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3 Economic Factors That Force 1 In Every 11 Indian Children To Work

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By Ankur Chhabra:

Child labour is not a new practice and actually formed an intrinsic part of pre-industrial economies and societies. The working child population increased rapidly with the onset of the Industrial Revolution in the 18th century in Britain.

There is considerable amount of evidence that indicate strong linkages between economic factors like country’s economic structure and status, globalisation, poverty, illiteracy and child labour.

Child labour, albeit prevalent in almost all countries of the world, it is most profound in developing countries and and least developed countries (LDC). According to the International Labour Organisation (ILO), 168 million children are engaged in some sort of child labour globally. In India, 1 in every 11 children is working. These figures are alarming.

Though a lot has been accomplished in the past few decades to control child labour in developed countries by way of stringent anti-labour laws and policies, the progress in the developing world has been very slow, if at all. Various socio-economic studies have found that the main employers of child labourers are usually their own parents. Thus, there are deeply embedded critical economic issues leading to child labour.

We need to understand the root causes of the child labour problem in the Indian context. Some of the critical economic factors are explained here:

1. Poverty and Illiteracy:

Child labour stems from the vicious cycle of poverty. Poverty leads to the mentality of ‘more hands, more income’. Child labour emanates from poverty and illiteracy. Poor people are inclined towards having more children. The main premise of having more children is to send the children to work. In economic terms, the opportunity cost of going to school is quite high and thus not an attractive option. For poor parents, losing the advantage of any earnings opportunity open to children, far outweighs the money, time and effort spent towards school education. The benefits of child labour usually outweigh the costs of schooling, for poor parents. As long as this is the case, child labour would remain persistent and pervasive.

2. Economy:

India is predominantly an agrarian economy. 70% of the population still lives in rural areas and villages. A strong rural economic base also has its own pitfalls. 80% of working children are based in rural areas and 75% of these children work in agriculture, as cultivators or in household industries, most of which are home-based employments. In essence, economically poorer states exacerbate the menace of child labour and vice-versa.

3. Globalisation:

There was a shift in India’s economic policies after the 1991 economic crisis. India could not even pay for its imports. Faced with a debt and liquidity trap situation, India was in a very difficult position as far as loan repayments to the IMF and the World Bank were concerned.

This led to the repeal of the much criticised Licence Raj system. India then adopted the three-pronged economic policy of liberalisation, privatisation and globalisation that kick started a slew of economic reforms. Now, there are two sides to the same coin. On the one hand, globalisation has helped India gain momentum which has led to rapid economic growth and development in the past, whereas, on the other hand, it has also led to an increased income inequality in society. The rich is becoming richer and the poor, poorer.

Globalisation has also led to changes in the domestic labour market. All these changes have not been in the positive direction. There are various facets to globalisation in the Indian context. Firstly, globalisation may have increased the employment and earnings opportunities available to poor households, but it has also increased the influence of rich countries in the domestic policies of the developing world. Due to greater linkages with the world economy, both positive and negative aspects of globalisation have impacted Indian economic sectors and industries in one way or the other. However, overall, the developing countries had to bear greater consequences vis-à-vis the rich countries. The recent example has been the global financial crisis.

To put things in perspective, India, as is the case with most of the other developing countries, has a comparative advantage in agriculture and allied sectors (on a relative basis to other sectors of the economy). Integration into international markets has led to volatility in the market prices of agricultural products. Trade liberalisation has contributed to an increase in exports, employment and wages in the agricultural sector. Increased earning opportunities have distorted the labour markets in the past, leading to a surge in demand for child labourers and thus child labour.

An alternate argument in favour of globalisation is that improvements in earnings opportunities can reduce child labour due to increased parental earnings. Increased parental earnings serve as a substitute for the child’s income. Hence, globalisation can help parents in poor households stop child labour.

However, there is a caveat here. Globalisation has not resulted in intended gains in a country like India that is encumbered with pressing socio-economic challenges like poverty, illiteracy and income inequality. Regardless of the long-term benefits, short term challenges due to increased exposure to foreign competition, has inarguably turned globalisation into a bane than a boon, for majority of the poor households in India. This has certainly not helped the child labour situation in India.

Globalisation has also increased the ability of rich countries to influence policy in the world’s poorer nations and increased child exploitation sharply. Poor nations are dependent on foreign markets for trade (exports) and this has led to policy being dictated by rich countries, directly or indirectly.


India’s fight must not be against globalisation and free trade, but rather, it must be against socio-economic issues like poverty, illiteracy and most importantly income inequality to counter child labour problem. There must be greater economic decentralisation, with the Centre delegating more powers and providing greater financial independence to the states, especially the poor states of our country. The government’s goal must be to ensure that the gains from global inter-connectedness trickle down to the poorest of the poor of our country. The child labour issue could effectively disappear if targeted measures are taken to ensure equitable distribution of income and wealth. Income equality in society would help attain better living standards, in India’s urban as well as rural areas.

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