Abstract

The recent Periodic Labour Force Survey (PLSF) report conducted by the Ministry of Statistics and Programme Implementation (MoSPI) showed that the percentage of urban households has declined whereas rural households have increased (in the report of PLSF 2020-21) as compared to the previous years. This article deals with the households and its importance in the economy, impact of the settings i.e., urban and rural, reasons for migration as well as the reverse change and future aspects for the same.

 

Household and its Importance

To quote, “Households consist of one or more persons who live in the same housing unit, such as a family.” They also possess all the factors of production, which are: land, labour, capital and entrepreneurial abilities. Households play an integral part and are the largest sector of any economy. The vital roles of the households are -

1. Households supply factors of production to the Factor Market and then the firms purchase the factors to set the production process.

2. They have a part of their income as consumption expenditure which is used to buy final goods from the Product Market and therefore, this helps in generating the profits to the firms.

3. A part of their income also goes to savings which then flows to the firms for undertaking investments through capital markets such as banks.

4. They also pay taxes to the government which becomes a part of the government's income. The government then spends it on other purposes such as transfer payment, to pay back for the factor services from the households and to firms for the goods.

5. Households also earn foreign remittance from the rest of the world which act as an injection to the circular flow of income.

 

Impact of difference in the settings of the household (Urban/Rural)

1. Both Rural and Urban households consume final goods but the consumption structure differs widely. Most likely it is noticed that Urban households spend more than rural households for a given income.

2. Even the saving structure as well as ways of saving differs due to the difference in the settings of the households.

3. Rural Households are more engaged in the primary sector whereas Urban Households are engaged in secondary and tertiary sectors.

4. Tax Structure also differs due to differences in the settings of the household. Urban Households pay more taxes than rural households.

5. Urban Households earn more Foreign Remittance than Rural Households.

 

Reasons for Migration from Rural to Urban

1. Economic Factor: Rural areas have a lack of employment opportunities as well as poor economic conditions.

2. Demographic Factor: Urban areas have better living standards. Better facilities in healthcare, education and other factors attract people to urban areas.

3. Social and Cultural Factor: Traditional Values are much stronger in rural areas whereas urban areas are more liberal. With upcoming generations, people tend to move to a more liberal thought process and hence, shift to urban areas.

4. Geographical and Physical Factor: Generally urban areas have moderate weather conditions so as to favour the working atmosphere.

5. Political and Institutional Factors: There is an Inter-State Migrant Workmen Act which regulates the employment of the workforce in different states.

 

Reasons for the fall in the Migration from Rural to Urban Area

1. Due to Capacity Saturation: The major urban areas such as the capital cities have already seen a major migration since past decades. They have come to a saturation level in terms of residential area, opportunities. Increase in the population has increased a pressure on the Government for providing ample amount of healthcare and educational workers. Therefore, at present scenario people prefer to shift to unpopular yet opportunity driven cities.

2. COVID-19: Unprecedented pandemic has led to shift in the workforce to their respective hometowns and has created a space for digital existence. The pandemic has fast forwarded the Digital Revolution. Hence, part of the workforce has now an option to work from their hometown which is generally not the popular cities, yet don’t miss the major opportunities.

3. Digitalisation: Digitalisation has reduced the importance of physical presence for works which can be done digitally. IT is the majorly affected sector. According to the research of “DATAREPORTAL”, India’s internet penetration rate stood at 47% of the total population at the start of 2022. Hence, there is vast scope still left so as for citizens to imbibe the effect of digitalization in India.

4. Rising Unemployment in Urban Areas: According to the Financial Express Survey, the unemployment rate in urban areas stood at 8.9% while the same was at 2% in the rural areas (July 2019-June 2020). This can be extracted from the fact that currently urban areas have a higher population with respect to opportunities. These popular cities have reached their saturation level. Therefore, leading to high unemployment.

 

Conclusion

Analysing the scenario, it can be expected that there will be slight upsurge in population of the unpopular yet opportunity rich cities rather than the capital cities and cities of major importance. The importance of these cities will be maintained but the degree of the extent will decrease. The rural areas will be upgraded in terms of facilities and opportunities, making it more favourable to live.