rachel Brown is a research associate for Asia Studies at the Council on Foreign Relations. This is the first part of a series on migration trends in China and India.

Each minute, an estimated thirty Indians migrate from the countryside into cities. By 2050, as a result of this migration, Indian cities will house more than 800 million residents, many of them young people in search of work. However, the Indian government is ill-prepared to absorb this burgeoning youth population into cities and address their needs.

Traditionally, Indian leaders resisted large-scale development of cities and the nation’s urbanization rate lagged behind those of other developing nations. Despite the large projected increase in movement to cities, the share of India’s population living in cities in 2015 was just 33 percent, while in China it hit 56 percent. A recent study also found that Indians move to urban areas less frequently than their counterparts in other large developing nations such as Indonesia, despite a higher rural-urban wage gap. (Although estimates differ markedly on rural-urban wage gaps across nations, and other studies report a higher gap in China.)

But with India confronting predictions of an increasingly urban future, Indian policymakers must formulate a new response. Some have suggested that to handle greater flows of workers to cities, India should examine China’s hukou system, which attempts to control migration by distinguishing between residents based on their place of household registration. However, “looking to the east for lessons on labour” by studying the hukou system, as a blog from the Indian newspaper the Hindu recently suggested, would be ill-advised. Instead, policymakers should examine three areas that could help prepare cities to reap the benefits of greater urbanization and internal migration.

1. Increasing Investment in Urban Infrastructure

When adequately financed, cities can offer an array of economic and environmental benefits such as reduced strain on resources, greater innovation, and improved delivery of services. Historically, however, India has underinvested in its cities – whether in housing, transportation, sewage, or other services. As of 2010, while China was spending $116 per urban resident on infrastructure each year, India was spending just $17. And while China built out (at times to excess) housing and transportation capacity in cities in anticipation of future growth, India did the reverse. This underinvestment led to situations like the sprawling slums that house over 50 percent of Mumbai’s population and the recurring water shortages that plagued twenty-two out of thirty-two major Indian cities in 2013.

However, signs of a new commitment to cities are emerging. President Modi pledged to reduce slums by constructing twenty million homes under his ambitious “Housing for All” program and to build one hundred “smart cities” outfitted with new technology. If fully executed, these initiatives will help alleviate some of the pressure on city services created by greater urbanization.

2. Altering Incentives to Remain in the Countryside

Currently, development policies focused on rural areas make it more economically appealing for many individuals to stay in the countryside. For example, the Mahatma Gandhi National Rural Employment Guarantee provides a hundred days of paid labor for each rural household, which individuals may not want to sacrifice to move to a city with uncertain job prospects. To get the best of both worlds, many engage in short-term circular migration between cities and villages so they can earn urban wages and also preserve access to the protections of agricultural work and rural social insurance networks. Matias Echanove and Rahul Srivastava of Mumbai’s Institute of Urbanology argue that going forward India should embrace this pattern of urbanization and encourage the growth of smaller cities. The Indian government could also consider delinking work guarantees from household location.

3. Reducing Internal Migration Hurdles

Finally, while India lacks formal legal restrictions on migration akin to the hukou system, informal social prejudices nonetheless deter some workers from moving. The Indian constitution enshrines citizens’ freedom to move to and settle in any part of the country, but when individuals do move to cities they often face discrimination based on religion, language, caste and provincial identity. Experts have even compared the caste system to the hukou system as a form of social exclusion that limits labor mobility. Compounding the problem is the fact that laws to protect migrant rights are not been well enforced.

Additionally, like rural hukou holders Indian internal migrants frequently confront marginalization in accessing entitlements due to their identity documentation or lack thereof. However, the Aadhar program, which assigns every Indian a unique identification number, could remedy this since individuals can use the number to access food rations and other entitlements no matter their location.

As India considers future internal migration policies, the “lesson from the east” should not be to study the hukou system and try to deter people from moving, but instead to design urbanization policies able to accommodate them when they do. Programs such as Aadhar and “Housing for All” offer promising steps in that direction; if India’s future is truly urban, similar projects will need to follow.

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