# **A. Introduction**

Internal migration rates in India have been largely static and low in recent times compared to other countries. As per India’s Census of 2001, the flow of internal migration in the five years preceding 2001 accounted for less than 3 percent of the population (Kone et al., 2016). In contrast, those who moved from one state to another in the United States during 2005 accounted for 12 percent of the population (Molloy et al., 2011). Furthermore, in a cross-country comparison of internal migration rates between 2000 and 2010, Bell et al. (2015) show that India ranks last in a sample of about 80 countries. The low level of migration in India relative to other emerging economies is also reflected in the country's relatively low urbanization rate. The urbanization rate in India was 28 percent in 2000, 15 percent less than in countries with comparable GNP levels (Deshingkar and Anderson, 2004). And this only marginally increased to 31 percent in 2011 (Sharma and Chandrasekhar, 2014).

Internal migration rates for those who moved for economic reasons are similarly low, although new evidence suggests that labor mobility is higher than previously estimated. The stated reasons for migration span a wide range, including employment, marriage, study and moving to join one’s parents and/or the earning member of the family who has previously migrated. According to the 2011 Census, 3.5 million migrants who moved within the last one year stated economic reasons for migration. The corresponding numbers for the 2001 and 1991 Census, respectively, were 2.2 million and 1.4 million. A new Cohort-based Migration Metric (CMM) developed in the Government of India’s recent Economic Survey shows that annual interstate labor mobility averaged 5 million to 6 million people between 2001 and 2011. It also includes the first-ever estimates of internal work-related migration, which using railway data for 2011–16, indicate an annual average flow of close to 9 million people between states. Both these estimates are significantly greater than the annual average number suggested by successive Censuses.

Internal migration for economic reasons can promote the agglomeration of economic activity in productive locations. India’s five largest districts account for 18 percent of total employment, a share that has not moved appreciably over time – even though the composition of these top five changed substantially (Fernandes and Sharma, 2012). This suggests that more productive locations have not been successful in attracting additional resources at the expense of less productive locations. The evidence is indicative of “thick” district borders – the misallocation of resources between districts is considerably larger than within districts – indicating significant barriers to firms reaping the benefits of agglomeration (World Bank, 2016). Reducing factor market distortions, in particular, can improve the ability of more productive firms to access inputs. Empirical evidence suggests that a 1 percent decrease in the index of employment misallocation could raise output per worker in the manufacturing and service sector, respectively, by about 0.3 percent and 0.9 percent (Duranton et al., 2015).<sup>2</sup> Labor market integration should therefore be a priority, especially given India’s size and diversity.

Internal migration for economic reasons can also directly contribute to reducing poverty and boosting shared prosperity through remittances. Consumption per capita of migrant households was, on average, higher than that of non-migrant households in 2011–12. This relates to the

> 2 This is because labor is a relatively more important input in services vis-à-vis manufacturing.

2